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The Premier Investments Limited (ASX: PMV) share price is edging lower following the release of the company’s FY22 half-year results today.

This comes despite the board declaring a record interim dividend after posting record sales from its Peter Alexander business.

At the time of writing, the retail conglomerate’s shares are swapping hands for $28.645, down 1.02%.

It’s worth noting that earlier this month, Premier shares hit a 10-month low of $25.47 before quickly rebounding higher.

Below we take a look at the company’s latest financial performance and its huge interim dividend for investors.

What’s the go on the Premier Investments dividend?

In the half-year report for the 2022 financial year, Premier reported a mostly sound performance across key metrics.

In summary, retail global sales lifted by 0.6% to $769.9 million driven by strong online growth. The latter achieved a 27.3% increase in sales to $195.4 million despite the long-endured lockdowns across Sydney and Melbourne.

In total, more than 42,000 trading days were lost in H1 FY21 due to government-mandated restrictions.

However, most notably, sales in Peter Alexander were up 11.4% to $227.4 million as people remained at home more often.

This led to the group registering a net profit after tax (NPAT) of $163.6 million for the six-month period ending 29 January.

While the company’s bottom line reflected a decrease of 13%, the board opted to amplify the interim dividend. A fully franked dividend of 46 cents per share, which represents a 35.3% jump on the previous H1 FY21 dividend.

When can Premier shareholders expect payment?

The Premier Investments interim dividend will be paid to eligible shareholders on 27 July.

However, to be eligible, you’ll need to own Premier shares before the ex-dividend date which falls on 21 June. This means if you want to secure the dividend, you will need to purchase Premier shares on Monday 20 June at the latest.

It is worth noting that on the ex-dividend day, the share price traditionally falls in proportion to the dividend amount.

The post The Premier Investments (ASX:PMV) dividend just jumped 35%. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Premier’s record dividend, BHP upgraded
• Premier (ASX:PMV) share price on watch after earnings beat and record dividend
• 5 things to watch on the ASX 200 on Friday
• Top analyst reveals 2 ASX 200 retail shares well positioned for inflation
• 2 top ASX shares this broker loves

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Australian small caps are pushing higher in 2022 after a shaky start to the year. The large end of the market in the S&P/ASX 200 Index (ASX: XJO) has climbed 41 basis points today and sits at 7,417, having rallied 6% in the past month.

ASX small caps have followed suit and are only lagging by a small amount, also up by almost 6% during the last month of trade.

The S&P/ASX Small Ordinaries Index (ASX: XSO) spiked 2% in the past week, not enough to erase a 6% loss that investors have penalised the segment with so far in 2022.

Interestingly, with all the talk of inflation, investors can look to the smaller end of town in search of some juicy dividends at more than respectable yields. Take a look.

Small cap dividends? Please tell me more

ASX small caps have often lent investors an uncorrelated return to add into their portfolios. So hearing that some of these names also pay dividends is music to our ears.

One interesting name is Beacon Lighting Ltd (ASX: BLX). Two experts are also constructive on the stock and rate it as a buy right now. Beacon paid a fully franked 4.3 cents per share dividend in March.

Both Martin Hickson of 1851 Capital and portfolio manager at Hayborough Investment Partners, Ben Rundle, agree that Beacon is worth its weight at present.

“We think Beacon’s a buy. We’re going through a renovation boom at the moment that’s supportive of their earnings,” Hickson said during an episode of Buy Hold Sell on Livewire. Rundle agreed.

“We also think the market is underestimating the growth in their trade and international businesses. So, Beacon’s a buy,” he added.

Hickson also advocates to buy Capitol Health Ltd (ASX: CAJ), noting the new CEO’s turnaround and a respectable valuation.

“They’ve [Capitol] got $100 million in firepower to deploy into acquisitions, trades on an EV/EBITDA multiple of 8x, versus private transactions being done at 12x. So, we think it’s a buy,” he remarked.

Meanwhile, Rundle is supportive of Money3 Corporation Ltd (ASX: MNY). He likes the company’s recent earnings strength, plus its growth vision appears more visible from recent funding.

