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The Lovisa Holdings Ltd (ASX: LOV) stock price is at one of those age-old junctions in the investment world. Shares in the jewellery chain have moved like a bat out of hell these past six months, giving investors some pause for thought.

Ultimately, the dilemma sits within the million-dollar question… can a company’s shares still be worth buying after a massive rally? It’s a question that toys with the human psyche, breathing life into the psychological bias known as the ‘anchoring effect’. And, of course, no one wants to be caught buying at the top.

Six months ago, Lovisa shares could be purchased for under $18.50. Fast forward to today, Lovisa stock is now perched at $31.23 apiece, rising 70% in half a year.

Does the recent rally prevent Lovisa from being added to my shopping cart? Or is there an argument for buying Lovisa stock in April?

Let’s dive in.

It looks fundamentally expensive

Studying the fundamentals is a good place to start when deciding whether to invest in a company.

When I check Lovisa, there’s no denying it appears expensive. The company’s profits have grown, but not as much as the share price. As such, the price-to-earnings (P/E) ratio has expanded to around 47 times earnings — its highest multiple since March 2022.

Lovisa’s PEG ratio is also at a 52-month high (four years and four months). Essentially, this means investors are paying a hefty premium for a relatively modest expected earnings per share (EPS) growth rate, as shown below.

There’s also the risk of consumer spending taking a whack. February’s retail trade data showed a 4.2% increase month-on-month for the ‘clothing, footwear, and personal accessory retailing’ segment.

However, the strength of the economy is leading some economists to believe interest rate cuts will be delayed until next year. That could mean greater financial pressure on Aussie households towards the end of the year as cash surpluses run dry.

I’d still buy Lovisa stock for its long-term potential

A lot of time and effort is poured into trying to work out when a company’s shares are ‘cheap’ or ‘expensive’. Too much time, in my honest opinion.

And yes, valuation is important to an extent. There is such a thing as paying too much for a stock. But, its importance arguably pales in comparison to the quality of the business and its management. This is a point that legendary investor Terry Smith has made before, stating:

People spend almost their entire effort thinking about whether something’s cheap or expensive or highly rated or lowly rated, which I guess is a better way of expressing it, and far too little deciding whether it’s a high-grade business that they really want to own that can compound in value.

Perhaps Lovisa stock is a little ‘expensive’ right now. At a higher level, though, it remains a quality business with great growth potential as it expands internationally. Whether I buy Lovisa stock at $31, $40, or $20 seems trivial to me when applying a long-term investing lens.

The post Is Lovisa stock a good ASX investment in April? appeared first on The Motley Fool Australia.

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More reading

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• Big returns could be coming for high-flying Lovisa shares

Motley Fool contributor Mitchell Lawler has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. 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 Australian share market is a great place to generate passive income.

And while pulling in $20,000 of passive income each year from ASX shares may seem out of reach, with a combination of time, patience, and capital, it could be possible. In fact, history shows that it has been achievable in the past.

But how would I go about generating this sort of passive income?

How to make $20,000 in passive income with ASX shares

The first step is to put my capital to work with ASX shares.

If I can invest $500 a month into the share market, I could build a substantial portfolio over time.

To begin with, I would focus on growing my portfolio before even considering the passive income side of things.

After all, money in the market will compound over time, growing my portfolio and wealth. Whereas if I take out money in the form of dividends, I’m holding back my portfolio’s growth potential.

With that in mind, I would focus on investing in high-quality companies with long track records, positive growth outlooks and competitive advantages. Any dividends I receive, I would reinvest back into the market.

Many ASX shares offer dividend reinvestment plans (DRPs). These allow shareholders to automatically reinvest their dividends in additional shares, often at a discounted price.

Compounding returns

The next step is to let compounding work its magic and grow my wealth.

Historically, the share market has generated a return of approximately 10% per annum.

It is important to note that there’s no guarantee that this will happen in the future, but I’m going to base my calculations on this figure.

