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The Qantas Airways Limited (ASX: QAN) share price is slipping despite the flying kangaroo’s three-year recovery program appearing to have paid off.

The airline expects to post an underlying profit before tax of between $2.425 billion and $2.475 billion for financial year 2023. That would mark a record for the Aussie icon.

Not to mention, it’s bolstered its on-market share buyback.

The Qantas share price is struggling on the back of the update, falling 2% to trade at $6.37 at the time of writing.

Let’s take a closer look at Tuesday’s news from the S&P/ASX 200 Index (ASX: XJO) travel giant.

Qantas share price gains on record profit guidance

A recovery in demand for travel and normalising aviation supply chains is on track to bolster Qantas’ bottom line while airfares are trending lower, the ASX 200 company revealed this morning.

Flying activity at the national carrier has increased this half on the arrival of new aircraft, widebody jets returning from storage, and reliability improvements.

By the end of the second half, Qantas expects its domestic capacity to be 104% of pre-COVID levels.

Meanwhile, its international capacity is forecast to be above 80% of pre-COVID capacity. That’s set to rise to around 100% by March 2024.

But there was rough news for travellers.

While airfares have declined recently, Qantas expects them to remain “materially” higher than pre-pandemic levels through the next fiscal year. Particularly, for those flying internationally.

Capacity improvements and falling jet fuel prices are tipped to benefit the company’s financial year 2023 earnings. On the other hand, adverse foreign exchange and bond movements are expected to dent its bottom line.

Qantas expects to end this fiscal year with a net debt position of between $2.7 billion and $2.9 billion — considerably below its targetted range of $3.7 billion to $4.6 billion.

It also expects to fork out between $2.6 billion and $2.7 billion of capital expenditure for the period.

Finally, five aircraft in reserve will be back flying before the end of this half, while another eight new aircraft are on track to be delivered by the end of 2023.

The airline is working to get the last of its stored aircraft back into the air.

Qantas extends on-market share buyback

There’s also been news of the company’s capital return initiatives today. The airline underwent a $400 million buyback last year and announced another $500 million buyback in February.

The latter capital return is now 78% complete, with shares bought for an average of $6.49 apiece.

It will now bolster the buyback by up to another $100 million.

RBC analyst Owen Birrell dubbed the increase to the buyback a “token” given the company’s debt levels are considerably below target, The Australian reports, quoting the expert as saying:

It obviously begs the questions as to whether there will be a major step-up in fleet capex and/or any further capital management coming at the FY23 result.

What did Joyce say?

Qantas CEO Alan Joyce commented on the news apparently weighing on the airline’s share price today, saying:

More parts of the aviation supply chain are returning to normal, which means we’re able to put some of the spare aircraft and crew we kept in reserve back in the schedule. That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers.

The industry remains capacity constrained and the travel category remains strong, so there’s still a mismatch between supply and demand that’s likely to persist for some time, especially for international flying.

Qantas share price snapshot

This year has been a good one for the Qantas share price so far.

The stock has lifted 7% since the start of 2023. It’s also 17% higher than it was this time last year.

Comparatively, the ASX 200 has risen 5% year to date and 2% over the last 12 months.

The post Qantas share price drops as airline eyes record profit appeared first on The Motley Fool Australia.

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More reading

• Have I missed the flight on Qantas shares?
• Back to 100%: The deal driving Qantas shares into the green on Friday
• Why Goldman Sachs rates these ASX 200 shares as top buys
• Why Qantas shares are Morgans’ top pick in the travel sector
• Buyback bender: These ASX All Ords shares can’t get enough of their own stock

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Given the current uncertain economic environment, investors may well be on the lookout for low risk ASX shares with defensive qualities.

If you’re one of these investors, then you may want to consider Telstra Group Ltd (ASX: TLS) shares.

Australia’s largest telco has been tipped as a buy by analysts at Goldman Sachs. And one of the reasons for its bullish view is the company’s defensive earnings.

Why Telstra shares could be a top defensive option

Goldman Sachs currently has a buy rating and $4.70 price target on the telco giant’s shares.

Based on the current Telstra share price of $4.35, this implies potential upside of 8% for investors from current levels.

In addition, the broker is expecting a fully franked dividend yield of approximately 4% this year and next. This brings the total potential return to approximately 12%.

That’s not a bad total return when you consider that Telstra shares are being seen as a defensive option by analysts!

What else is it saying?

