Tag: Motley Fool

AGL Energy Limited (ASX: AGL) shares are traditionally a popular option for income investors.

That’s because each year, the integrated energy giant shares a portion of its profits with shareholders in the form of dividends.

For example, over the last decade, AGL has paid out a total of $7.50 per share to loyal investors.

That’s almost as much as the current AGL share price of $8.74!

But those dividends are long gone now. What about the future? Let’s see what investors can expect from AGL’s shares in the near term.

What sort of dividends are expected from AGL shares?

The good news for investors is that the team at Macquarie believes the company will be in a position to pay some big dividends in the near term.

In FY 2024, for example, the broker is forecasting a 53 cents per share dividend. Based on the current AGL share price, this equates to a 6.1% dividend yield.

And while its analysts suspect that a slight dividend cut is coming in FY 2025, another generous yield is still expected.

It has pencilled in a dividend of 49 cents per share for that financial year. If this proves accurate, it would mean a 5.6% yield for investors.

Are its shares good value?

As well as big yields, the broker sees major upside for AGL’s shares over the next 12 months.

According to the note, the broker has an outperform rating and $10.89 price target on its shares.

This suggests that its shares could rise almost 25% from current levels. And combined with its forecast 6.1% dividend yield, a total 12-month return of approximately 31% could be on the cards for investors buying AGL shares at current levels.

The post Buying AGL shares? Here’s much you could receive in dividends in 2024 appeared first on The Motley Fool Australia.

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More reading

• ‘Oversold’: 2 beaten-up ASX 200 shares ready to be given a fair go
• The 2023 AGL share price return was double the ASX 200
• The No. 1 ASX 200 shares of each market sector in 2023

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 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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Looking for big dividend yields? If you are, then it could be worth checking out the ASX dividend shares listed below.

Here’s what analysts are forecasting for them:

Dexus Convenience Retail REIT (ASX: DXC)

The first ASX dividend share that has been tipped to provide investors with big yields is the Dexus Convenience Retail REIT. It is a convenience retail and service station property company.

Bell Potter likes the company due to its attractive valuation and strong tenant base. It explains:

DXC is a convenience retail / service station REIT with a network of over 100 assets across the country predominantly leased to institutional and strong covenant tenants including Chevron, Viva, EG, Mobil and 7-Eleven. DXC trades at a circa 34% discount to stated NTA which we think is overly punitive for a sub-sector where there is clear price discovery (double digit number of asset sales for DXC at a blended 2-3% discount to book, and 65 market transactions in FY23), and investors for commercial real estate have a clear preference for smaller cheque size assets.

As for income, the broker is forecasting dividends per share of 20.9 cents in FY 2024 and 20.5 cents in FY 2025. Based on its current share price of $2.54, this equates to yields of 8.2% and 8.1%, respectively.

Bell Potter has a buy rating and $2.85 price target on its shares.

Transurban Group (ASX: TCL)

Another ASX dividend share that could offer generous yields in the coming years is toll road giant Transurban.

Citi is a fan of the CityLink and Cross City Tunnel owner. In fact, it suspects that things could be going better than expected and sees scope for dividends ahead of guidance. It said:

We believe TCL’s FY24 DPS guidance of 62c is conservative and we forecast DPS of 63.4c given strong toll price growth, traffic growth on new road completions and a slower increase in debt costs in FY24 given a small proportion (c. 3%) of the debt book is maturing this year TCL is currently trading in-line with historic EV/EBITDA multiples at 22.5x, but we see upside given the strong EBITDA growth outlook (c.12% CAGR between Fy24-FY26). Retain Buy

Citi is forecasting dividends per share of 63 cents in FY 2024 and then 65 cents in FY 2025. Based on the current Transurban share price of $13.06, this will mean yields of 4.8% and 5%, respectively.

The broker currently has a buy rating and $15.90 price target on its shares.

The post Buy these quality ASX dividend shares with 5%+ yields appeared first on The Motley Fool Australia.

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More reading

• These ASX 300 dividend shares offer major upside and good yields
• 2 ASX dividend shares with juicy yields to buy right now
• Leading brokers name 3 ASX shares to buy today
• Forget savings accounts and buy these ASX dividend shares
• Why 29Metals, Alumina, Beach Energy, and Worley shares are falling today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Transurban Group. 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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At The Motley Fool, we’re all about long-term investing.

However, it’s fun to see how certain stocks rocket overnight from time to time.

It demonstrates how a massive winner can carry your portfolio, even if your other stocks are growing at a pedestrian rate.