If my portfolio achieved a 10% annual return and I invested $500 a month into ASX shares, in 10 years I would have grown my portfolio to just over $100,000.

It may still be a little too soon for me to start thinking of passive income. Instead, I would carry on doing what I’m doing and continue to build wealth.

For example, if I were to continue investing $500 a month into my portfolio and achieved a 10% per annum return, my portfolio would grow to be worth approximately $400,000 after a further 11 years.

At this point, I can now start thinking about passive income.

Pay day

If I were to rebalance my $400,000 portfolio with a focus on dividends and averaged a yield of 5% across it, then I would pull in $20,000 in passive income each year (and growing).

Overall, I believe this demonstrates that a significant passive income is possible from even relatively modest investments. It just takes a combination of patience, diversification, investing in quality, and consistent reinvestment of dividends.

The post How I would generate $20,000 of passive income from ASX shares each year appeared first on The Motley Fool Australia.

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More reading

• 3 ‘forever’ ASX dividend shares to build your wealth
• 5 ASX 200 shares for trying to build wealth after 50
• Does a 6.5% yield with relative stability sound good? Consider this ASX energy giant
• The best ASX shares to invest $10,000 in right now
• Why is everyone talking about Mesoblast shares?

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 Scott Phillips.

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Recommending high-quality ASX dividend shares that investors can use to reliably build wealth is difficult enough. But putting forward income stocks that investors can conceivably hold ‘forever’ is a formidable task indeed.

But that won’t stop us from discussing this very topic today. So without further ado, here are three ASX dividend shares that I think any investor can hold forever (or at least for the foreseeable future) for relatively consistent dividends and perhaps a bit of growth on the side.

3 ASX dividend shares you can use to build wealth for life

Telstra Group Ltd (ASX: TLS)

Telstra is a company most of us would know and may or may not love. This ASX 200 telco has been on the ASX for decades. I have been impressed with Telstra’s ability to change with the times though.

When it made its ASX debut in the 1990s, Telstra’s primary business was facilitating landline telephony services. But today, Telstra is the largest provider of mobile phone connections in the country with indisputably the best network coverage. It is also the nation’s favourite provider of fixed-line broadband connections.

Whatever communications technology we use in 50 or 100 years time, I’d be willing to bet Telstra will remain the first choice of most Australians. As such, I think Telstra is a great pick for a dividend investment right now. At recent pricing, you can expect a fully franked dividend yield of more than 4.5%.

National Australia Bank Ltd (ASX: NAB)

Next up, we have ASX 200 bank stock NAB. Banks are arguably the most important businesses in the entire economy. And thanks to Australia’s ‘four pillars’ policy, NAB enjoys an entrenched position as one of the largest in the country. Given this has been the status quo for all readers’ lifetimes, I don’t see this changing anytime soon.

As such, I think you can happily buy NAB shares today and hold them for a very long time indeed. Sure, there will be ups and downs, given banks’ inherent cyclicality. But I’d still be happy to ride this out and collect those fat dividends.

Speaking of dividends, like most ASX bank shares, NAB offers substantial dividend income today. At recent pricing, NAB was trading with a fully franked dividend yield of around 4.9%.

Woolworths Group Ltd (ASX: WOW)

Finally, let’s talk about ASX 200 supermarket giant Woolworths. Like Telstra and NAB, Woolies is a household name. Chances are many readers visit a store regularly. Woolworths has enjoyed the lion’s share of the supermarket and grocery market for many years. Given this company’s entrenched presence, I don’t see this changing anytime soon either.

One of the most compelling reasons to own Woolworths shares as a dividend investment is its consumer staples nature. We all need to eat, drink and stock our households regularly.

I don’t see Woolies’ role in helping us do so being disrupted or meaningfully challenged within my lifetime at least. Based on this assessment, I think investors would do well to buy Woolworths shares today if they intend on holding them for life.

Thanks to recent share price drops, the Woolworths share price recently put up a fully-franked dividend yield of around 3.25%.