Goldman explains its bull thesis. This includes its low risk earnings and the potential for value to be crystalised through asset divestments. It said:

Telstra is the incumbent telecom operator in Australia. We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful opportunity to crystalise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn. Although there is some debate around the strategic benefits, we see a strong rationale for monetizing the recurring NBN payment stream, given its inflation linked, long duration cash flows could be worth $14.5bn to $17.9bn, with no loss strategic benefit.

And while the broker acknowledges that Telstra shares are starting to look fully valued on historic numbers, it feels they are worthy of a premium. It adds:

Although at a headline level, Telstra valuation appears relatively full (vs. peers and vs. 10Y yield), we note: (1) Adjusting out NBN recurring payments (a unique asset), Telstra trades at a much more compelling multiple; (2) Although its yield spread is compressed vs. history, when factoring dividend growth this is more attractive. Hence into an uncertain 2023 we rate Telstra Buy.

But every bull thesis isn’t without risks. The broker concludes:

Key risks to our view include: (1) higher competition in mobile/fixed from Optus/TPG or from smaller players using the NBN to loss lead, both which would reduce our earnings & dividend growth; (2) disappointing cost out performance, meaning TLS is unable to offset wage cost inflation; (3) unfavorable regulation in fixed & mobile, including NBN pricing; and (4) delays to infrastructure monetisation or lower than expected realised value.

The post Why Telstra shares are a ‘low risk’ option for investors: broker appeared first on The Motley Fool Australia.

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More reading

• Buy Westpac and this ASX 200 dividend stock for income: analysts
• Better buy: Telstra shares or TPG?
• No savings at 40? Here’s my 3-step plan for $1,500 of passive income a month
• 2 ASX 200 blue chip shares that brokers love
• Broker says mobile price increases are good news for the Telstra share price

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 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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Zip Co Ltd (ASX: ZIP) shares are racing higher on Tuesday morning.

At the time of writing, the buy now pay later (BNPL) provider’s shares are up over 13% to 62.5 cents.

Why are Zip shares on fire today?

It appears that investors have been scrambling to buy shares today in response to the release of a bullish broker note out of Shaw and Partners.

According to the note, the broker believes that the proposed change to BNPL regulations in Australia are actually a big win for Zip. So much so, its analysts feel that the company is now a very attractive takeover option for rival Afterpay, which is owned by Block Inc (ASX: SQ2).

In light of this, Shaw and Partners has reaffirmed its (high risk) buy rating with a $2.02 price target.

Based on where Zip shares are currently trading, this implies potential upside of 220% for investors over the next 12 months.

Why did the broker say?

In response to the proposed changes announced yesterday, the broker expects Zip to benefit from the “levelling the playing field.” It explains:

Broadly we suspect that there is ~30-50% upside medium term to ANZ volumes if and when implemented from levelling the playing field. In particular these changes would benefit Zip in the following ways: 1) Levelling the origination playing field, seeing other providers having similar at check-out hurdles for origination; 2) Potential changes to fees/merchant charges for competitors, noting higher administrative burden through changes; 3) Focus on larger credit limits via customers upfront due to dynamic responsible lending; and 4) Slow down in competition as responsible changes roll through against varying industry experience. Broadly a number of large and small competitors have also ceased operations in ANZ in the LTM and this market is appearing more attractive for further profit growth for Zip.

All in all, the broker feels that this makes Zip a strategically important player in the BNPL industry and an attractive option for further acquirers in the space. It adds:

This change represents a material net positive to Zip. Importantly with market leadership in the digital space in already utilising this process, Zip’s value appears strategically relevant for further acquirers in the space, particularly if you didn’t want to miss a beat. APT should have a crack at Zip.

The post Afterpay should acquire Zip: broker appeared first on The Motley Fool Australia.

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More reading

• Why Galan Lithium, Metcash, Tyro, and Zip shares are falling today
• Could Zip shares be a winner of more regulation in the BNPL sector?
• Credit call: ASX BNPL shares slump as regulation arrives
• Here are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today

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 Zip Co. 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 Liontown Resources Ltd (ASX: LTR) share price has been a standout performer so far this year, surging 125% since the start of 2023.

No doubt, investors will be happy with their stock’s performance. But is it safe to say those not yet on board the company have missed out?

Right now, Liontown shares are trading for $2.77 apiece.

Liontown share price soars 125% in 2023

Fans of S&P/ASX 200 Index (ASX: XJO) lithium shares will have watched the Liontown share price in awe in recent months. But most of its gains were triggered by a single event.