Pocketing $5,800 in just one month

Take Boss Energy Ltd (ASX: BOE), for example.

The uranium producer has ridden a boom in the nuclear fuel sector, with the stock price soaring more than 29% over the past month.

So if you bought $20,000 of Boss Energy shares a month ago, they would now be worth $25,800.

That’s a $5,800 profit in just 31 days!

Over the past year, the Boss share price has gained an amazing 137%.

That’s more than double in just 12 months.

Sure beats a term deposit.

Plenty more upside for Boss Energy shares

Many professional investors are bullish on uranium and ASX uranium shares at the moment.

A stunning announcement recently from the world’s biggest miner of the nuclear fuel certainly helped.

Kazakhstan’s National Atomic Company Kazatomprom Joint Stock Company (FRA: 0ZQ) last weekend downgraded its 2024 production forecasts because of a shortage in the supply of sulphuric acid.

Sulphuric acid is an essential ingredient in the processing of uranium.

There ain’t no bull market like a #uranium bull market.

If cameco cuts too it could get crazy. $CCJ $KAP pic.twitter.com/BPlmABqswe

— Gigi Penna (@giginator_) January 15, 2024

https://platform.twitter.com/widgets.js

Former earth sciences researcher and current analyst John Quakes said on X that the news was a rock thrown into waters of the global nuclear sector.

“And now we watch the ripples spread across the world.

“Every other producer, trader and nuclear utility affected by the ‘potential’ for missed deliveries will now be actively seeking out spot lbs to hedge against that possible outcome, which will then translate into far higher spot U3O8 prices as a bidding war erupts.”

According to CMC Invest, five out of the six analysts that currently study Boss Energy shares rate them as a strong buy.

The post If I’d invested $20,000 in Boss Energy shares one month ago here’s what I’d have today appeared first on The Motley Fool Australia.

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More reading

• Would I be crazy to buy Boss Energy shares at $5.50?
• Here are the top 10 ASX 200 shares today
• The shocking admission catapulting ASX uranium shares to record highs today
• ASX uranium shares crack new highs AGAIN as spot price flies past US$100 per pound
• Why Boss Energy, Core Lithium, Pinnacle, and Syrah shares are rising 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 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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The Fortescue Ltd (ASX: FMG) share price has had a fascinating last six months, surging by 21%. 2024 could be the biggest year for the ASX resources share for multiple reasons.

Today, I’m going to look at how things might unfold.

Iron ore price volatility

The Fortescue share price has benefited from the strength of the iron ore price over the last few months, rising to US$140 per tonne. It’s currently sitting at around US$130 per tonne.

There are many positives and negatives facing the iron price in relation to China. The Chinese government has added a number of stimulus measures to try to boost its economy.

But, the economy is still not firing on all cylinders. According to Trading Economics, new home prices in China “sank at the sharpest pace since 2015, stretching the declining momentum to the sixth month and underscoring the slump in property demand in the country”.

Trading Economics added:

… uncertainty over demand for construction materials in the year ahead tempered iron ore demand from steel mills and countered added buying activity in their usual restocking season.

Market players noted that robust portside iron ore inventories limited new purchasing demand from steel mills as the sector struggles with decreasing margins, contributing to the downturn.”

The profit Fortescue generates from iron ore funds its green energy division and pays for the company’s generous dividends. So its fortunes with this resource in 2024 will influence the company and the Fortescue share price.

In addition, the new high-grade project Iron Bridge is ramping up in 2024, so it will need to start justifying the money spent on it this year.

Green energy decisions

Fortescue has already committed hundreds of millions of dollars to its green energy ambitions, and 2024 might be a pivotal year. It’s starting to make final investment decisions on projects it wants to work on in the US.

This is important – is it now making some tangible progress on diversifying its future operations? Or are hundreds of millions of dollars going up in smoke?

The decision to focus efforts on the US may also be misguided if Donald Trump wins the US election in 2024. He has committed to cut spending on clean energy projects and perhaps withdraw from the Paris agreement.

Financing will also be a key factor this year. Fortescue has flagged the option of bringing external investors into its green energy projects. How successful it is with this endeavour in 2024 (and subsequent years) may well dictate whether the company is able to achieve its lofty goals of delivering all green energy projects or not.

Fortescue share price snapshot

In the past year, the Fortescue share price has surged by around 20%.

