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Passive income is one of the most pleasing things about ASX shares. Investors can use ASX stocks to gain $1,000 of passive income a month and perhaps more.

There are a variety of different ways to gain passive income, and we can find them on the ASX. Each of these methods can create income, though I’d suggest ASX companies will deliver the biggest yields.

Interest from cash

Typically you would have to go to a bank or credit union to get a financial product that pays interest from a cash deposit. But, on the ASX, there’s an option that takes investor money and spreads it across a number of term deposits at financial institutions in Australia.

Betashares Australian High-Interest Cash ETF (ASX: AAA) is the ASX investment that does just that. Its bank holdings include National Australia Bank Ltd (ASX: NAB), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd (ASX: BOQ).

The ETF pays the income monthly. At the moment, the interest rate is 4.45%.

Bonds

Owning bonds can be another form of passive income. Bonds are basically debt from a government or business. The borrower pays interest to the investors.

While investors can probably get a higher return from bonds focused on businesses, I’d prefer to focus on government bonds because, typically, they are safer.

Vanguard Australian Government Bond Index ETF (ASX: VGB) invests in Australian government bonds. The yield to maturity for this was around 4% on 31 December 2023.

Property

Property is a favourite asset class of many Aussies – and we can buy ASX shares that give exposure to property.

Real estate investment trusts (REITs) allow us to buy pieces of a business that have a portfolio of commercial property.

They pay out a large proportion of the net rental profit each year, creating a pleasing source of annual passive income.

I’ll mention the yields of a couple of my favourite REITs based on the projected payouts on Commsec.

For example, farm REIT Rural Funds Group (ASX: RFF) could pay a distribution yield of 5.7% and Centuria Industrial REIT (ASX: CIP) might pay a distribution yield of 4.9%.

Shares in ASX companies

One of the best things about ASX companies is that when they pay fully franked dividends, the franking credits boost the yield. For example, a 3.5% normal dividend yield becomes a grossed-up dividend yield of 5%, or a 7% yield can become a grossed-up dividend yield. Investors get the benefit of the credits when they do a tax return.

There are a number of larger ASX shares that have a history of paying sizeable and attractive dividends, such as Telstra Group Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL).

Some companies have grown their dividends for many years in a row, including Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and Sonic Healthcare Ltd (ASX: SHL).

I’ll also point out that listed investment companies (LICs) – which own a diversified portfolio of shares – can make investment returns and pay dividends to shareholders.

One of the most attractive things to me is that companies can both pay good dividends and achieve profit growth as they invest for more long-term growth. For example, Wesfarmers is a much bigger business than it was 15 years ago, and it’s paying a much bigger dividend.

Organic growth of dividends means that, over time, companies can deliver higher passive income than interest options and achieve capital growth.

$1,000 per month of passive income

Earning $1,000 per month translates into an annual passive income of $12,000 per year.

It depends on the yield for how much we’d need to make that much. With an 8% dividend yield, it’d take a portfolio value of $150,000.

A 5% yield would need a portfolio value of $240,000, and a 4% dividend yield would take a value of $300,000. But, lower yields may be safer and/or deliver stronger growth over time.

It might take a fair bit of time to reach a portfolio value of those amounts, so investing in ASX shares that could deliver good growth along with dividends would be prudent, particularly for younger Aussies.

The post How can I make $1,000 a month from ASX shares? appeared first on The Motley Fool Australia.

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More reading

• Retirees: 2 Top ASX dividend shares I’d buy now for passive income in 2024
• Why I’m buying Soul Patts shares over the Vanguard Australian Shares Index ETF (VAS)
• Got $15,000? How I’d invest for a bulletproof ASX passive-income portfolio
• Top 5 most profitable ASX large-cap shares of 2023
• This ASX 300 stock is my favourite way to invest in Australian farmland

Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank, Brickworks, Coles Group, Rural Funds Group, Telstra Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When is the best time to buy ASX shares? It’s when everyone else hates them!

It sounds obvious, but buying a stock when it’s cheap provides the best returns later. 

You’d be surprised how many people insist on grabbing shares when everyone else loves them and they’re already expensive.

In the bargain-hunting spirit, the team at QVG Opportunities Fund recently named two ASX shares that had a pretty ordinary January that they’re still backing for long-term gains:

Is this stock severely under-priced?

It’s been a sorry tale for real estate classified provider Domain Holdings Australia Ltd (ASX: DHG).