The post 3 ‘forever’ ASX dividend shares to build your wealth appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 shares could rise 20% to 50%
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• 2 ASX shares I’d buy to quickly add diversification

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank and Telstra Group. 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 Telstra 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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If you want to build wealth, then buy and hold investing with ASX 200 shares could be the answer.

That’s because the longer you are holding shares, the more time you have to benefit from compounding. This is where you generate returns on top of returns, which supercharges your wealth creation.

But which ASX 200 shares could be good options for investors looking to build wealth after 50? Let’s have a look at five options to consider.

ASX 200 shares to buy to build wealth

Firstly, when making buy and hold investments, you will want to look for companies with strong business models and sustainable competitive advantages.

Nothing is guaranteed in investing or business, but generally speaking these companies are the ones that are most likely to not only survive over the long term, but also thrive.

Warren Buffett has had a career of building wealth by investing in companies exhibiting these qualities, so it could pay literally to follow in his footsteps.

ASX 200 shares like biotherapeutics giant CSL Ltd (ASX: CSL), sleep disorder treatment company ResMed Inc (ASX: RMD), and cloud accounting platform provider Xero Ltd (ASX: XRO) are three great options.

All three are leaders in their fields, have talented management teams, operate in markets with high barriers of entry, and spend significant sums on research and development activities to maintain their market leadership.

At present, UBS has a buy rating and $330.00 price target on CSL’s shares, Citi has a buy rating and $34.00 price target on ResMed shares, and Macquarie has an outperform rating and $152.60 price target on Xero’s shares.

Two more shares to consider

A couple more great long-term options to build wealth with could be data centre operator NextDC Ltd (ASX: NXT) and property listings company REA Group Ltd (ASX: REA).

They both appear very well-placed to continue growing at a solid rate long into the future. For NextDC, this is being underpinned by the incredible and growing demand for data centre capacity due to the cloud computing boom.

Whereas for REA Group, its realestate.com.au platform continues to dominate the Australian market. It is now attempting to do the same in other international markets, as well as expand into other areas of the real estate market.

At present, UBS has a buy rating and $20.10 price target on NextDC’s shares, and Morgan Stanley has an overweight rating and $210.00 price target on REA Group’s shares.

The post 5 ASX 200 shares for trying to build wealth after 50 appeared first on The Motley Fool Australia.

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More reading

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• Why are ASX tech shares rebounding strongly on Thursday?
• 3 ASX growth shares to supercharge your investment portfolio returns
• 3 ASX shares boasting better revenue growth than Tesla
• Own CSL shares? You’re receiving a healthy dividend boost today!

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in CSL, Nextdc, ResMed, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Macquarie Group, REA Group, ResMed, and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group, ResMed, and Xero. The Motley Fool Australia has recommended CSL and REA 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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ASX energy giant APA Group (ASX: APA) continues to build its reputation as an ASX dividend share that can provide a stable level of passive income.

APA owns a large portfolio of energy assets around Australia, including a large national gas pipeline that transports around half of the country’s gas usage.

The company has stakes in several other energy-related assets, including gas storage facilities, gas-fired power stations, and renewable energy generation (solar and wind farms). The business also owns a growing number of electricity transmission assets.

When it comes to the ASX energy giant’s payouts, there are two main things I want to tell you about.

Solid distribution yield from the ASX energy giant

APA has one of the most impressive records when it comes to passive income.

Amazingly, the company has grown its distribution every year since 2004. In other words, it has boosted its payout in every annual result across two decades. There’s only one business on the ASX with a longer growth streak than APA.

The company expects to increase its distribution again in FY24 — by 1.8% to 56 cents per security.

Based on the APA share price of $8.53 at the close of trade on Friday, the forecast payout for FY24 equates to a forward distribution yield of 6.5%. That’s comfortably more than a generous term deposit rate from the big ASX bank shares.

Ongoing investments for growth

APA is benefiting from revenue growth largely linked to inflation, so the elevated CPI numbers of the last couple of years have helped boost its revenue.