“I think it’s a buy,” he noted, agreeing with Hickson, who said the same thing about Money3.

“As he [Hickson] pointed out, they upgraded earnings the other day and they probably will upgrade again. They’ve just got more funding as well, which can support their growth plans. So, I think it’s a buy,” Rundle concluded.

Money3 has paid a 13 cents per share cumulative dividend since 8 April 2021.

The returns for each of these names is charted below. In that time, Beacon lighting has surged over 29%, beating the other recommendations.

The post 3 small-cap ASX shares that pay big dividends? Please tell me more appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Why is the Sayona (ASX:SYA) share price getting so much love on Friday?
• This ASX gold miner just bought a copper mine, and its share price is surging 40%
• Could a bidding war be on the cards for Uniti (ASX:UWL) shares?
• Why this fundie is steering clear of ASX mining shares

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Brickworks Limited (ASX: BKW)

According to a note out of Citi, its analysts have retained their buy rating and lifted their price target on this building products company’s shares to $26.00. This follows the release of a first half result which came in well ahead of the broker’s expectations. Looking ahead, Citi remains positive on Brickworks’ outlook. This is largely due to its strong performing property joint venture. The Brickworks share price is trading at $23.82 on Friday.

Coles Group Ltd (ASX: COL)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $19.70 price target on this supermarket giant’s shares. The broker believes Coles is benefiting from rising food inflation and doesn’t expect the trend to stop in the near term. All in all, Macquarie continues to see a lot of value in the company’s shares at the current level and retains it as one of top picks in the retail sector. The Coles share price is fetching $17.81 this afternoon.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

Analysts at Goldman Sachs have retained their buy rating and $3.40 price target on the media company’s shares. According to the note, the broker was pleased with Nine’s strategy update for its Stan business. Goldman believes the update highlighted both the quality and the quantum of original content that Stan is producing. The broker feels this and its Stan Sport offering remain a key differentiator in a competitive market and will allow continued subscriber and earnings growth. The Nine share price is trading at $2.93 on Friday afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• These strong ASX 200 dividend shares just gave shareholders a pay rise
• Why Brickworks, JB Hi-Fi, Mesoblast, and Sayona shares are charging higher
• ASX 200 (ASX:XJO) midday update: Brickworks impresses, Uniti confirms takeover approach
• Soul Pattinson (ASX:SOL) share price on watch after 281% surge in net profit
• Brickworks (ASX:BKW) share price on watch amid 269% first half profit jump

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks. The Motley Fool Australia owns and has recommended Brickworks and COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Sayona Mining Ltd (ASX: SYA) share price is on the move once more, gaining an impressive 7% on Friday.

The Canada and Australia-focused lithium producer has been on a green run lately, having gained 33% so far this week.

At the time of writing, the Sayona Mining share price is trading at 23 cents. That’s just slightly off the company’s shiny new 52-week high of approximately 24 cents, which it hit in intraday trade yesterday.

For context, the broader market is also in the green today. The All Ordinaries Index (ASX: XJO) is currently up 0.33%, as is the S&P/ASX 200 Index (ASX: XJO).

So, what’s boosting the company’s stock higher again? Let’s take a look.

Why is the Sayona Mining share price surging today?

While there’s been no news from Sayona Mining to explain its share price’s movements, the company’s stock might be reacting to rising lithium prices.

The battery-making material’s value has been on many minds lately. Today, Bloomberg is reporting the Chinese price of lithium carbonate has increased 5 times over the past 12 months as demand continues to increase.

While this could be bad news for those looking to buy batteries – the online service states electric vehicle manufacturers could be forced to increase prices by as much as 15% due to the commodity’s rising price – it’s likely good news for lithium producers.

Of course, when the price of lithium goes up, it generally means producers’ profits rise in turn.

Additionally, trading of Sayona Mining’s shares has seemingly increased over the last few weeks, potentially helping to drive its stock higher.

That might have something to do with the company’s recent inclusion in both the All Ords and the S&P/ASX 300 Index (ASX: XKO).

Of course, its addition to the indexes mean funds tracking them had to buy into the company. Additionally, it’s likely allowed fund managers mandated to trade within certain indexes to look into the company’s stock.

