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While regular readers all know that diversification is the key to successful investing, it’s still fun to see those stocks that rocket rapidly and imagine what could have been.

There is a practical purpose to looking at such examples too, other than allowing us to fantasise.

Such cases show us that not every stock we pick for our portfolio has to be a winner.

In fact, that sort of expectation is unrealistic and downright dangerous. 

In most portfolios a handful of winners will do the heavy lifting to cancel out the losses and boost the overall returns.

Let’s check out one mining stock that’s gone gangbusters in the past year to demonstrate this power:

Overnight sensation

Back on 7 December 2022, Meteoric Resources NL (ASX: MEI) was a junior explorer that was literally a penny stock with its share price languishing at 1.6 cents.

But then it went into a trading halt for 11 days and all hell broke loose.

On 16 December 2022, it emerged with news that it had acquired a site in Brazil with potential to be a rare earths producer. By the end of the day Meteoric shares had almost doubled to 3.1 cents.

The project, named Caldeira, then kept putting out positive drilling results through the next 12 months.

And every tidbit has aroused the market’s interest in the now-$460 million company.

On Tuesday, Meteoric shares were trading for 24 cents.

That means that the shares have multiplied 15 times in just 13 months.

If you had invested $20,000 back in December 2022, that would now be worth an amazing $300,000.

If you take on the risk, you deserve the reward

Aside from the obvious thrill, a great benefit of repairing such a windfall is that it can make up for all the losses from your dud stock picks.

That is, if you had invested $20,000 each into 10 shares including Meteoric, the other nine could be worth $0 now and your portfolio would still be up 50%.

How crazy is that!

Of course, not everyone will be able to pick such a spectacular winner. 

But the point here is that even if 4 out of your 10 picks are in the green, they have infinite potential whereas the most you can lose from your dogs is 100%.

Also, those fortunate enough to have held Meteoric shares the last 13 months deserve the wealth they created because they took on a significant risk premium.

As each positive test results came out, the less risky the business became.

This ASX mining stock is still a buy after all that

For the record, many experts still think Meteoric Resources shares are a buy.

CMC Invest currently shows all six analysts that cover it still recommend adding it to portfolios.

Novus Capital stock broker John Edwards, who personally owns the stock, said last month that its “tenements are among the biggest and richest in the world”.

“Speculation exists that this rare earths junior is a potential takeover target,” he told The Bull.

“I have a 12-month price target of up to 50 cents a share.”

The post If you’d put $20,000 in this ASX mining stock 13 months ago, you’d have $300,000 now appeared first on The Motley Fool Australia.

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More reading

• 3 ASX mining shares hitting 52-week highs today
• 5 best performing ASX All Ords shares of 2023
• 13-bagger in a year: 2 ASX mining shares that could be takeover targets
• Why Atlantic Lithium, Meteoric Resources, Stockland, and Strickland shares are sinking 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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There is no shame in acknowledging that stock-picking can feel daunting. Especially when you’re first cutting your teeth in the land of stock market lingo, much of this anxiety is linked to diversification, or lack thereof, when first getting started — a problem that can be alleviated through ASX exchange-traded funds (ETFs).

Beginners might be surprised to learn that even experienced investors often utilise ETFs in their portfolios. The convenience of adding a collection of companies through a single investment is a beautiful invention of the financial industry — enabling portfolio diversity from day one.

Known as the core-satellite investing approach, investors can reduce their overall volatility while giving themselves the chance for additional upside. The ‘core’ is formed by a majority investment in an ETF (or multiple), leaving the remaining portion of funds for actively trying to outperform the market.

Which ASX ETFs I’d buy for a robust core

Squashing home bias in one fell swoop

A common pitfall among investors is home bias — a natural tendency to allocate most of their money to companies listed in their homeland. Approximately 98% of the global share market resides outside of Australia, meaning a lot of missed opportunities if we only fish locally.

To negate this psychological one-sidedness, I’d invest in the Vanguard MSCI Index International Shares ETF (ASX: VGS). A reasonably low-cost ETF at a 0.18% management fee, Vanguard’s International Shares fund invests in around 1,500 companies from roughly 23 countries while excluding Australia.

What I appreciate about this ASX ETF is its breadth. Due to its global mandate, this ETF includes possibly some of the highest-quality companies in the world. For instance, businesses I hold in regard, including Apple Inc (NASDAQ: AAPL), Eli Lilly and Co (NYSE: LLY), ASML Holding NV (AMS: ASML), and LVMH Moet Hennessy Louis Vuitton SE (EPA: MC).