In the midst of 13 interest rate rises dampening the property market, the Domain share price has plunged almost 39% since the start of 2022.

The slide continued last month as the company kept struggling against the market leader REA Group Ltd (ASX: REA).

“Domain continued to soften after a poorly-received AGM update which showed listing volumes were tracking behind their major competitor,” stated the QVG analysts in a memo to clients.

“This listings volume discrepancy is largely explained by geographic mix, but given Domain’s patchy historic financial performance the market is disinclined to give them the benefit of the doubt.”

But as far as the QVG team is concerned, the Domain share price has slid too much considering the bullish business prospects from this point on.

“Domain has opened a very wide valuation gap between itself and REA Group. This gap is even wider than it first appears if you believe Domain can expand its margins over the next few years.”

The ASX shares with catalysts imminent

The Aussie Broadband Ltd (ASX: ABB) has lost a painful 35% since April 2022.

However, the market has been positive over the past four months since revealing its proposed acquisition of business telco Symbio Holdings Ltd (ASX: SYM).

It did have to go to market with a cap in hand though.

“Aussie Broadband continues to digest the large placement it made in November.”

The QVG Opportunities Fund retains Aussie Broadband shares as its fifth largest holding because the business simply has too many tailwinds coming to ignore.

“Aussie has a number of upcoming catalysts the most imminent of which is the completion of its acquisition of Symbio and articulation of the synergies associated with this purchase.”

The post Why one fund is backing these 2 hammered ASX shares from now on appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband, REA Group, and Symbio. The Motley Fool Australia has recommended Aussie Broadband, REA Group, and Symbio. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Have you got $20,000 saved up that you could invest?

Many of you reading this will, because comparison site Finder last year found the average Australian has double that amount saved in their bank account.

ASX shares can turn that into a nice passive income that could pay you thousands of dollars each month in return for no labour.

Curious? Read on.

Growth vs dividend

Hypothetically let’s construct that $20,000 into a well diversified stock portfolio.

The first step is to do your best to not take any money out of the investment and let it grow. If anything, you should be adding to the nest egg as much as you can.

Does this growth phase call for ASX growth shares, or can it be implemented with a bunch of dividend stocks?

Honestly, it doesn’t matter.

As long as you have done the research to satisfy yourself that the stocks will return a satisfactory compound annual growth rate (CAGR) over the long term, go for whatever you want.

Because both capital growth and dividend income contribute towards yearly growth if the latter is immediately reinvested.

How much could I gain each year?

So what kind of performance is realistic in the long run?

Let’s check out some examples.

Johns Lyng Group Ltd (ASX: JLG) and Cettire Ltd (ASX: CTT) are two growth stocks that have done pretty well in recent years, and experts reckon have a bright future.

The past has nothing to do with what might happen in the future, but let’s analyse their track record for the purposes of working out realistic return expectations.

Over the past five years, Johns Lyng shares have returned an amazing 524%. In just a tick over three years on the ASX, Cettire has gained 521%.

Even if we conservatively assume Cettire has been around for five years, it equates to a CAGR of about 44%.

Over in dividend land, Woodside Energy Group Ltd (ASX: WDS) and Growthpoint Properties Australia Ltd (ASX: GOZ) are pumping out excellent income.

The former is handing out a stunning 10.5% fully franked dividend yield, while the latter is paying 8.4% unfranked.

With these types of stocks, I think it’s not outrageous to imagine your portfolio could average out to 12% CAGR in the long run.

Ten years for the good times to roll

Going back to that $20,000 portfolio you constructed, let’s say you can afford to add $400 a month to the pot.

Let that brew with 12% CAGR, and after 10 years, it will have grown to $146,350.

From the 11th year, instead of reinvesting the returns, try cashing it in.

That will be $17,562 of passive income annually, on average.

This means $1,463 of cash landing in your bank account each month for the rest of your life.

That’s one way you can turn $20,000 into thousands of dollars of regular extra income.

The post $20,000 in savings? Here’s how I’d try to turn that into $1,463 a month of passive income appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Atlantic Lithium, Johns Lyng, Pro Medicus, and WiseTech shares are rising today
• 5 things to watch on the ASX 200 on Monday
• Buy these ASX growth shares for market-beating returns
• Australian first: Why Woodside shares are making news this week

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group. The Motley Fool Australia has recommended Cettire and Johns Lyng Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Living off dividend income in retirement sounds like a great life to me. But retirees who don’t work any more need to look after their portfolio dollars because if something goes really wrong, it’s not like they can easily replace that money.