With its FY24 forecast payout of 56 cents per security, the 1.8% growth reflects “the desire to balance distribution growth with the funding” of its growth ambitions.

The ASX energy giant continues to deploy capital investment in the first half of FY24 to drive longer-term growth and ensure the reliability of its assets. Some of its current growth projects include the East Coast grid expansion, the Kurri Kurri lateral, the Northern Goldfields interconnect, and the western outer ring main (WORM).

On the renewable energy efforts, the construction of the Port Hedland solar farm and BESS (battery energy storage system) project is on track and scheduled for completion in the fourth quarter of the 2024 calendar year.

As a bonus, APA is working on the idea that its pipelines may be able to transport hydrogen in the future, which could future-proof the business if it’s successful with those tests and initiatives.

The post Does a 6.5% yield with relative stability sound good? Consider this ASX energy giant appeared first on The Motley Fool Australia.

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More reading

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• Here’s how the ASX 200 market sectors stacked up last week

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 positions in and has recommended Apa 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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Choosing the right ASX shares can lead to pleasing capital growth over the long term, as well as a bit of passive income.

Share prices change every day, so the market presents us with different opportunities to buy (or sell). When I look for my next investment, I’m seeking a company that looks undervalued today and has the potential to grow its operations/profit for a long time to come.

The three investments below are among my top ASX share ideas right now, with a five-year timeframe in mind.

Brickworks Limited (ASX: BKW)

Brickworks is a leading Australian building products business, with brands like Austral Bricks, Austral Masonry and Bristle Roofing. Australia’s strong population growth could help drive demand for building products over the rest of the decade.

What excites me the most about this ASX share is its asset base, which was worth $5.6 billion as of 31 January 2024, compared to Brickworks’ current market capitalisation of roughly $4.25 billion.

A majority of that $5.6 billion is substantial ownership of the diversified investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). This has provided Brickworks with dividend growth and a rising share price over the decades (albeit with volatility).

Brickworks also owns a lot of land assets, including a 50% share of an industrial property trust. There is significant demand for logistics buildings in metropolitan locations, which is helping encourage Brickworks and its joint venture partner to build multiple industrial estates and plan for more. The large tenant demand for large warehouses can help drive organic rental increases in the coming years.

In my opinion, the market is undervaluing the potential cash flow growth of Brickworks’ assets.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This is an exchange-traded fund (ETF), not an individual company, but it trades on the ASX and I think it’s great, so I’m including it in my ‘best ASX shares’ list.

This ETF invests in United States businesses that it thinks have wide economic moats. What’s a moat? In the investing world, it means having competitive advantages compared to other businesses that want to ‘invade’ your company’s castle. Moats that stop competitors can be things like brand power, cost advantages, patents and switching costs for customers.

The investment analysts at Morningstar have judged that the businesses within the MOAT ETF’s portfolio have competitive advantages that are almost certain to endure for the next 10 years and more likely than not to endure for the next 20 years.

On the valuation side, shares are only bought for the portfolio if the analysts think the business is priced attractively compared to what they think it’s actually worth.

Thanks to the investment strategy, this ETF’s net returns have been pleasing over the long term, though past performance is not a reliable indicator of future returns, particularly in the short term (such as the next 12 months).

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng is an ASX share that specialises in building and restoring properties and contents after an insured event, such as a fire, storm or flooding.

The core business is growing strongly — the FY24 half-year result saw its normalised ‘business as usual’ (BAU) net profit after tax (NPAT) grow by 15.8% to $25 million. I think that’s a good growth rate that can help send the Johns Lyng share price higher if underlying profit keeps rising in the double digits.

It also has growing exposure to catastrophe events. The company said catastrophes in the US and Australia were “growing in size and duration”, giving the company work that is multi-year in nature. In its HY24 result, the ASX share outlined the potential of its catastrophe earnings to keep growing:            

While CAT events are innately unpredictable, JLG’s strong relationships with insurers and Governments, along with its growing geographical footprint, means it expects this segment to continue to expand in future periods.