An ASX ETF packed with innovators

I’m a big fan of innovative companies, those that are on the cutting edge of technology. Often, such businesses are highly profitable, vastly scalable, and are led by visionary leaders.

The way I see it, innovation is the only way forward for society, so I want to position my portfolio to benefit from the value these transformative operators create over time. I believe the US tech sector will continue to be the epicentre of this, making Betashares Nasdaq 100 ETF (ASX: NDQ) my preferred pick.

However, it should be noted that there is an overlap between the VGS ETF and the Nasdaq 100 ETF, resulting in an elevated weighting toward the likes of Apple, Microsoft Corp (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Nvidia Corp (NASDAQ: NVDA), etc.

Buffett’s secret sauce

The final investment I’d add to my portfolio to form a rock-solid core is Vaneck Morningstar Wide Moat ETF (ASX: MOAT). As alluded to in the name, this is an ETF invested in US companies that Morningstar’s analysts believe have a sustainable competitive advantage.

Moats can come from many places, including network effects, brands, patents, scale, and product stickiness. In the words of Warren Buffett, the legendary leader of Berkshire Hathaway, “A good business is like a strong castle with a deep moat around it. I want sharks in the moat. I want it untouchable.”

This ETF gives the investor a slice of heavyweights such as Salesforce Inc (NYSE: CRM), Wells Fargo & Co (NYSE: WFC), and Nike Inc (NYSE: NKE).

The post Building a rock-solid base for my stock portfolio with these 3 ASX ETFs appeared first on The Motley Fool Australia.

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More reading

• The BetaShares Nasdaq 100 ETF (NDQ) just hit a new all-time high. Here’s why
• 2 of the best ASX ETFs to buy now
• Which global ASX ETFs were the top performers for Aussie investors in 2023?
• 2 no-brainer ASX ETFs for investors to buy and hold
• Top ASX shares for beginner investors to buy in 2024

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, BetaShares Nasdaq 100 ETF, Microsoft, Nike, Nvidia, and Salesforce. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $47.50 calls on Nike. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, Nike, Nvidia, Salesforce, VanEck Morningstar Wide Moat ETF, 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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The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Which had the better year in 2023: Core Lithium, Liontown or Pilbara Minerals shares?
• Buying ASX 200 shares in 2024? Here’s why this $106 billion proposed US tax break matters
• Why Atlantic Lithium, Charter Hall, Droneshield, and Zip shares are pushing higher
• 5 things to watch on the ASX 200 on Tuesday
• ‘Oversold’: 2 beaten-up ASX 200 shares ready to be given a fair go

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 Telix Pharmaceuticals. The Motley Fool Australia has recommended IPH, Orora, and Telix Pharmaceuticals. 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 All Ordinaries Index (ASX: XAO) is down 1.1% today, but that’s not holding back this rocketing ASX uranium stock.

The ASX uranium share closed yesterday trading for 55 cents. In earlier trade today, shares were swapping hands for 65 cents apiece, up 18.2%.

After some likely profit-taking, shares are currently trading for 63.5 cents, leaving this ASX uranium stock up 15.5% in intraday trade.

Any guesses?

If you said Toro Energy Ltd (ASX: TOE) give yourself a virtual gold star.

Here’s what’s happening.

Broader tailwinds for ASX uranium stocks

Toro Energy looks to be getting a big lift on two fronts.

First, the uranium price hit 16-year highs yesterday, with yellowcake trading above US$100 per pound.

The uranium price has been marching steadily higher over the past six months amid renewed global ambitions for nuclear energy.

The outlook for the uranium price, and ASX uranium stocks like Toro Energy, got another boost over the weekend when National Atomic Company Kazatomprom Joint Stock Company (FRA: 0ZQ) announced a significant reduction to its 2024 production guidance.

Kazatomprom, the world’s largest uranium producer, cited a shortage of sulphuric acid for the downgraded forecast.

The Toro Energy share price closed up 4.8% following that news yesterday.

As for some of the biggest ASX uranium stocks, Paladin Energy Ltd (ASX: PDN) shares gained 7.5% on Monday while Bannerman Energy Ltd (ASX: BMN) shares closed the day up 6.2%.