Hence, there are some ASX dividend shares that I would want to buy for retirement because of their passive income, dividend yields and stability. The two dividend shares I’m going to write about below also offer a good rate of growth and a defensive profit profile.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is one of the leading ASX dividend shares in my opinion. It has the best dividend growth record on the ASX – it has grown its annual ordinary dividend every year since 2000. It’s not guaranteed to keep going, but I think it has a very good chance.

The company operates as an investment house, meaning it invests in other businesses and assets. Some of its longest-held assets have been its best performers because of how small those companies were when Soul Pattinson first invested. I’m talking about Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and TPG Telecom Ltd (ASX: TPG).

Some of its other largest investments include Tuas Ltd (ASX: TUA), Apex Healthcare, BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), CSL Ltd (ASX: CSL), BKI Investment Company Ltd (ASX: BKI) and Commonwealth Bank of Australia (ASX: CBA).

Other investments include farms, structured yield (credit/bonds), financial service businesses, swimming schools, an electrical and electronic business (called Ampcontrol) and more.

The portfolio pays investment cash flow up to Soul Pattinson, and then the investment house sends a lot of that cash to shareholders. Its investments can grow their own payouts to Soul Pattinson and the investment house can also reinvest retained cash flow into new opportunities.

Based on the last 12 months of dividends, it has a grossed-up dividend yield of 3.7%.

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) and reportedly Australia’s largest domestic pure-play industrial property investment vehicle.

Its properties are located in very useful locations which are close to key infrastructure.

At the end of the FY24 first quarter, the ASX dividend share had a weighted average lease expiry (WALE) of 7.8 years, which means it has a lot of rental income baked in. The business also had a portfolio occupancy rate of 98.6%, showing its portfolio is in high demand.

Its organic rental income growth is also showing signs of industrial property being in high demand. In the FY24 first quarter, it achieved a 48% positive re-leasing spread, meaning the rate for the new rental contracts was 48% higher than the old rental contracts. This level of rental growth can help send distributions higher in future years.

In FY23, its biggest tenants by rental income were Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW), Arnotts, AWH, Visy and Fantastic Furniture.

Centuria Industrial REIT is expected to generate funds from operations (FFO), or net rental profit, of 17 cents per security and pay a distribution per security of 16 cents for FY24. This would suggest a forecast forward distribution yield of 5%.

The post Retirees: 2 Top ASX dividend shares I’d buy now for passive income in 2024 appeared first on The Motley Fool Australia.

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More reading

• Why I’m buying Soul Patts shares over the Vanguard Australian Shares Index ETF (VAS)
• Got $15,000? How I’d invest for a bulletproof ASX passive-income portfolio
• Top 5 most profitable ASX large-cap shares of 2023
• Brokers say buy these ASX 200 dividend stocks with juicy yields
• Are Brickworks or Soul Patts shares a better ASX buy? Here’s my take

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, CSL, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended CSL and Tpg Telecom. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There’s no better time to catch a wave than when it’s just started.

So here are two S&P/ASX 200 Index (ASX: XJO) buy suggestions from experts that have just started their rally:

‘Poised to deliver strong earnings growth’

Netwealth Group Ltd (ASX: NWL) shares have been busy climbing 36% since late October.

Sequoia Wealth senior advisor Peter Day still likes the look of them.

“The company’s high quality investment platform is poised to deliver strong earnings growth driven by market share gains, in our view,” Day told The Bull.

Investors’ money is flowing into the investment tool.

“Funds under administration (FUA) stood at $78 billion at December 31, 2023. 

“FUA increased by 24.9% for the year to December 31, 2023. FUA net inflows accounted for $9.5 billion and a positive market movement accounted for $6 billion.”

Unusually for a fintech, Netwealth shares pay out a dividend, which currently stands at 1.4% yield.

“This wealth management business offers an appealing outlook.”

Comeback year for this ASX 200 stock

The Resmed CDI (ASX: RMD) share price has been coming back hard after it fell off a cliff last reporting season.

Fears about the impact of GLP-1 weight loss drugs such as Ozempic sent the ASX 200 stock to a trough in late September, but it has soared 38% since.