The post 2024 could be the biggest year in history for the Fortescue share price. Here’s why! appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares I think are ready for dividend hikes in 2024
• Top broker Citi lifts its Fortescue share price forecast
• How do Pilbara Minerals, Fortescue and BHP shares compare on FY24 dividend forecasts?
• Which had the better year in 2023: Pilbara Minerals, BHP or Fortescue shares?
• ‘Strong commodity cycle’: 2 ASX 200 iron ore shares to buy now

Motley Fool contributor Tristan Harrison has positions in Fortescue. 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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped into the red. The benchmark index fell 0.6% to 7,346.5 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set to end the week on a very positive note following a good night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 55 points or 0.75% higher this morning. In late trade on Wall Street, the Dow Jones is up 0.4%, the S&P 500 is up 0.75%, and the NASDAQ is up 1.25%.

Oil prices jump

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a good finish to the week after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 2.2% to US$74.13 a barrel and the Brent crude oil price is up 1.6% to US$79.13 a barrel. Traders were buying oil after the International Energy Agency forecast strong growth in global oil demand.

BHP is a buy

Goldman Sachs believes that BHP Group Ltd (ASX: BHP) shares are in the buy zone despite a slightly weaker than expected quarterly update. In response to the update, the broker has retained its buy rating with a $49.40 price target. It said: “BHP reported a slightly weaker than expected Dec Q with copper and met coal production -6%/-9% vs. GSe but iron ore production/shipments of 72.7/70.3Mt were in-line with GSe.”

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a good day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.7% to US$2,021 an ounce. Middle East tensions boosted demand for the safe haven asset.

Suncorp remains a buy

Suncorp Group Ltd (ASX: SUN) shares remain a buy according to Goldman Sachs. The broker has been running the rule over the insurance giant ahead of the release of its half year results next month and likes what it sees. As a result, it has retained its buy rating with a trimmed price target of $15.00. It said: “While the bank trends have seen some pressure, the trajectory for margins in the general insurance business remain strong and should see a strong 2H24 benefit / skew from positive rate v inflation jaws and with SUN operating in its target 10-12% range.”

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• These ASX 200 shares just hit new 52-week highs
• Why these two headwinds are dragging down the ASX 200 today
• BHP shares tumble after missing expectations in second quarter
• ASX 200 shares: A once-a-decade opportunity to get rich?

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. 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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You might be sick of hearing it, but that doesn’t make it any less true.

The best way to grow your wealth is to invest in ASX shares for the long term.

Those who chase short-term profits might receive a windfall now and then — but overall, the chances of success are slim.

That’s because no one — read no one — has the ability to deliberately time the market.

In contrast, those investors who have the patience to buy quality stocks and then let them brew for a few years are giving themselves a much better chance of making sustainable returns.

So for those readers who are genuinely in it for the long haul, here are three S&P/ASX 200 Index (ASX: XJO) stocks that the team at ECP Growth Companies Fund are backing:

ASX 200 player boasting ‘global scale and multi-destination footprint’

IDP Education Ltd (ASX: IEL) is a classic example of a stock facing short-term troubles, but could be rewarding for investors who can fight on.

The shares are now trading 11% lower than it was in early December. They have sunk 35% if you go back to last February as the starting point.

“IDP Education underperformed as the market digested changes to Australian migration rules and a change in CFO,” the ECP team said in a memo to clients.

“While both of these have been well flagged and are not unexpected, they do represent developments for IDP to address in the near term.”

However, the analysts are not concerned about the impact of these developments for the long-term outlook for the education services business.

“The Australian government has communicated that its changes to migration settings are aimed at addressing non-genuine students and improving the quality of educational institutions servicing this market.

“While these changes may affect student volumes in the short-term, the impact to IDP Education is limited given the company’s global scale and multi-destination footprint.”

The money is rolling in for this mob

GQG Partners Inc (ASX: GQG) shares have been going the opposite direction to IDP in recent weeks.

The investment management company has enjoyed an awesome 33% rise in its stock price since 9 November.

The ECP analysts attributed this to the flows of investment capital and a general bullishness in equity markets. 

“GQG’s business continues to perform to expectations, with consistent positive monthly net flows from higher fee channels and strong fund performance across all products on a rolling three-year time-frame.”

The state of the business provides much assurance for long-term investors.

“This consistent alpha generation gives us confidence GQG can continue to sustain flows as it moves toward utilising its significant fund capacity.”

A rejuvenated ASX 200 stock

Payments technology provider Block Inc CDI (ASX: SQ2) has returned with a vengeance to the winners’ club after some ordinary stock performance since its ASX listing in early 2022.