Today’s gains see the Sayona Mining share price 73% higher than it was this time last month. It has also gained 541% since this time last year.

The post Why is the Sayona (ASX:SYA) share price getting so much love on Friday? appeared first on The Motley Fool Australia.

More reading

• 5 ASX mining shares smashing 52-week highs today
• Why Brickworks, JB Hi-Fi, Mesoblast, and Sayona shares are charging higher
• Why is the Sayona (ASX:SYA) share price rocketing 19% higher?
• Surging again: Why has the Sayona (ASX:SYA) share price rallied 46% in a month?
• Why IDP, IGO, Sayona Mining, and Yancoal shares are storming higher

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Mandrake Resources Ltd (ASX: MAN) shares are soaring after the gold miner announced it has bought a high-grade copper mine.

At the time of writing, the Mandrake Resources share price is up 42.55% to 6.7 cents.

This is the news that ASX investors have been waiting for after the company requested a trading halt on Wednesday.

In a statement released just after the market opened today, Mandrake described the buy as a “transformational acquisition”.

The junior explorer has executed a binding term sheet to acquire 100% of the Delfin Copper Project in Chile. The mine is located in the world’s most prolific copper-producing region of Antofagasta.

Mandrake will be in fine company with the Escondida2 copper mine jointly owned by BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) nearby.

This is Mandrake’s first acquisition outside Australia. It owns two exploration licences for the Berinka Pine Creek Gold Project in the Northern Territory and the Jimperding PGE-Ni-Cu Project in Western Australia.

More about the Delfin Copper Project

Mandrake will pay staged and conditional consideration for Delfin. This begins with a $1 million loan to the former owner, Atacamoz Pty Ltd, as well as 80 million shares.

The deal is conditional upon the successful completion of a 12-week due diligence phase and regulatory approvals.

The exploration project comprises 84 square kilometres of land with existing infrastructure and year-round accessibility for exploration.

Mandrake notes “multiple spectacular historical drilling intersections … at shallow depths”. It intends to begin an active exploration program early in the second quarter of 2022.

Mandrake said 90% of historical drilling was contained to just a 300m x 100m area.

The first priority for Mandrake is to get a better understanding of the mineralisation of near-surface high-grade targets. The company says it is cashed up with $16.2 million available to help fund its exploration activities at Delfin.

Management commentary

Mandrake Resources managing director James Allchurch said:

Mandrake is excited to have secured the Delfin Project, which provides the company with an advanced high-grade copper project in a first-class mining jurisdiction.

Historic exploration has identified several different zones of spectacular high-grade copper mineralisation including 86m at 4.83% Cu from 121m in DD-04.

We see a clear opportunity to apply modern exploration and interpretation techniques to understand these zones and look to grow them ahead of a maiden JORC resource.

Mandrake Resources share price snapshot

The Mandrake Resources share price is down 58% over the past 12 months. In the year to date, it has risen by 34%.

The ASX gold company has a market capitalisation of $22.65 million based on the current share price.

The post This ASX gold miner just bought a copper mine, and its share price is surging 40% appeared first on The Motley Fool Australia.

More reading

• Could a bidding war be on the cards for Uniti (ASX:UWL) shares?
• Why this fundie is steering clear of ASX mining shares
• Top broker says JB Hi-Fi (ASX:JBH) shares are ‘undervalued’
• Why is the BlueScope Steel (ASX:BSL) share price surging?
• Do Zip shares pay dividends?

Motley Fool contributor Bronwyn Allen owns BHP shares. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s been a big couple of weeks for the Uniti Group Ltd (ASX: UWL) share price, and there’s potential more volatility (of the good kind) could be on the way.

Over the past fortnight, Uniti has been levelled with 2 separate takeover bids.

Tensions behind the scenes could be high. Top brokers are reportedly predicting that a bidding war for the telecommunications company could soon spark.

At the time of writing, the Uniti share price is $4.77, 2.91% higher than its previous close. It’s also a whopping 44.9% higher than it was at the start of the month.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.39% today.

Watch this space: Will there be a battle to win Uniti?