Catapult Wealth portfolio manager Tim Haselum acknowledged that obesity is “a contributing factor” towards sleep apnoea, which ResMed’s devices treat.

ResMed, with its latest update, dispelled the scares from last year.

“In the second quarter of fiscal year 2024, the company grew revenue by 11% on a constant currency basis compared to the prior corresponding period,” said Haselum.

“We expect the sleep apnoea business to grow moving forward.”

According to CMC Invest, 18 out of 25 analysts rate the healthcare stock as a buy, just like Haselum.

The post ‘Appealing outlook’: 2 ASX 200 shares that just started their latest rally appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Hoping to bag the ResMed dividend? You better be quick!
• Top brokers name 3 ASX shares to buy next week
• 3 ASX All Ords shares with ex-dividend dates in the next week
• Top ASX shares to buy in February 2024

Motley Fool contributor Tony Yoo has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netwealth Group and ResMed. The Motley Fool Australia has positions in and has recommended Netwealth Group and ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With interest rates most likely at their peak, and very possibly coming down later in 2024, history tells us this could be a really big year for S&P/ASX 200 Index (ASX: XJO) shares.

Lower interest rates tend to benefit most stocks, though often with a lag. As you’d expect, some stocks tend to get more tailwinds from falling rates than others.

Among those are ASX 200 shares involved in the consumer discretionary sector. That’s especially true because we’re likely looking at lower rates going hand in hand with lower inflation in Australia.

And that means more money left in consumers’ pockets to spend on those services and goods they don’t really need but do really want.

Below we look at three ASX 200 shares in that sector that I believe could outperform in a falling rate environment.

Electronics and household goods stocks

First up we have electronics and home appliance retailer, JB Hi-Fi Ltd (ASX: JBH).

The ASX 200 retail share saw its comparable sales growth for the September quarter dip across Australia and New Zealand, with its Good Guys segment also reporting lower sales.

Yet the JB Hi-Fi share price began marching higher in late October.

Partly spurred by increasing investor optimism of pending rate cuts from the RBA and the US Federal Reserve, the ASX 200 share leapt 36% from 26 October through to 15 January.

Amid headwinds that include the dawning reality that, while interest rates may have peaked cuts are still likely some months away, the JB Hi-Fi share price is down 7% since 15 January.

With shares trading at a 5.62% fully franked dividend yield, and the expectation that consumer spending power could rebound later in 2024, now could be an opportune time to dig deeper into this company.

Which brings us to home furnishings and white goods retailer Harvey Norman Holdings Ltd (ASX: HVN).

Like JB Hi-Fi, this ASX 200 retail share saw revenues and profits fall in 2023 as consumers delayed non-essential purchases.

And like JB Hi-Fi, the Harvey Norman share price soared 25% from 26 October through to 23 January. Shares are down 2.25% since then.

While the share price may have further to retrace, an uptick in household discretionary spending amid lower inflation and interest rates should, with some expected delay, translate to rebounding sales and profits for the ASX 200 retail share.

Atop a higher share price, that could also see Harvey Norman up its dividends. The retail stock currently trades at a fully franked trailing yield of 5.76%.

An ASX 200 share for all seasons

The third ASX 200 share that could have a big year in 2024 is gaming technology company Aristocrat Leisure Limited (ASX: ALL).

The Aristocrat share price has been on an upward trend for the past 12 months, with shares up 22.51% since this time last year. That tells us that, despite the pressure on household budgets, consumers didn’t cut back their gambling spend.

For the 12 months ending 30 September, Aristocrat reported a 13% year on year increase in revenue to $6.3 billion. And it reported that net profit after tax was up 53% to $1.45 billion.

Management also expects to continue to grow profits in 2024. A forecast that should be aided as interest rates and inflation come off the boil.

The ASX 200 share currently trades at a 1.44% fully franked dividend yield.