The post The best ASX shares to invest $10,000 in right now appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in April 2024
• 4 ASX All Ords shares with ex-dividend dates next week
• 3 of the best ASX ETFs to buy now
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Motley Fool contributor Tristan Harrison has positions in Brickworks, Johns Lyng 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, Johns Lyng Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Johns Lyng Group and VanEck Morningstar Wide Moat ETF. 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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Mesoblast Ltd (ASX: MSB) shares have certainly been garnering plenty of attention of late.

That’s come amid some astonishing recent daily share price moves for the ASX biotech company.

How astonishing?

I’m glad you asked!

On 26 March Mesoblast shares closed the day up an eye-popping 45.5% to close at 48 cents apiece, having reached intraday highs of 52 cents.

But ASX investors weren’t done yet.

The next day the biotech stock gained 3.1% followed by a 12.1% gain on 28 March, to close out last month on a bang.

And if you think those are some big moves, then you must not have been watching the boards on Tuesday, 2 April, when the ASX re-opened following the four-day Easter holiday break.

Any guesses on how much Mesoblast shares gained on Tuesday?

I won’t leave you hanging.

The biotech stock rocketed an astounding 71.2% on the first trading day of April, closing the day at 95 cents apiece, with intraday prices as high as 96 cents!

I told you the moves were astonishing.

Now Mesoblast has since given back some of those gains, with the stock closing Friday trading for 86.5 cents a share.

Still, it was only back on 21 March that shares were trading for 33 cents.

Here’s what’s been stoking ASX investor enthusiasm.

Mesoblast shares draw major attention

The initial 45.5% blast-off for Mesoblast shares on 26 March came after the company announced some promising communications with the US Food and Drug Administration (FDA).

The communications in question involved the company’s remestemcel-L treatment. This medicine is being developed to treat inflammatory diseases in children and adults. That includes steroid-refractory acute graft versus host disease and biologic-resistant inflammatory bowel disease.

ASX investors were clearly enthused after learning the FDA had examined the additional clinical data from Mesoblast’s phase 3 study. The FDA said the clinical results appeared to be sufficient to support the submission of the company’s proposed Biologics License Application (BLA) remestemcel-L medicine to treat paediatric patients with steroid-refractory acute graft versus host disease.

CEO Silviu Itescu was clearly pleased with the development that was sending Mesoblast shares through the roof.

“We thank the agency for their collaborative approach,” he said on the day.

Itescu added, “The responses and guidance from FDA are clear and provide us with a high level of confidence to refile our BLA for remestemcel-L in children with SR-aGVHD.”

With the company saying it intends to file the resubmission in the next quarter, enthusiasm appears to have lifted off again following the Easter break, with investors piling back into Mesoblast shares on Tuesday.

Stay tuned!

The post Why is everyone talking about Mesoblast shares? appeared first on The Motley Fool Australia.

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More reading

• Why the Mesoblast share price can rise another 60%
• Brokers name 3 ASX shares to buy now
• Why Mesoblast, Regis Resources, Westgold, and WiseTech shares are sinking today
• Mesoblast share price dumps 10% as excitement simmers on FDA submission
• Why Austal, Mesoblast, Novonix, and Paladin Energy shares are racing higher

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 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 Scott Phillips.

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If you are on the lookout for big returns to supercharge your investment portfolio, then you may want to take a look at the ASX 200 shares listed below.

They have all recently been named as buys by brokers and tipped to rise between 20% and 50% from current levels. Here’s what you need to know about them:

Orora Ltd (ASX: ORA)

This packaging company’s shares were sold off last week following the release of a disappointing market update. While analysts at Goldman Sachs were equally disappointed with the update, they believe it is worth sticking with Orora and see huge value in its shares at current levels.

Goldman Sachs currently has a buy rating and $3.00 price target on the ASX 200 share. This implies potential upside of 36% for investors over the next 12 months.