However, both Paladin and Bannerman shares are in the red today, while Toro Energy is surging.

Toro Energy share price boosted on project update

The Toro Energy share price is leaping higher again today after the ASX uranium stock announced it has made significant advancements in its Lake Maitland extension study.

Toro Energy’s Lake Maitland uranium-vanadium project is located in Western Australia.

The extensions study is evaluating incorporating material from Toro Energy’s Lake Way and Centipede-Millipede uranium deposits into a proposed processing operation at Lake Maitland.

According to the release, “Strong potential exists to increase production at Lake Maitland with additional uranium resources from Lake Way and Centipede-Millipede.”

The company noted the potential to extend processing of its high-grade uranium resource “well beyond” the seven years it expects from a standalone Lake Maitland operation.

Commenting on the progress sending the ASX uranium stock soaring today, executive chairman Richard Homsany said, “We are pleased that strengthening uranium market conditions continue as we develop and seek to maximise the value of the Wiluna Uranium Project, especially our evaluation of extending our Lake Maitland uranium vanadium processing operation.”

Homsany added:

The uranium resources at Lake Way and Centipede-Millipede are strategically located and considerable and need to be thoroughly evaluated for viability. The inclusion of additional material into the Lake Maitland uranium vanadium processing operation has the strong potential to add significant value to the Wiluna Uranium Project.

As for the Toro Energy share price, this small-cap ASX uranium stock has already gained a whopping 35% in 2024.

The post Guess which ASX uranium stock just leapt 18% on ‘significant’ project upside potential appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 energy shares being hit so hard on Tuesday?
• Buying ASX 200 shares in 2024? Here’s why this $106 billion proposed US tax break matters
• Would I be crazy to buy Boss Energy shares at $5.50?
• The BetaShares Nasdaq 100 ETF (NDQ) just hit a new all-time high. Here’s why
• ‘Bombed-out’ ASX REITs are bargain shares, says expert

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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S&P/ASX 200 Index (ASX: XJO) energy shares are deep in the red on Tuesday.

Here’s how these top three ASX 200 energy stocks are performing at the time of writing in early afternoon trade:

• Woodside Energy Group Ltd (ASX: WDS) shares are down 1.4%
• Santos Ltd (ASX: STO) shares are down 2.0%
• Beach Energy Ltd (ASX: BPT) shares are down 3.0%

For some context, the ASX 200 is down 1% at this same time.

So, why are these ASX 200 energy shares underperforming the benchmark?

ASX 200 energy shares under selling pressure

Beach Energy, Santos and Woodside shares are, as you’d expect, highly influenced by the price of oil and gas.

Atop the current oil price, forward-looking investors in ASX 200 energy shares will also attempt to gauge the future price outlook.

As for today’s performance, despite the ongoing conflict in Gaza. and renewed attacks by Houthi forces against ships in the crucial Red Sea shipping corridor, the oil price slipped again overnight.

Brent crude oil is currently trading for US$78.01 per barrel, down 0.2%. That sees the oil price down 3.6% since 26 December. And Brent crude has plunged some 20% since trading for US$97 per barrel as recently as 27 September.

The market remains jittery about the potential for the conflict to spread across the oil-rich region. But the oil price and ASX 200 energy shares have slipped amid record output from the United States, the world’s top oil producer, alongside increased supply from other nations outside of OPEC+.

That supply boost comes at a time when the forecast for demand growth in 2024 remains subdued.

Commenting on the oil price outlook amid the latest tensions in the Red Sea, Citigroup Inc analyst Francesco Martoccia said (quoted by Bloomberg), “It is not our base case that US/UK strikes on Houthi targets in Yemen and issues in the Red Sea will lead to a substantive upside in oil prices over the coming weeks.”

However, Martoccia cautioned:

A possible escalation in tensions between Israel and Hezbollah and/or Iran, which the market believes may result in supply disruption, or actually results in supply disruption, is a larger concern in the near-term, though also not within our base case.

While a higher oil price would offer some welcome tailwinds for ASX 200 energy shares, let’s hope this isn’t driven by any further escalation in the Middle East tensions.

The post Why are ASX 200 energy shares being hit so hard on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Santos shares storm higher on $5.7 billion approval
• Here are the top 10 ASX 200 shares today
• Is now the right time to invest in Woodside shares amid a volatile oil price?
• 5 things to watch on the ASX 200 on Monday

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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Rising interest rates were a headwind for ASX real estate investment trusts (REITs) last year, and today they look like good value, says Morgan Stanley Australia’s co-head of investment banking, Tim Church.