Since the start of November, Block shares have gained a phenomenal 63%.

Although it is experiencing a 13% dip so far this year, the ECP team’s faith is on show as the third largest holding in the portfolio.

The company is back in the good books with investors because of its new attitude towards expenses and cash flow.

“Block Inc outperformed in December following the release of its 3Q23 result the month prior, which exceeded investor expectations with respect to future cost discipline, and strong messaging about internal personnel productivity,” read the ECP memo.

“The result is an expectation of faster operating leverage to emerge across business units, with a plan to hit Block’s ‘rule of 40’ in 2026.”

The post ‘Consistent alpha generation’: 3 ASX 200 shares sitting pretty for the long run appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Buy this dirt cheap ASX 200 share with huge upside potential
• 5 things to watch on the ASX 200 on Wednesday
• These ASX 200 growth shares can rise ~30% to 55%
• ‘Exceeding expectations’: 3 rocketing ASX shares you better buy before they rise even more

Motley Fool contributor Tony Yoo has positions in Block. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block and Idp Education. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Idp Education. 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 Vanguard Australian Shares Index ETF (ASX: VAS) is an exchange-traded fund (ETF) that focuses on the S&P/ASX 300 Index (ASX: XKO), representing 300 of the biggest businesses on the ASX. Can the VAS ETF, the biggest ETF in terms of fund size, be a good option for ASX growth investors?

There are two main ways for investors to make investment returns: dividends and capital growth.

Some companies don’t pay any dividends at all, so any returns from those businesses need to come from share price increases. Names like Xero Limited (ASX: XRO), Berkshire Hathaway, Alphabet, Amazon.com come to mind.

A company can see its share price rise over time and deliver dividends, such as Sonic Healthcare Ltd (ASX: SHL), Altium Limited (ASX: ALU) and Brickworks Limited (ASX: BKW).

Can Vanguard Australian Shares Index ETF (VAS) fit the bill for ASX growth share investors?

The performance of the VAS ETF simply tracks the performance of its underlying holdings. The bigger the allocation to a holding, the more influence it has over the VAS ETF’s performance.

Looking at the biggest positions in the portfolio, these are the ones with a weighting of more than 3% as of 31 December 2023:

• BHP Group Ltd (ASX: BHP) – 11%
• Commonwealth Bank of Australia (ASX: CBA) – 8.1%
• CSL Ltd (ASX: CSL) – 6%
• National Australia Bank Ltd (ASX: NAB) – 4.1%
• Westpac Banking Corp (ASX: WBC) – 3.5%
• ANZ Group Holdings Ltd (ASX: ANZ) – 3.5%

As we can see, mining and banking are two key sectors for the ASX.

The tricky thing is that they’re such huge businesses in market capitalisation terms that it becomes very difficult to keep delivering growth. It’s much easier to double a $1 billion business to $2 billion than it is to go from $100 billion to $200 billion.

The big four ASX bank shares have a huge market share, and I’m not sure they can grow profit at a solid compounding rate from here, considering there is so much competition in the lending space willing to accept very low returns. However, they continue to pay big dividends.

BHP (and other ASX mining shares) in the VAS ETF are highly reliant on good commodity prices to make good profit. Commodity prices don’t keep increasing year after year – they usually go through cycles. Miners can increase their production, but it’s unsustainable to think the resource business can keep producing more and more. If production does keep rising, it could hurt the commodity price.

My point is that the ASX is full of the sorts of companies that aren’t likely to see strong profit growth year after year. Investors usually judge a business based on how much profit it’s making, so the share price isn’t likely to rise strongly if the profit isn’t rising.

There are some businesses within the VAS ETF that are doing better at growing profit, such as CSL, Aristocrat Leisure Limited (ASX: ALL) and WiseTech Global Ltd (ASX: WTC). But, they don’t have as much influence on the VAS ETF as BHP and the ASX bank shares.

Past performance

ASX growth share investors need to know that while the VAS ETF has delivered an average return per annum of around 10% over the past five years, its capital growth has been 5.6% per annum. In the past decade, the total return has been an average per annum of 7.8%, which included capital growth of 3.3% per annum.

I think the VAS ETF can keep increasing value, but it’s not going to shoot the lights out when it comes to capital growth. I’d rather go for an ASX ETF that’s focused on the global share market, such as Vanguard MSCI Index International Shares ETF (ASX: VGS).