And with the broker also expecting 5%+ dividend yields through to at least FY 2026, the total 12-month potential return stretches beyond 40%.

Qantas Airways Limited (ASX: QAN)

This airline operator’s shares have lost almost 20% of their value over the last 12 months. This is despite the Flying Kangaroo delivering huge profits in FY 2023 and so far in FY 2024.

While this is disappointing for shareholders, a number of analysts think it is a compelling buying opportunity for the rest of us.

For example, the team at Morgan Stanley currently has an overweight rating and lofty $8.00 price target on the ASX 200 share. If this recommendation proves accurate, it will mean a return of almost 50% for investors between now and this time next year.

Another positive to consider is that a few brokers believe that Qantas could resume its dividend payments in the near future. Macquarie, which has an outperform rating and $6.00 price target, has pencilled in a 34 cents per share dividend in FY 2025. This represents a very generous 6.25% dividend yield at current prices.

Telstra Group Ltd (ASX: TLS)

You don’t generally think of this telco giant as being an ASX 200 share that can generate market-beating returns. But a number of analysts think its shares are seriously undervalued at current levels.

One of those is Morgan Stanley. In response to its half year results in February, the broker put an overweight rating and $4.75 price target on its shares. This suggests potential upside of 24% for investors before dividends and almost 29% including them.

The post These ASX 200 shares could rise 20% to 50% appeared first on The Motley Fool Australia.

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More reading

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• 3 lower-risk, high-yield ASX dividend shares to consider buying now
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• Top brokers name 3 ASX shares to buy today
• 2 ASX shares I’d buy to quickly add diversification

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 positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool Australia has recommended Orora. 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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Here’s a question for you: If money doesn’t bring happiness, what does?

A snapshot of the latest World Happiness Report may provide some clues.

For the seventh year running, Finland topped the list as the world’s happiest country, with fellow Nordic nations Denmark, Sweden, and Iceland all landing within the top five spots.

Australia snagged the tenth possie, easily beating the Brits (who placed 20th) and the Americans (who only managed a miserable 23rd on the list), based on overall merriness metrics.

According to a University of Helsinki academic and happiness researcher, two key factors helping to produce all those grinning Finns are a close connection to nature and a healthy work-life balance. Other contributors include a strong sense of trust, freedom, and society.

Interestingly, the report also revealed that older Aussies reported feeling much happier than those under the age of 30.

So, what does all this have to do with investing?

Well… these findings suggest that perhaps the path to happiness could hinge on money after all! That is, not money itself — but having the financial freedom to work less and spend more time doing the things that bring us joy.

And, for many Australians, a regular passive income stream from ASX dividend shares helps make this freedom a reality far sooner.

Happily, our Foolish writers have plenty of ideas on which ASX dividend shares they reckon will lead to investor smiles — and extra income — over the long term.

Here are their ASX dividend stock picks for April:

5 best ASX dividend shares for April 2024 (smallest to largest)

• Smartgroup Corporation Ltd (ASX: SIQ), $1.28 billion
• Brickworks Limited (ASX: BKW) $4.23 billion
• Metcash Ltd (ASX: MTS), $4.25 billion
• Yancoal Australia Ltd (ASX: YAL), $6.93 billion
• Rio Tinto Ltd (ASX: RIO), $44.75 billion

(Market capitalisations as of market close 5 April 2024).

Why our Foolish writers love these ASX passive income stocks

Smartgroup Corporation Ltd

What it does: Smartgroup provides a complete range of administrative and workforce optimisation services to Australian government and non-government customers. The company’s three key product lines are salary packages, novated leases, and fleet-managed vehicles.

By Mitchell Lawler: Salary packaging and other employee administrative services play an important role in many businesses. However, the time and expertise involved means they are often tasks better suited to being outsourced to providers such as Smartgroup. 

More recently, the government’s electric vehicle fringe benefits tax (FBT) exemption has spurred an increased interest in novated leasing of EVs, as the benefits under a salary packaging arrangement are included in this exemption. 