The post History shows 2024 could be a big year for ASX 200 shares. Here are 3 to look at now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Stocks on the rocks: Why the ASX 200 is backtracking from record highs today
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up this week
• Why these 3 ASX 200 shares leapt into the Motley Fool’s headlines this week

Motley Fool contributor Bernd Struben 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 positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Why Atlantic Lithium, Johns Lyng, Pro Medicus, and WiseTech shares are rising today
• Leading brokers name 3 ASX shares to buy today
• Stocks on the rocks: Why the ASX 200 is backtracking from record highs today
• Apple Vision Pro and an ASX 200 healthcare share hitting all-time highs
• These are the 10 most shorted ASX shares

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. has positions in and has recommended Johns Lyng Group, Netwealth Group, Pro Medicus, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Netwealth Group and WiseTech Global. The Motley Fool Australia has recommended Johns Lyng Group and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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2023 was a lucrative year for ASX’s army of dividend investors. The year just gone saw major dividend hikes from almost all of the major ASX 200 blue-chip shares.

Commonwealth Bank of Australia (ASX: CBA)? It raised its dividends from $3.85 per share in 2022 to $4.50 per share last year. National Australia Bank Ltd (ASX: NAB) followed a similar path, dialling up its own shareholder payouts from $1.51 per share to $1.67.

Last year, we also saw dividend hikes from Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES) and Transurban Group (ASX: TCL).

The dividends from the big players in the mining and energy spaces mostly reduced their dividends in 2023 compared to 2022’s levels.

But given how monstrous the payouts were in that year from the likes of BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS), 2023’s dividends still look very high from a historical standpoint.

However, 2024 could give investors a different story, and not entirely a pleasant one, if one ASX expert is to be believed.

Fund manager Ausbil recently spoke to the Australian Financial Review (AFR) about its projections for the present year. Although Ausbil predicted that “dividends this year will be broadly in line with 2023”, it also warned investors that “the local market’s dividend yield will be slightly lower because of soaring valuations”.

So if yields from major ASX shares are going to be lower over 2023, where should income investors look to for passive income this year?

3 ASX dividend shares to consider in 2024

Considering the warning from Ausbil, the first dividend stock I would turn to is Telstra Group Ltd (ASX: TLS). Unlike many ASX 200 shares, the Telstra share price actually went backwards last year, dropping from over $4.40 in July to a low of $3.75 in November.

But this fall, probably unwelcomed by shareholders, has boosted Telstra’s dividend yield today, which sits at a fully franked 4.21%. Telstra has one of the most defensive earnings bases on the ASX in my view. As such, I regard its ASX dividends as highly reliable. Even better, some brokers reckon the company could give investors another pay raise this year.

Next, I’d think about Coles Group. Coles is another blue-chip stock that spent 2023 going backwards. But again, this has been a boon for new income investors. At under $16 today. Coles shares offer a fully-franked yield of 4.13%.

This is another company that has a highly defensive earning base from which it pays out ASX dividends. We recently looked at one expert’s prediction that Coles might be forking out 70 cents per share by FY2025.

Lower share prices mean higher dividend yields

Finally, I think income investors should kick the tyres of Transurban. Transurban shares have been rather flat over many years now. Today’s prices are cheaper than what you could have bought the company at way back in 2019. Not to mention their pre-COVID 2020 peak of over $16.

However, we see a different story playing out if we look at this toll road operator’s dividends. After a big dip in 2020, Transurban’s ASX dividends are now back to their 2019 levels.

Given the company’s ability to easily pass on inflation to motorists, I think there’s a reasonable shot at the company growing its dividends even further over 2024.

At today’s share price of $13.44, you can grab a dividend yield of 4.32% from Transurban.

The post Falling yields? I’d buy these ASX dividend beasts for a beefed-up income in 2024 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in National Australia Bank, Telstra Group and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group, Telstra Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Argo Investments Ltd (ASX: ARG) share price is slipping today after the listed investment company (LIC) reported its half-year earnings for the six months to 31 December 2023.

Argo shares closed at $9.10 each last week. Today the LIC opened at $9.10 a share but has dropped 0.55% to $9.05 at the time of writing after falling as low as $9.03 this afternoon.

Still, investors might not be too disappointed given that the broader S&P/ASX 200 Index (ASX: XJO) is currently nursing a far more substantial 1.04% loss at present.

Half-year report highlights EPS, profits drop

• Argo reported a half-year profit of $125.3 million for the first half of the 2024 financial year (1H24), down 8.5% on the first half of the 2023 financial year (1H23)
• Earnings per share (EPS) of 16.5 cents, down 9.3% from 1H23’s 18.2 cents
• Unchanged interim dividend of 16.5 cents per share, fully franked,
• Net tangible assets of $9.33 per share as of 31 December, up from $8.75 at the end of 1H23
• Management expense ratio (fee) reduced from 0.16% to 0.15%

What else happened in 1H24?