Before we get into why, let’s take a look at the recent performance of ASX REITs.

ASX REITs smashed in 2023, but recover strongly in Santa Rally

The S&P/ASX 200 A-REIT Index (ASX: XPJ) hit its 2023 trough of 1,216.6 points on 30 October.

At that time, the property shares index was down 8.76% in the year to date compared to a 3.78% fall in the benchmark S&P/ASX 200 Index (ASX: XJO).

Everything changed in November, with the traditional Santa Rally starting early as yields on long-dated bonds fell and optimism that the US Federal Reserve would cut interest rates in the new year grew.

The chart below shows this change. As you can see, ASX REITs had a massive rally in November and December, with the A-REIT Index rising 23.5% over this two-month period.

ASX REITS looking ‘decidedly good value’

Tim Church told the Australian Financial Review (AFR) that ASX REITs are looking like bargains.

Church said:

Bombed-out REITs that have suffered from a combination of poor sentiment and rising bond yields and cash rate increases look decidedly good value, ie oversold, particularly when you consider that we are closer to – if not there already – peak interest rates.

In an AFR roundtable discussion, Church and other real estate investment bankers noted that more property funds were likely to downgrade their commercial property valuations this year.

Valuations are likely to fall most on office tower assets amid hybrid working arrangements reducing demand for office space post-pandemic.

More of these valuation downgrades may take place during the February reporting period.

Which REITs are good buys?

Here’s how the top three ASX REITs by market capitalisation stack up based on consensus ratings published on CommSec today.

Goodman Group (ASX: GMG)

The biggest REIT, Goodman Group, is trading at $24.29 per share on Tuesday. The consensus rating on CommSec is a moderate buy. The rating fell from a strong buy on 27 November.

Scentre Group (ASX: SCG)

The Scentre Group is changing hands at $2.93 per share today. The consensus rating on CommSec is a moderate buy. The rating increased from a hold on 5 June.

Stockland Corporation Ltd (ASX: SGP)

Stockland shares are trading at $4.43 per share today. The consensus rating is a moderate buy, up from a hold rating on 2 June.

Median home values rose by 8.1% in 2023 while ASX REITs booked a 12.67% gain for the year overall.

The post ‘Bombed-out’ ASX REITs are bargain shares, says expert appeared first on The Motley Fool Australia.

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More reading

• Bullish about data centre growth? I’d try these 3 ASX 200 shares
• Forget term deposits and buy these ASX dividend stocks
• The No. 1 ASX 200 shares of each market sector in 2023
• Navigating rising interest rates: Top Australian stocks to watch
• Citi says these ASX 200 dividend shares are buys

Motley Fool contributor Bronwyn Allen has positions in Goodman Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman 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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S&P/ASX 200 Index (ASX: XJO) shares aren’t just sensitive to interest rate moves from the Reserve Bank of Australia (RBA). Like it or not, they’ve also proven to be susceptible to rates set by the United States Federal Reserve.

As we covered at the start of the year, ASX 200 shares came within a whisker of setting new all-time highs on 2 January. But that new record slipped further away in the first weeks of trading in 2024, in part because investors pared their bets of a March rate cut from the US Fed.

That March Fed rate cut is still possible. But a potential deal in the works for US$70 billion (AU$106 billion) in tax breaks for US households and businesses could throw cold water on those hopes.

Here’s what’s happening.

ASX 200 shares eyeing Fed rate cuts

While not all ASX 200 shares would face headwinds from a delay in interest rate cuts from the Fed, the benchmark index will most likely fare better once the world’s most watched central bank begins easing.

And that easing could be delayed if the $106 billion in proposed tax breaks work to fuel inflation.

If passed the deal – which remains under Congressional negotiations – would increase the child tax credit and renew corporate tax breaks through 2025. And households could see the benefits of that extra cash as early as March.

Now that extra cash will certainly be welcomed by those on the receiving end, and work to spur the US economy. But if it stalls the Fed’s battle to bring inflation back to its 2% target range, investors in ASX 200 shares may have a longer wait than many expected for the Fed to begin easing.

Mickey Levy, a visiting scholar at the Hoover Institution, noted that the US economy is still awash with some of the fiscal stimulus unleashed during the global pandemic.