The company was the recipient of a $2.50 per share takeover bid put forward by lithium giant Albemarle in March. The offer, though rejected, saw the stock rocket 68.5% in a single session.

And it didn’t stop there. It kept climbing to peak at $3.02 earlier this month.

But experts are torn on whether the stock will return to such highs or surpass them entirely. Indeed, many are downright bearish on Liontown shares.

What are experts saying about Liontown shares?

Where Liontown shares are heading from here is a contentious subject.

Indeed, three of 10 analysts covering Liontown believe it’s a strong buy while the remainder think it’s worth holding, according to CMC Markets.

Bell Potter is among those most hopeful, my Fool colleague James reported shortly after Albemarle’s offer was announced. It had a speculative buy rating and a $3.35 price target on the stock, a potential 21% upside.

But some experts are more sceptical. Alto Capital’s Tony Locantro is one, tipping the ASX 200 stock a sell this week, saying, as per The Bull:

Prior to the bid, the lithium sector was struggling with a falling price and major cost blowouts on new projects … Investors may want to consider cashing in some gains.

Meanwhile, Goldman Sachs forecasts Liontown shares to fall to $1.50, slapping the stock with a neutral rating. That marks a potential 46% downside.

All in all, whether I’d be mad to buy Liontown shares at their current level apparently depends on who I might ask.

When might the company realise cash flow?

Liontown is still a lithium developer. It’s aiming to bring its Kathleen Valley Project into production in mid-2024. From that point, three off-take agreements will kick off.

LG Energy Solution and Tesla have each signed on to buy 100,000 dry metric tonnes (DMT) in the first year of production, extending that to 150,000 DMTs in each of the subsequent four years. Meanwhile, Ford has agreed to buy 75,000 DMTs in the first year of production, 125,000 DMTs the following year, and 150,000 DMTs annually for another three years.

Each of the agreements will see the lithium product’s value based on market prices.

Thus, the company could be bringing in regular cash flow before the market knows it, if all goes to plan.

The post Up 125% in 2023, would I be mad to buy Liontown shares at today’s prices? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Could another lithium price boom be around the corner? Experts weigh in
• Own Liontown shares? Here’s when the company expects to kick start dividends
• Are ASX 200 lithium shares approaching a ‘tipping point’ for ripper revenues?
• Power portfolios: Millionaire investors shun ASX 200 lithium shares

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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The TechnologyOne Ltd (ASX: TNE) share price is on the move on Tuesday morning.

At the time of writing, the enterprise software provider’s shares are up 2.5% to $15.71.

This follows the release of a half-year result, which has impressed the market.

TechnologyOne share price higher on half-year results

For the six months ended 31 March, here’s a summary of how Technology One performed:

• Revenue up 22% to $210.3 million
• Software-as-a-Service (SaaS) annual recurring revenue (ARR) up 40% to $316.3 million
• Profit before tax up 24% to $52.7 million
• Profit after tax up 24% to $41.28 million
• Interim dividend up 10% to 4.62 cents per share

What happened during the half?

Technology One reported strong top line growth during the first half thanks to its SaaS business. Management advised that it increased the number of large-scale enterprise SaaS customers by 27% to 903 during the period.

In addition, the company’s Net Revenue Retention (NRR), which is the net amount of new ARR won and retained from existing customers, was strong. It came in at 119% for the 12 months to 31 March, compared to 114% for the same period last year. Management highlights that this is an outstanding result given that best practice in the ERP market is between 115% and 120%.

Technology One is also having a lot of success over in the UK. The company’s UK business delivered almost the same amount of new ARR in the first half of FY 2023 as it did for the full year in FY 2022. This saw the UK business deliver profit before tax of $3 million for the half, which is a 29% increase year over year.

This ultimately led to Technology One reporting a 24% increase in both profit before tax and profit after tax to $52.7 million and $41.28 million, respectively.

How does this compare to expectations?

As you might have guessed from the Technology One share price reaction today, this result has come in ahead of expectations.

For example, according to a note out of Bell Potter, its analysts were expecting a 14% increase in revenue to $196.6 million and a 17% jump in profit before tax to $49.9 million. The company has beaten on both metrics.

Outlook

Management believes the company is well positioned to deliver continuing strong growth over the full year and is expecting net profit before tax growth of 10% to 15%.

Technology One CEO, Edward Chung, commented:

We expect to see our SaaS ARR continuing to grow strongly, circa 40% over the full year. As we continue to aggressively grow our SaaS business, we will also continue to reduce our legacy licence fee business, which will be down to approximately $2.0m over the full year (vs $10.0m pcp). While this has a significant immediate impact on our P&L over the full year, this is an integral part of our strategy to grow our SaaS business and the recurring revenue base.