The post Should ASX growth investors buy the Vanguard Australian Shares Index ETF (VAS)? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 shares: A once-a-decade opportunity to get rich?
• Top ASX shares for beginner investors to buy in 2024
• Is it too late to buy Vanguard Australian Shares Index ETF (VAS) near a 52-week high?
• Own Vanguard Australian Shares Index ETF (VAS) units? It had a very good 2023
• Is this a good time to buy the Vanguard Australian Shares Index ETF (VAS) for 2024?

Motley Fool contributor Tristan Harrison has positions in Altium and Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Brickworks, CSL, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Brickworks, WiseTech Global, and Xero. The Motley Fool Australia has recommended CSL, Sonic Healthcare, and Vanguard Msci Index International Shares 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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If thinking about your retirement puts you in a panic, research shows you are not alone. According to State Street Global Advisors, only 20% of Australians surveyed expect to have enough saved to fund their desired lifestyle post-work.

Unfortunately, the despairing result is down from 25% in 2022. When asked about the cause for concern, 73% of Aussies named inflation and cost of living as the negative influences detracting from a more optimistic outlook.

However, I think a comfortable retirement is within reach of most people by leveraging a simple portfolio.

My $150 per week plan to confidently retire at 60

I’ll be using my circumstances throughout. However, anyone can adapt to their age by using an online compound interest calculator, such as Moneysmart’s, to change the timeline.

For me, I’m working on 32 years of compounding before turning 60 years old. Don’t be discouraged if you are much closer to 60. Heck, even if you’re 60, there’s no harm in starting now to build some financial cushion by 70.

The most important part of my plan is finding $150 per week, every week, to invest for the next 32 years. For some, this might be possible from their day-to-day income. Although, if I was short on cash — for whatever reason — there are plenty of ways to make $150 in a day.

My top pick at the moment is mowing lawns. It’s pretty straightforward work, using readily available tools, and can pay $55 per hour on average. Doing some extra work may not sound appealing, but if it means a comfortable retirement, I’m up for it.

I’d start by investing an upfront $10,000 accumulated through savings over the years. Approximately 70% would be invested in index-tracking exchange-traded funds (ETFs), such as the Betashares Australia 200 ETF (ASX: A200) and the Vanguard MSCI Index International Shares ETF (ASX: VGS) — the other 30% in high-quality ASX-listed companies that have the potential to grow for decades to come.

From here, I’d regularly invest $150 weekly into these ASX shares and ETFs. As shown above, this could compound to $1.164 million by the time I reach 60 (assuming an 8% per annum return).

Extending retirement without the worry

The hard part of earning and growing the retirement funds is done in this hypothetical scenario. So, how much might it improve our life outside the nine to five?

Well, it means roughly $77,600 per year before fees and taxes each year for 15 years, assuming no growth (or loss) — providing a comfortable lifestyle until I’m 75 years old. But the good times are not over yet.

See, building this additional fund with ASX shares would give my superannuation an additional 15 years to compound before use. According to my fund, that’s the difference between $493,000 at 60 and $844,000 at 75 — increasing my superannuation by 71%.

As a result, I’d have another $56,260 per year for another 15 years to spend. Only then, at the ripe old age of 100, will I have exhausted my retirement funds.

Sounds like a good life to me.

The post How I’d invest in ASX shares to unlock an extra $1.1 million for retirement appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 Vanguard Msci Index International Shares 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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Some experts are telling everyone who’ll listen that small-cap stocks are going to go gangbusters in 2024.

The reasoning is that they have underperformed compared to their larger cap sisters over the last two years as inflation and rising interest rates forced investors to flee for more conservative options.

But now with the tantalising prospect of rate cuts looming, it could be time for sweet revenge.

“The fundamental setup for small cap returns in 2024 is compelling,” the analysts at LSN said in a memo to clients.

“Valuations are attractive, the earnings outlook is robust, and tailwinds from an improved economic backdrop historically provide active small cap managers with outsized returns.”

They noted that even Australia’s sovereign wealth fund, the Future Fund, has started a new program to buy small-cap ASX shares. 

“ASX small caps have underperformed the ASX top 100 by 25% since August 2021 and are now trading at substantial discount, despite the outlook for significantly more earnings growth,” read the LSN memo.

“This has not gone unnoticed in capital markets with a recent flurry of M&A from financial investors and industry players taking advantage of the environment.”

How to grab a piece of the small-cap action

So, if you believe in this thesis, how do you take advantage?

Of course, you can buy ASX small caps directly. But that requires much research and due diligence, which is all the more harder with less information available to the public than the big businesses.