Smartgroup’s customer growth suggests its service offering resonates with customers. The company is also operating on a highly profitable net income margin (NIM) of 24.6%. That allows Smartgroup to pay a generous dividend yield of 4.9% when including the last special dividend payment. 

Motley Fool contributor Mitchell Lawler owns shares of Smartgroup Corporation Ltd.

Brickworks Limited

What it does: Brickworks is Australia’s largest brickmaker and also owns other building product brands, including Bristle Roofing and Austral Masonry. The company has a large investment stake in Washington H Soul Pattinson & Company Limited (ASX: SOL) and a significant property portfolio.

By Tristan Harrison: Brickworks shares have recently seen a pullback, which makes me think right now is an appealing time to look at the business.

In a recent announcement regarding the departure of its managing director, Brickworks revealed its asset base was $6 billion as at 31 March 2024. The current Brickworks market cap of around $4.23 billion is, therefore, sitting at a discount of more than 25% to this, which makes the stock look like a bargain to me.

While Brickworks is a quality building products manufacturer, it’s the Soul Patts shares and property assets that appeal to me the most.

In addition, Brickworks owns a 50% stake in an industrial property trust which is constructing very large warehouses on surplus, wholly-owned land that the company no longer needs, creating ongoing rental income from tenants like Amazon.  

Brickworks hasn’t cut its annual dividend since 1976 and has a current grossed-up dividend yield of 3.2%.

Motley Fool contributor Tristan Harrison owns shares of Brickworks Limited and Washington H Soul Pattinson & Company Limited.

Metcash Ltd

What it does: Metcash is the company behind several grocery and hardware chains, including IGA, Mitre 10, and Home. It has been on the ASX for decades and has paid hefty dividends along the way.

By Sebastian Bowen: Metcash might be a great option to consider if you’re searching for a source of substantial but reliable dividend income this April. Metcash’s exposure to both the hardware and grocery sectors gives this company a stable and diversified earnings base, which is great news for dividend investors. 

This company may not be growing at a fast clip, having reported revenue growth of just 1.6% in its last half-yearly earnings report that we saw back in December. But it has managed to decisively — if a little haphazardly — increase its dividends over the past decade. Today, it offers a fully-franked dividend yield well north of 5.5%. 

Given this company has a proven ability to maintain and even raise its dividends and franking credits during economic maladies such as surging inflation and the pandemic, I think Metcash is a dividend stock any investor can feel comfortable owning as part of a diversified income portfolio. 

Motley Fool contributor Sebastian Bowen does not own shares of Metcash Ltd.

Yancoal Australia Ltd

What it does: Yancoal is an Australian coal miner. The company has a range of high-quality mining assets across New South Wales, Queensland, and Western Australia. Yancoal digs up and processes a diversified mix of metallurgical and thermal coal.

By Bernd Struben: Like it or not, the death of coal appears to have been announced prematurely.

While coal prices have come down from the record levels we saw in 2022, coal is still trading well above historic levels — and well above the price Yancoal needs to turn a handsome profit. Furthermore, with the world’s most populous nations, China and India, continuing to roll out new coal-fired power stations, I believe prices will be supported amid limited global supply growth.

Despite a 39% decrease in its realised coal price in calendar year 2023, Yancoal still raked in revenue of $7.8 billion on the back of a 14% increase in attributable saleable coal production. The company closed out the year with a $1.4 billion cash balance.

As for that passive income, Yancoal paid out 69.5 cents per share in fully franked dividends over the past 12 months. Based on the Yancoal share price of $5.25 at Friday’s close, that equates to a trailing yield of 13.24%.

Motley Fool contributor Bernd Struben does not own shares of Yancoal Australia Ltd.

Rio Tinto Ltd

What it does: Rio Tinto is one of the world’s largest miners. Its portfolio includes iron ore, copper, aluminium and a range of other minerals and materials needed for the world to cut carbon emissions to net zero.