Argo’s investment portfolio increased by 5.6% over the six months to 31 December 2023. This figure includes taxes that Argo has paid, as well as the management expense ratio. That underperformed the benchmark S&P/ASX 200 Accumulation Index, which achieved a return of 7.6% over the same period.

Some major moves that the LIC made in its investment portfolio include opening a position in ResMed Inc (ASX: RMD) and buying up more shares in CSL Limited (ASX: CSL), Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS).

Positions in Liontown Resources Ltd (ASX: LTR), Insurance Australia Group Ltd (ASX: IAG) and Invocare Ltd were closed, reducing Argo’s overall portfolio to 86 positions.

Investors seem to have been more optimistic over the latter half of 2023 than they were at the time of Argo’s October annual general meeting (AGM).

Following the company’s AGM in late October, the Argo share price fell more than 2% over just a few days. That was despite the company announcing that it expected an improvement in global economic conditions (which have subsequently proved prescient).

What did management say?

There was no specific commentary from Argo’s management in today’s report. However, here’s some of what the company said on its half-year:

Holdings in [Clarity Pharmaceuticals Ltd (ASX:CU6)] (up more than +170%) and [Stanmore Resources Ltd (ASX: SMR)] (up nearly +60%) contributed positively to performance. However, gains were offset by negative returns from other holdings, including pathology and imaging provider [Healius Ltd (ASX: HLS)].

In general, Australian healthcare providers have lagged due to higher costs and lower utilisation levels. Not owning Fortescue Ltd (ASX: FMG)] materially weighed on relative performance, as did our underweight exposure to the major banks…

The share price performance was +5.4%, with Argo shares now trading at a slight discount to their NTA backing. Sharply higher returns from term deposits have decreased the comparative appeal of many equity investments, including listed investment companies (LICs). We expect this trend to reverse as the monetary policy cycle continues and interest rates fall.

What’s next for Argo?

Despite the bullish performance of the ASX stock market over 2024 so far, Argo is approaching the coming year with caution. The company warned that “bullish sentiment has seen investors largely overlook consensus expectations of lower company earnings for the remainder of 2024 and cast aside concerns about slowing growth and/or a monetary policy misstep”.

Argo is also warning investors not to discount geopolitical threats during 2024, including the upcoming US elections. However, the company also argues that “With a strong balance sheet, no debt and cash on hand, Argo is well positioned as we enter the new calendar year”.

Argo share price snapshot

As you can see in the chart above, the Argo share price has struggled in recent months. The company remains down 4.74% over the past year but has gained 1.8% over the last six months.

At the current Argo share price, this ASX LIC has a market capitalisation of $6.84 billion, with a dividend yield of 3.82%.

The post Argo share price falls as profits drop 8% appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Westpac Banking Corp (ASX: WBC) stock is traditionally a popular option on the ASX for passive income.

Each year, the bank shares a good portion of its profits with shareholders in the form of dividends.

But while dividends are great to receive, there’s no point overpaying for them.

After all, if you overpay, you could end up losing more in share price declines than you would from dividends gained.

So, with that in mind, is Westpac stock a buy for ASX passive income? Let’s find out.

Should you buy Westpac stock on the ASX for passive income?

Unfortunately, opinion remains divided on whether Westpac shares are a good option right now.

For example, if we start with the bears, Morgan Stanley put an underweight rating and $21.70 price target on the bank’s shares last week. This implies potential downside of 10% for investors from current levels.

And while the broker is forecasting a $1.44 per share dividend in FY 2024, this attractive fully franked 6% dividend yield won’t fully offset that potential downside.

Over at Macquarie, its analysts currently have an outperform rating on Westpac stock. However, the broker’s price target of $24.00 is broadly in line with where its shares trade today.

Its analysts are forecasting a $1.42 per share dividend in FY 2024, which represents a 5.9% yield.

The bulls

Finally, the bulls at Ord Minnett see both meaningful upside and a generous dividend yield.

The broker has an accumulate rating and $28.00 price target on Westpac’s stock. This implies potential upside of approximately 20% for investors over the next 12 months.

As for passive income for this ASX bank share, its analysts are expecting a $1.45 per share dividend in FY 2024. This equates to a 6% yield at current prices.

The post ASX passive income: Is Westpac stock a buy, sell, or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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