“There’s already substantial fiscal stimulus driving up economic activity,” Levy said (quoted by Bloomberg).

Commenting on the potential $106 billion in tax cuts, Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget said, “This is going to be a decent amount of fiscal cost with very little of it going to encourage new investment in a time when there are still inflation pressures.”

As for today, ASX 200 shares are down an average of 1.2%.

The post Buying ASX 200 shares in 2024? Here’s why this $106 billion proposed US tax break matters appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• The pros and cons of buying Wesfarmers shares right now
• Bullish about data centre growth? I’d try these 3 ASX 200 shares
• 5 things to watch on the ASX 200 on Monday

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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Unless you’ve been investing under a rock, you’ll probably be aware of the huge gains that owners of ASX uranium shares like Boss Energy Ltd (ASX: BOE) have been enjoying in recent weeks and months.

Boss Energy shares have been on an absolute tear lately. This ASX uranium stock was going for just $2 a share in March last year. But today, Boss shares are sitting at $5.46 each, after hitting a new all-time high of $5.64 earlier this morning.

That puts the company up a whopping 35% in 2024 to date, and up an even better 128% over the past 12 months:

So we’ve established that Boss Energy shareholders have been a lucky lot in recent times. But what about an investor looking to buy Boss shares today? Is it too late to get in at $5.50 a share?

Are Boss Energy shares a buy at $5.50?

Well, expert opinion on this uranium stock remains a little mixed.

Earlier this month, my Fool colleague James covered the opinion of ASX broker Macquarie. Macquarie did give Boss an outperform rating. However, it also slapped a $5 share price target on the company, which is obviously well below Boss’ current share price.

However, at the time, Boss Energy shares were well under $5. Macquarie noted that Boss has recently signed its maiden sales contract, and reckons the company is well placed to take advantage of the recent surge in uranium prices.

However, another ASX expert isn’t quite as optimistic. The Bull recently covered the views of John Athanasiou of Red Leaf Securities. Athanasiou rated Boss as a sell, despite the surge in uranium prices.

He argued that Boss Energy “shares have risen too quickly and appear priced to perfection, leaving little or no room for error”.  Athanasiou advised investors to consider “pocketing a profit”.

As such, it seems that at least these two ASX experts are wary of Boss Energy shares at $5.50 each. Something for those jubilant Boss investors to keep in mind with today’s new record high for the company.

The post Would I be crazy to buy Boss Energy shares at $5.50? appeared first on The Motley Fool Australia.

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More reading

• 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
• Boss Energy shares up 23% in 2024. Is it too late to buy?

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 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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Last month, we discussed whether it was too late to buy the BetaShares Nasdaq 100 ETF (ASX: NDQ) at close to what was then a new record high.

Since then, we’ve seen this ASX exchange-traded fund (ETF) push even higher, decisively answering that redundant question with a ‘no’.

Today, we’ve seen ASX NDQ units do it again. This ETF closed at $38.16 a unit yesterday afternoon. But this morning, those same units climbed up to $38.31 each. That’s a new record high that is more than 2% above where the Betashares Nasdaq 100 ETF was last month when we first asked whether it was too late to buy.

Today’s gains put NDQ units up 2.44% year to date, as well as up an extraordinary 49.65% over the past 12 months.

So why is this popular ETF sitting at another new high today?

Why has the BetaShares NDQ ETF just hit a new ASX record high?

Well, to answer that, let’s look at what this ETF actually invests in. Like many ETFs, NDQ is an index fund. In this case, the index that it tracks is the NASDAQ-100 Index (INDEXNASDAQ: NDX). This index covers the largest 100 non-financial shares on the American Nasdaq stock exchange.

The Nasdaq is famous for housing almost every major US tech stock on the market. That’s everything from Apple, Microsoft and Amazon to Netflix, PayPal and Airbnb.

During last night’s US trading, a few of these companies managed to push higher. Microsoft inched closer to another new record high, gaining 1%. Meta Platforms was up 1.3%. Although other Nasdaq tech stocks like Apple, Amazon and NVIDIA fell slightly, it seems that those gains from Microsoft and Meta were enough to warrant another rise for NDQ units today.

A fall in the value of the Australian dollar against the US dollar overnight would be helping to push NDQ higher as well.