By James Mickleboro: If you’re not averse to investing in the mining sector, then I think it would be worth considering Rio Tinto shares.

While commodity prices will inevitably fluctuate, most analysts agree that the coming years are looking favourable for the key metals and minerals that Rio Tinto mines. This is particularly the case for copper, which is tipped to experience a supply crunch in the near future.

This couldn’t have come at a better time for Rio Tinto. Analysts at Goldman Sachs recently noted that “Rio is a FCF [free cash flow] and production growth story in our view, with forecast Cu Eq [copper equivalent] production growth of ~5-6% in 2024 & 2025 driven by the ramp-up of the Oyu Tolgoi UG copper mine & a recovery at Escondida and Bingham”.

The broker expects this to underpin fully franked dividend yields of approximately 5.5% in FY 2024 and 5.7% in FY 2025. Its analysts, with their buy rating and $140.20 price target, also see room for this ASX dividend share to climb from current levels.

Motley Fool contributor James Mickleboro does not own shares of Rio Tinto Ltd.

The post Top ASX dividend shares to buy in April 2024 appeared first on The Motley Fool Australia.

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More reading

• Rio Tinto share price slips amid an unrelenting ESG grilling
• 4 ASX All Ords shares with ex-dividend dates next week
• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices
• 5 things to watch on the ASX 200 on Friday
• Why is everyone talking about Rio Tinto stock on Thursday?

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Brickworks, Goldman Sachs Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Smartgroup, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Amazon and Metcash. 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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Given how low the Australian pension is, if you are aiming for a comfortable retirement, you will undoubtedly want to finish your career with as much superannuation as possible.

But given that most people understandably don’t talk about their superannuation balances with their friends and colleagues, it can be difficult to know how you compare to the average person and whether you are on course to retire wealthy or not.

Knowing your balance and where you stand compared to your retirement goals is very important. That’s because if you have fallen behind the curve, you have time to make extra contributions to hit your target.

For example, if you have recently turned 50, you currently have 17 years until you hit retirement age. Thanks to the power of compounding, that’s more than enough time to generate significant wealth from ASX shares.

But what is the average Australian superannuation balance at age 50 in 2024? Let’s take a look at what the data shows.

The average Australian superannuation balance at age 50 in 2024

Well, firstly, the data for 2024 is not yet available, but it’s safe to say that the numbers won’t have changed much since the last data release.

According to the nation’s largest super fund, AustralianSuper, the average superannuation balance for women aged 50-54 in 2023 was $191,400. For men aged 50-54, the average balance stood at $289,900.

Though, it is worth noting that this is the average across the 50-54 years old range. It is probable that most 50-year-olds will have superannuation balances below the average of this group.

Nevertheless, let’s imagine that we can compound these figures by 9% per annum for 17 years and add $750 a month to the balances. What will we end up with?

For women aged 50, their superannuation balance would grow to $1,177,081 by the time they are 67. And for men aged 50, their balance would become $1,603,352.

Is this good?

The good news is that these figures are at the comfortable side of retirement life.

For example, financial services company AMP Ltd (ASX: AMP) estimates that a single retiree needs to have $1.25 million in their superannuation to fund a “comfortable retirement.” This allows for $50,207 in annual expenses using only their superannuation.

Whereas for a “modest retirement,” a single retiree would need $795,000 for $31,867 per annum expenses.

What if you’re behind the curve?

If you’re behind the curve with your superannuation balance, the best thing to do is to make extra contributions wherever possible.

For example, if you were 50 years old with a superannuation balance of $150,000, if your balance compounds 9% per annum, you could grow your superannuation to $1.2 million in 17 years by adding $1,200 to it monthly.

The key is to understand your balance and your goals, and what you need to do now to achieve the latter.

The post Here’s the average Australian superannuation balance at age 50 in 2024 appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Rio Tinto share price slips amid an unrelenting ESG grilling
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• Brokers name 3 ASX shares to buy now

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 Scott Phillips.

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