One shortcut might be to buy an exchange-traded fund (ETF) that invests in smaller ASX businesses.

As well as cutting down on the required research, such funds have the advantage of providing immediate diversification to potentially smooth out the volatility of individual stocks.

Here are four ETFs on the ASX that invest in small-cap equities:

Exchange-traded fund	Fee per annum	5-year return per annum (distributions reinvested)	Distribution yield
Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)	0.3%	9.89%	3%
VanEck Small Companies Masters ETF (ASX: MVS)	0.49%	5.16%	4.6%
iShares S&P/ASX Small Ordinaries ETF (ASX: ISO)	0.55%	5.89%	2.6%
Betashares Australian Small Companies Select Fund (ASX: SMLL)	0.39%	8.05%	3.7%

The post Which ASX ETFs could explode if small caps surge in 2024? appeared first on The Motley Fool Australia.

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• 3 ASX ETFs for growth investors to buy in January
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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 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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In 2023, I regretfully held some cash on the sidelines. The appetising ‘risk-free’ return on savings was a big reason why. However, my real returns on this cash pile came to an approximate 1% loss after inflation. Instead, I’m putting that lazy capital to work in 2024 by investing it where it may ward off wealth-eating inflation.

Where to invest $7,000 sitting in cash

There are plenty of deterrents to deploying my money into the share market right now — there always are. Most notably, there are the ever-present warnings from investment analysts, cautioning that now may not be the right time to buy.

I have no doubt the same views were being plastered across the headlines last year as well… and the year before that. Little was often said about the threat of losing 13% purchasing power between 2021 and today by holding cash, though.

On that note, here are three ASX stocks I plan to grow my money with this year.

ASX stock #1: Boring compounder

Propel Funeral Partners Ltd (ASX: PFP) is already my second-largest holding. Yet, if the Australian and New Zealand funeral operator delivers another result showing consistent business growth, I’ll be scooping up another $3,000 worth of shares.

In FY23, the company achieved revenue growth of 16% and a profit increase of 18.5%. Propel plans to release its first-half results for FY24 on 21 February. I expect growth to be somewhat weaker than the prior year due to smaller acquisitions. However, I’m pleased with management’s diligence approach to outlaying capital.

As outlined in my in-depth review, I’m confident Propel can consolidate the industry and reap the rewards over the long term.

ASX stock #2: Glamorous growth machine

How many ASX-listed retailers do you know that have tripled their revenue in six years? Harder still is maintaining profitability throughout the rapid growth. Lovisa Holdings Ltd (ASX: LOV) is a cheap jewellery retailer showing others how it can be done.

The opportunity here is in Lovisa continuing its successful expansion into regions outside Australia. While reaching maturity locally, the United States, Europe, and Asia offer ample runway to grow. For example, total sales in the US increased 78.1% in FY23.

Furthermore, Lovisa stated it was preparing to open its first stores in Vietnam and mainland China in November/December 2023.

This is where I intend to invest $2,000 in 2024. The only reason why I’m refraining from more is the balance sheet. Lovisa had an 81% debt-to-equity ratio in July 2023, which would usually nudge me to steer clear.

ASX stock #3: Energy squeeze

Lastly, I believe there is an upside to be captured in the energy sector over the next few years. Between conflicts erupting in energy-rich lands and climate targets still out of reach, I expect prices to rise much higher to incentivise increased supply.

I’m of the belief that more regions will turn to nuclear energy as a means of improving energy security and reducing emissions. While the price of uranium has nearly doubled in the space of a year, recent reports of impacted production could support further strength.

Admittedly, miners are not my specialty. As such, I plan to invest $2,000 into an exchange-traded fund (ETF) for some exposure. The one on my radar is the Betashares Global Uranium ETF (ASX: URNM), charging a 0.69% management fee.

The post ASX investors: Where I’d invest $7,000 in 2024 appeared first on The Motley Fool Australia.

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More reading

• Brokers say these ASX 200 growth shares can rise 25% to 30%
• There’s great value right now in the ASX 200, especially in stocks like this one
• Targeting a $53,000 second income starting with just $1,000 of savings?
• Up 100%: Are ASX uranium ETFs worth a look today?
• 3 high-growth ASX shares that could be worth $2 billion in 10 years — or sooner

Motley Fool contributor Mitchell Lawler has positions in Lovisa and Propel Funeral Partners. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Betashares Global Uranium Etf, Lovisa, and Propel Funeral Partners. 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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