Chung also spoke about the long-term and is confident the company will achieve its $500 million+ ARR target by FY 2026. He concludes:

Over the next few years, our SaaS and Continuing Business is expected to continue to grow strongly. We are on track to surpass Total ARR of $500m+ by FY26, from our current base of $350.6m. We continue our significant long-term investments in R&D to build platforms for growth to continue to double in size every 5 years. The economies of scale from our global SaaS ERP solution will also see continuing Profit Before Tax margin expansion to 35%+.

The post TechnologyOne share price charges higher amid strong half-year growth appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Analysts say these ASX 200 growth shares are top buys right now
• Top brokers name 3 ASX shares to buy next week
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• Leading brokers name 3 ASX shares to buy today

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 Technology One. The Motley Fool Australia has recommended Technology One. 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’re looking for options in the gold sector, then Capricorn Metals Ltd (ASX: CMM) shares could be worth considering.

That’s the view of analysts at Bell Potter which have just upgraded the ASX 200 gold share.

Why is this ASX 200 gold share a buy?

Bell Potter has been running the rule over Capricorn Metals and likes very much what it sees.

In fact, the broker highlights that Capricorn Metals is “a sector leading gold producer with strong balance sheet and a management team that has an excellent track record of operational delivery.”

Its analysts also note that its “costs are among the lowest in the sector and consistently generates strong cash margins.”

It is for this reason, as well as its attractive valuation, that the broker has upgraded its shares to a buy rating with a $4.90 price target this morning.

This implies potential upside of over 16% from where the ASX 200 gold share closed yesterday’s session.

What else did the broker say?

Bell Potter notes that Capricorn Metals screens well and has been performing either in-line or ahead of expectations since first pouring gold. That’s quite an achievement in the current environment. It said:

CMM continues to screen as one of the top performing ASX-listed gold producers. Since pouring first gold in June 2021, it has successfully ramped up production at its 100%-owned KGP and delivered production and costs either in-line or ahead of guidance. CMM’s on target performance has positioned it as a sector leader in terms of cash generation. Since declaring commercial production in the September quarter 2021, we calculate total addition of cash and bullion to the balance sheet of A$109.2m for average cash build of A$520 per ounce produced.

The post Buy this ‘sector leading’ ASX 200 gold share: Bell Potter 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

Motley Fool contributor James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. does not own any shares mentioned. The Motley Fool Australia does not own any shares 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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I was chatting to a family member on the weekend.

He was telling me about a mate of his who went to see a financial planner.

The mate had his Super invested through an industry fund, AustralianSuper.

And the planner’s advice?

“You should move it to a wealth platform. The fees will be higher, but at least we can keep an eye on it.”

At this point, I should acknowledge that perhaps the story got twisted and miscommunicated by the time I heard it.

And thankfully I don’t know who the advisor was, so it saves me getting into any legal trouble.

It also potentially protects the guilty.

Because, and I hope you’re with me, paying more ‘so I can keep an eye on it’ was almost certainly terrible advice.

And it’s unfortunately only too common.

I’ve written before – and I stand by this – there are some exceptionally good financial planners.

As I wrote yesterday, some people just need or want a financial coach. That’s important, and though potentially costly, can be less costly (and end up with more wealth overall) than not doing it, for those people, because it might save them from some terrible mistakes.

Some people need advice on the right structure for their investments, and to make sure they have appropriate insurances and have considered estate planning. Some expert advice on these areas can be really useful.

But… and you knew this was coming, didn’t you… there are some planners who seem to view their clients as meal tickets.

Now, it’s possible that the planner in question was misquoted. It’s possible that there are some good reasons that a planner would need to ‘keep an eye on’ the client’s Super.

I just can’t think of any.

So why would the advisor suggest a client pay more in fees?

I mean… I couldn’t possibly guess…

But if I was going to, I’d suggest that ‘keeping an eye on’ the money is probably the worst possible reason.

It’s not like AustralianSuper is some small, tinpot operation. It’s not like you can’t get regular reporting on the Super balance and alter the investment strategy, if deemed necessary.

Is it possible that the advisor was doing it for his own benefit? Because he stood to make more money, or to make his – the advisor’s – life easier, at the client’s expense?

I don’t know the answer.

I do know that the most controllable part of wealth creation is fees, and that too many people pay too much because they don’t know better or are actively misled.