According to yesterday’s reporting by The Australian, both JP Morgan and Bell Potter believe rival bids for the fast-growing telco could boost the takeover offers put to it higher.

10 days ago, Uniti was approached with a $4.50 per share takeover bid by infrastructure and property-focused asset manager, Morrison & Co.

The offer represented a 43% premium on Uniti’s previous closing price and spurred the company’s share price to gain 27.3%.

Then, after much speculation, the company confirmed it had received a second bid yesterday. This time, the offer was worth $5 per share.

The higher bid was lobbed by Macquarie Group Ltd (ASX: MQG)’s Macquarie Infrastructure and Real Assets Holdings Pty Limited and Public Sector Pension Investment, together dubbed the Connect Consortium.

But JP Morgan reckons the company can do better. It believes Uniti should open its doors to more bidders to bring in higher offers.

In fact, the broker thinks the takeover target could be worth up to $7 per share.

And the latest news on the front might bolster predictions of a bidding war. After yesterday’s close, Uniti announced Canadian asset manager, Brookfield, will be teaming up as a joint bidder with Morrison & Co.

The company also stated that it’s keeping Macquarie’s offer firmly on the table.

Could a bidding war see Uniti offered $7 per share?

“While the reported indicative offer price is 25% above our base-case net present value, we believe it is only fair and there could be further competitive responses,” JP Morgan was quoted as saying in a note to clients, sent prior to Brookfield’s inclusion.

We estimate that $5 per share implies a weighted average cost of capital (WACC) of 6.7%.

This compares to the sales price of Vocus in 2021 at a 5.5% WACC. Applying a 5.5% WACC to Uniti would increase our NPV to over $7 per share.

Given the potential for even more interest and a likely competitive process, we believe it may be in the best interest of shareholders to open the data room to other players.

JP Morgan in a broker’s note to clients, as quoted by The Australian.

The post Could a bidding war be on the cards for Uniti (ASX:UWL) shares? appeared first on The Motley Fool Australia.

More reading

• Uniti (ASX:UWL) said to be ‘considering’ Macquarie cash bid of $5 per share
• ASX 200 (ASX:XJO) midday update: Brickworks impresses, Uniti confirms takeover approach
• 2 ravaged ASX shares that will rise again: expert
• 5 things to watch on the ASX 200 on Thursday
• Uniti (ASX: UWL) share price surges 11% to record high as Macquarie bid appears confirmed

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Markets are rangebound today with the S&P/ASX 200 Index (ASX: XJO) trading 29 basis points higher at 7,408 and the S&P/ASX All Ordinaries Index (ASX: XAO) up 30 points to 7,691.

Leading the pack today are the Aussie miners in a trend that’s been in situ since the beginning of 2022. Whilst the broader market edges forward, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) has spiked 1.4%.

You may assume most professional money managers are positioning themselves to benefit… but that’s not necessarily the case.

Some experts are steering clear of the sector and focusing on long-term fundamentals versus current market trends.

When ASX mining shares run, they ‘tend to run hard’

Commodity markets are gliding in 2022 — that’s no secret. Brent Crude futures are up 19 points today as Brent Crude oil charges to US$119 a barrel again.

Gold has spiked back towards its previous highs after testing the US$1,920/t.oz mark three times in the past week. Other commodities such as coal, copper, natural gas, and wheat are all in the green today as well.

In fact, the entire market has been propped up by financials and resources in 2022.

Near-term gains are being driven by “macro themes such as inflation, supply chains, and input price”, says fundie Richard Ivers. He’s the portfolio manager for Prime Value Asset Management’s Emerging Opportunities Fund.

“Not investing in small resource stocks has been a headwind over the last six months,” Ivers told The Australian Financial Review.

“When resources stocks run, they tend to run hard, like we are currently seeing,” he added, referring to the enormous gains commodity traders have racked up in 2022.

But Ivers isn’t focused on the near term.

Capital preservation over the long term

Whilst it may have been hard to sit on the sidelines and watch the rally from a distance, Ivers says he prefers companies with pricing power versus those who rely on market conditions.