Investing in index funds

It can be hard to muster enough energy to buy more units of an index fund that is sitting at or near a new record high. However, as we’ve already discussed, investors who got cold feet before today would probably be regretting their previous reluctance.

If you’re following a dollar-cost averaging strategy to invest in NDQ units, it’s important to stick to a consistent investing schedule.

Trying to time the market by waiting for a cheap opportunity to buy an investment is usually a poor strategy to follow. None of us know what an index might do next. The BetaShares Nasdaq 100 ETF could have a terrible year in 2024 for all we know. But it’s equally possible that it has another blowout year.

If you keep in mind that indexes like the Nasdaq 100 tend to go up more often they they go down, the right path is hopefully easier to see.

The post The BetaShares Nasdaq 100 ETF (NDQ) just hit a new all-time high. Here’s why appeared first on The Motley Fool Australia.

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More reading

• 2 no-brainer ASX ETFs for investors to buy and hold
• 5 top ASX ETFs for investors to buy in 2024
• 3 ASX ETFs to buy in 2024 and hold forever
• 3 ASX ETFs to buy after the Christmas break
• Is it too late to buy the BetaShares Nasdaq 100 ETF (NDQ) trading near record highs?

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Airbnb, Amazon, Apple, Netflix, PayPal and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Airbnb, Amazon, Apple, BetaShares Nasdaq 100 ETF, Microsoft, Netflix, Nvidia, and PayPal. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Airbnb, Amazon, Apple, Netflix, Nvidia, and PayPal. 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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Owning ANZ Group Holdings Ltd (ASX: ANZ) shares can be rewarding in terms of passive income. I’m sure it’s a dream for plenty of Aussies to be able to enjoy thousands of dollars of dividends flowing into their bank account every year for no effort. In this article, I’m going to look at how many ANZ shares we’d need to own for $7,000 of passive income.

ANZ is one of the biggest ASX bank shares around, as well as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

Why are ANZ shares able to generate such strong dividends?

As one of the biggest companies in Australia, its huge size gives it the ability to achieve good economies of scale.

It makes billions in profit every year, and the ASX bank share trades on a fairly low earnings multiple. In other words, ANZ has a low price/earnings (P/E) ratio. If a company pays a dividend, the lower the P/E ratio the higher the dividend yield. That’s why ASX coal shares can have such large yields.

The other part of the dividend yield equation is the dividend payout ratio. The more of its profit it pays out, the bigger the dividend yield – that’s applicable to ANZ shares or any other business that pays a dividend or distribution.

In FY23, the business paid an additional 13 cents per share to make up for the fact that the percentage of franking for the FY23 second-half dividend was reduced. Excluding that extra 13 cents, ANZ’s normalised dividend had a dividend payout ratio of 66% in FY23. In FY22 and FY21 the dividend payout ratio was 65%.

How big could the passive income be in FY24?

Amid the difficulties of strong banking competition and the danger of borrowers’ rising bad debts due to high interest rates, ANZ’s net profit after tax (NPAT) and dividend are expected to reduce in FY24.

According to Commsec, the ANZ share price is valued at 12 times FY24’s estimated earnings and could pay an annual dividend per share of $1.62. I’m not sure what the franking level is going to be in 2024, so I’ll just assume it is going to be partially franked again.

ANZ could pay a partially franked dividend yield of 6.3%, or 7.6% grossed-up at the same franking rate as the last dividend.  

Making $7,000 of passive income

Excluding franking credits, investors would need to own 4,321 ANZ shares to get $7,000 of cash dividends in FY24 from ANZ. It’s predicted to pay the same dividend in FY25.

At the current ANZ share price, we’re talking about an investment of around $111,000 to buy that many ANZ shares.

Diversification is an essential part of an investment strategy, so I wouldn’t rely on one ASX share for all of my dividend income. I’d buy a number of others to create a portfolio of dividendpayers.

Businesses that are growing earnings and dividends could be solid picks for long-term passive income.

The post How much would I need to invest in ANZ shares for $7,000 a year in passive income? appeared first on The Motley Fool Australia.

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More reading

• These ASX dividend stocks could be buys this month
• Here’s why I think the dividend forecast could send ANZ shares climbing
• Here’s how these top 3 performing ASX 200 bank shares stacked up in 2023
• Could this give ANZ shares an edge over the other ASX 200 banks?
• Passive income seekers: Make $1,540 in 2024 buying just 3 ASX 200 shares

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

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