Now, if a financial planner is important to you, and keeps you on the straight and narrow, it can still be money well-spent.

If not… then your planner will be enjoying a lovely holiday at your expense. A holiday that could have been yours.

It’s at this point some planners are hitting the ‘send angry email’ button on their iPhones. Some because they didn’t actually read what I wrote. Some because they’re angry at having their behaviour highlighted.

And, I’m not resiling from the criticism. If you’re taking advantage of someone based on information asymmetry – because you know more than them, and are profiting from shamelessly magnifying and exploiting that – then I’m more than happy to condemn you for it.

(If you’re currently thinking: “Hang on, doesn’t The Motley Fool charge for advice?”, you’re dead right. And as I’ve said, repeatedly, to our members, if we’re not delivering value, they shouldn’t renew their membership to our services, either. This is not about us… it’s about them.)

But, rest assured, I get more supportive emails from planners than angry ones. Because, as I said, the good ones get it, and deliver more value to their clients than they cost.

Still, I hope it’s a cautionary tale.

I hope you have a financial plan – either personally, or via a planner.

I hope it’s a plan that is going to help you achieve your goals.

I hope you’re paying what it’s worth. And not a dollar more.

And I certainly hope you’re not paying extra for someone just to ‘keep an eye on’ your investments!

Fool on!

The post Are you getting value for what you’re paying? 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
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Guess which ASX 200 director has been stocking up on company shares before they trade ex-dividend tomorrow
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Scott Phillips 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’re stuck for S&P/ASX 200 Index (ASX: XJO) investment ideas at the moment, you are not the only one.

The fact is that we are living in uncertain times. Inflation is still high, no matter what the bulls are telling you, and the high cost of mortgages and life in general could hit the economy hard over the next few months.

It’s no surprise stock selection is a tough game right now. So this could be an opportune time to take a lead from the professionals.

As an example, here’s a pair of ASX 200 dividend stock picks from Baker Young managed portfolio analyst Toby Grimm:

This bank can fight through current troubles

Banks are in the “too hard” basket for many investors currently, but Grimm is bullish on Westpac Banking Corp (ASX: WBC).

“This bank has underperformed its major peers by an average of 33% during the past five years,” Grimm told The Bull.

“Following a better-than-expected 2023 half year result, we see attractive relative value and dividend yield.”

Indeed the Westpac share price has plunged 9.6% over the past year, and almost 7% year to date.

That’s left it with a decent fully franked dividend yield of 6.3%.

Grimm acknowledged the bank has headwinds, but it’s under control.

“Cost pressures continue to be a major detractor, but they are a controllable factor.”

Other professionals are divided over the merits of Westpac shares.

According to CMC Markets, five out of 17 analysts rate the stock as a buy. Six reckon it’s a hold while another six are urging investors to sell.

This healthcare provider can fight through current troubles

Private hospital operator Ramsay Health Care Ltd (ASX: RHC) saw its share price fall off a cliff at the start of this month.

Grimm attributed this to investor disappointment with its third-quarter numbers.

“Like many other firms, Ramsay Health had experienced cost pressures, which had a negative impact.”

But he expects this headwind to be transitory.

“We expect cost pressures to ease as operating leverage resumes with a continuing recovery in post pandemic revenues, which was evident in the results.”

Ramsay Health shares have tumbled more than 24% over the past year, and now pay out a 1.6% fully franked dividend yield.

Grimm’s peers are also somewhat polarised about Ramsay shares.

CMC Markets currently shows six out of 19 analysts rating the stock as a buy, with 11 recommending a hold.

The post ‘Attractive value & dividend’: 2 alluring ASX 200 shares to buy now appeared first on The Motley Fool Australia.

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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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ASX hydrogen shares are getting plenty of attention with the promise of opening up a new industry while simultaneously helping the world with decarbonisation.

Starting a new industry from scratch is not easy, but several ASX companies are moving into the space. They include Fortescue Metals Group Ltd (ASX: FMG), Pure Hydrogen Corporation Ltd (ASX: PH2) and Hazer Group Ltd (ASX: HZR).

Different businesses have different plans for their hydrogen production.

Hazer wants to use a “low-emission hydrogen and graphitic carbon production process”. This involves converting natural gas (predominately methane) and similar feedstocks into hydrogen and “high-quality advanced carbon materials”. The process would use iron ore as a catalyst.

Meanwhile, Fortescue Future Industries (FFI) wants to make ‘green hydrogen’ through electrolysis using water and renewable energy.