“We have a clear mandate to prioritise capital preservation over the long term, which means resources and speculative stocks are not our focus, even if that means we leave some short-term returns on the table,” he said.

“Ultimately, we prefer companies which are price makers, rather than price takers – resource company earnings are driven by commodity prices which are unpredictable and influenced by macro factors, which are very difficult to forecast”.

Ivers notes the fund focuses on companies with predictable earnings and robust fundamentals versus secular trends. The fund uses an absolute return benchmark of 8% instead of chasing an index.

Top picks for ASX shares

Ivers hammers in the old finance adage that cash is king and valuations do matter for the long run.

“We’re not traders. We are high conviction investors and prefer companies with a high certainty of future earnings and cash flows. This makes future value more certain.”

Futures on various commodity baskets have already started to cool off. Their parabolic charts are receding towards long-term averages.

Not only that, it appears tech names are starting a revival, with the S&P/ASX All Technology Index (ASX: XTX) soaring 2% higher this week and 11% over the past month.

The fundie said some of his firm’s favourite picks are Kelsian Group Ltd (ASX: KLS) and News Corporation (ASX: NWS).

The post Why this fundie is steering clear of ASX mining shares appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Premier’s record dividend, BHP upgraded
• 5 things to watch on the ASX 200 on Friday
• These 3 ASX 200 shares are topping the volume charts on Thursday
• Buyback bonanza! Why the Southern Cross Media (ASX:SXL) share price is up 8% today
• Is the Appen (ASX:APX) share price on the comeback trail?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The JB Hi-Fi Limited (ASX: JBH) share price has continued its positive run on Friday.

In morning trade, the retail giant’s shares hit a new record high of $55.26.

The JB Hi-Fi share price has since pulled back a touch but remains up 3.5% to $54.86 at the time of writing.

Why is the JB Hi-Fi share price racing higher?

Investors have been bidding the JB Hi-Fi share price higher today after brokers responded positively to the retail giant’s sales update.

That update revealed that business has been booming during the second half for JB Hi-Fi.

Management advised that for the period 1 January to 23 March 2022, it continued to see heightened customer demand and strong sales growth. This led to the JB Hi-Fi Australia business reporting total sales of 11.3% quarter to date, with both its New Zealand and The Good Guys businesses also reporting solid sales growth.

Morgans says buy JB Hi-Fi shares

One broker that was particularly impressed was Morgans. In response to the update, the broker retained its add rating and lifted its price target on the company’s shares to $58.00.

Based on the current JB Hi-Fi share price, this implies potential upside of almost 6%. This increases to almost 11% if you include the $2.77 fully franked dividend the broker is forecasting in FY 2022.

Morgans was pleased with JB Hi-Fi’s update and believes its shares are undervalued based on its current performance. It commented:

“JB Hi-Fi continues to experience strong sales growth driven by ‘heightened customer demand’. Its latest trading update shows comparable sales growth accelerated in February and March, with JB Hi-Fi Australia particularly robust.

We have increased our comparable sales growth forecast at the group level by 200 bp from a decline of (0.3)% to positive growth of +1.7%. This, combined with higher margin estimates, pushes up our FY22 EBITDA forecast up by 5%.

We see JBH as a well-run retailer with good cost discipline, a robust balance sheet and a strong market position. We regard JBH as undervalued at current multiples despite its good sales momentum and reiterate our ADD rating.”

The post Top broker says JB Hi-Fi (ASX:JBH) shares are ‘undervalued’ appeared first on The Motley Fool Australia.

More reading

• Why Allkem, Firefinch, JB Hi-Fi, and Piedmont Lithium are charging higher
• Why Brickworks, JB Hi-Fi, Mesoblast, and Sayona shares are charging higher
• JB Hi-Fi (ASX:JBH) share price charges higher on strong Q3 sales growth
• The next ASX share ready to join the 20-bagger club: expert
• Top analyst reveals 2 ASX 200 retail shares well positioned for inflation

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The share price of BlueScope Steel Limited (ASX: BSL) is currently up 4.4% to $21.32, making it the third-best performer on the S&P/ASX 200 Index (ASX: XJO) so far today.

The steel price has been rising amid the Russian invasion of Ukraine as well as the Chinese lockdown of some of its steel-producing regions. China is trying to limit the spread of COVID-19 cases. Russia, currently facing widespread sanctions, reportedly accounts for around 10% of the global steel trade, and Ukraine is responsible for a further 4%.

Huatai Futures analysts suggested that big buyers of steel will need to look for other suppliers.

Could the BlueScope Steel share price keep rising?

The broker Ord Minnett thinks so. It recently set a price target on the steelmaker of $25, suggesting an upside of around 17%. The current prices allow BlueScope to achieve strong profit and cash flow in the medium term.

In the recent FY22 half-year result, it delivered a record underlying earnings before interest and tax (EBIT) of $2.2 billion and a reported net profit after tax (NPAT) of $1.64 billion.

Management noted there was good demand in key segments, especially in building and construction, coupled with “robust” margins driven by the increased steel prices in Asia and the US.

In February 2022, it said that its second half FY22 EBIT was expected to be in the range of $1.2 billion to $1.35 billion.

The Bluescope Steel share price is up almost 15% over the past year, 2.5% this year to date, and 12% over the past month.

The post Why is the BlueScope Steel (ASX:BSL) share price surging? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Premier’s record dividend, BHP upgraded
• Is a dividend boost on the cards for Bluescope (ASX:BSL) shares in FY22?
• These were the worst performing ASX 200 shares last week
• BlueScope Steel (ASX:BSL) share price sinks 9%
• ASX 200 (ASX:XJO) midday update: CSL and St Barbara charge higher

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Zip Co Ltd (ASX: Z1P) now has a special place on the ASX share market. With the departure of buy now, pay later (BNPL) pioneer Afterpay from the ASX, and into the arms of Block Inc (ASX: SQ2), Zip is now the ASX’s largest pureplay BNPL share. But that hasn’t stopped the Zip share price from having a pretty horrible year thus far.

It’s only March, but Zip shares have lost close to 65% of their value in 2022 alone. Over the past 12 months, the losses now stand at almost 80%.

Yet investors seem to be paying more attention to Zip lately. It was only ten days ago that Zip hit a new 52-week low of $1.40 a share. But since then, the company has gained around 10%.

So with investor interest in Zip seeming to rise of late, many investors might be asking the question: do Zip shares pay a dividend. After all, Zip is quite a large ASX share, with a market capitalisation of over $1 billion. It’s also in a growing space in BNPL, and has been clocking some healthy growth numbers in recent years. In its most recent earnings report, the company reported revenue growth of 89%, as well as a 147% rise in transaction numbers. 

Do Zip shares pay a dividend?

Well, unfortunately, the answer is a resounding no.

Zip does not pay a dividend. In fact, Zip shares have never paid a dividend. And probably won’t for some time.

See, for a company to pay a dividend, it first needs to break even on its bottom line. Dividends are typically paid out of earnings or profits. And although Zip did report some arguably impressive growth figures in February, it also reported a loss before tax of $214.2 million for the half. 

Dividends are arguably one of the worst ways a company can spend money from a growth perspective. When a company pays a dividend, the money goes out the door to shareholders, never to return. The cash can’t be reinvested, used to pay down debt, shore up finances or otherwise benefit the company in any other way. It only benefits shareholders at the time. Thus, companies that typically pay out dividends tend to be consistently profitable, and have spare cash left over after accounting for needs like the ones listed above. 

Since Zip is not even profitable yet, it doesn’t have the capacity to even fund a dividend. But this isn’t necessarily a bad thing. Zip is still in its ‘growth phase’ and is choosing to use its revenues and capital for other purposes, like expansion. Thus, its shareholders are probably not expecting to receive income from their Zip shares anytime soon. 

Perhaps Zip will be an ASX 200 dividend share one day. But that day is not today. 

The post Do Zip shares pay dividends? appeared first on The Motley Fool Australia.

More reading

• The Zip share price is down 7%, close to March 2020 lows
• Why Aurelia Metals, Janus Henderson, ResMed, and Zip shares are dropping
• ASX 200 (ASX:XJO) midday update: Brickworks impresses, Uniti confirms takeover approach
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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