What’s holding back hydrogen?

While many companies in Australia and worldwide want to be involved in the hydrogen sector, some experts have pointed to hurdles that need to be overcome. These were outlined recently at the Australian Petroleum Production and Exploration Association annual conference, according to reporting by The Australian.

The conference heard that the sectors faced challenges such as customer demand for the many proposed hydrogen projects around the world and how to safely and cost-efficiently transport the gas once produced.

The BloombergNEF senior associate of hydrogen, Kathy Xitong Gao, said:

This is the real struggle for hydrogen right now, the slow pick-up from the demand side. The transportation of hydrogen is a big issue, and to liquefy hydrogen is still very, very expensive. It’s around $US5 to $US7 per kilogram, so it’s very expensive.

Deloitte partner Matthew Walden said that low-emission hydrogen was “emerging as a key element in the pathway to net zero”, but costs and regulatory issues remained. Walden said:

Important mechanisms to achieve this include the implementation of targets and mandates for low-emission hydrogen production and uptake.

What progress has been made?

Earlier in May, the Australian Government announced a $2 billion ‘hydrogen headstart’ initiative to help the “biggest green hydrogen projects to be built in Australia”. This funding will:

… provide revenue support for investment in renewable hydrogen production through competitive production contracts. Funding will cover the commercial gap between the cost of hydrogen production from renewables and its current market price.

It will support two to three flagship projects, though there hasn’t been any confirmation of which projects will be helped yet.

One ASX hydrogen share that’s making progress is Fortescue. Its FFI business was pleased to announce last year it had signed an agreement with E.ON to deliver up to 5 million tonnes of green hydrogen to Europe by 2030. However, not all of this green hydrogen may necessarily come from Australia.

FFI has also signed an agreement with JCB and Ryze Hydrogen to supply those two UK businesses with 10% of FFI’s global green hydrogen production. This was heralded as a “multi-billion pound deal”.

While FFI is working on a global portfolio of green hydrogen production projects, it has also revealed it’s working with energy infrastructure developer Tree Energy Solutions (TES) to develop the TES green energy hub in Wilhelmshaven, Germany. It aims to start receiving green hydrogen deliveries in 2026.

Time will tell how successful Australia, FFI and other ASX hydrogen shares are at producing low-emission hydrogen and transporting that to the world.

The post ‘The real struggle’: Can an ASX investment in hydrogen really pay off? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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 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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Are you looking for ASX 200 dividend shares to buy?

If you are, then you may want to look at the two named below that have recently been tipped as buys.

Here’s why brokers rate these dividend shares highly right now:

Stockland Corporation Ltd (ASX: SGP)

Stockland could be an ASX 200 dividend share to buy. It is a residential and land lease developer and retail, logistics and office real estate property manager.

Citi is positive on Stockland. It feels the company’s shares are trading at attractive level, particularly given its belief that property prices won’t fall as much as feared. In addition, its analysts highlight “a recovering resi backdrop, and prefer SGP over MGR.”

The broker is also forecasting some big dividend yields. It expects dividends per share of 26.6 cents in FY 2023 and FY 2024. Based on the current Stockland share price of $4.39, this will mean yields of 6% in both financial years.

Citi has a buy rating and $4.70 price target on Stockland’s shares.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share that has been named as a buy is Wesfarmers.

It is of course the conglomerate behind a wide range of high-quality businesses such as Bunnings, Covalent Lithium, Kmart, Officeworks, Priceline, and WesCEF.

Morgans is a fan of Wesfarmers and believes it could be well-placed to continue its solid performance in the near term. This is thanks to its highly regarded management team and focus on value. The broker notes that “Kmart is well-placed to benefit [from the cost of living crisis] with the average price of an item at around $6-7.”

As for dividends, its analysts are forecasting fully franked dividends per share of $1.79 in FY 2023 and $1.92 in FY 2023. Based on the current Wesfarmers share price of $50.85, this will mean yields of 3.5% and 3.8%, respectively.

Morgans has an add rating and $55.60 price target on Wesfarmers’ shares.

The post 2 ASX 200 dividend shares to buy according to analysts appeared first on The Motley Fool Australia.

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More reading

• No savings? Here’s how I’d target a second income of $1,000 per month from scratch
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• 3 reasons to buy Wesfarmers shares today
• Citi says these ASX 200 dividend shares are buys for passive income
• 2 of the best ASX 200 blue chip shares to buy: Morgans

James Mickleboro does not own any shares 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 Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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