Tag: Motley Fool

Westpac Banking Corp (ASX: WBC) shares are ones to consider if you’re looking for reliable passive income.

The S&P/ASX 200 Index (ASX: XJO) bank stock has paid two annual fully franked dividends for many years. The one exception is the pandemic addled year of 2020 when the bank gave its interim dividend a miss.

The past year’s passive income payments will go some way towards repairing the bank’s share price slide.

After closing down 2.6% yesterday at $21.13 per share, the stock is down 13% over the past 12 months.

How much passive income did investors receive from Westpac shares?

Westpac shares delivered a final dividend of 64 cents per share on 20 December.

The board declared an interim dividend of 70 cents per share when the bank released its half-year results on Monday. With profits up 22% year on year to $4 billion, the board increased the interim dividend by 15% from the prior year.

The stock traded ex-dividend yesterday, which helps explain its underperformance on the day. A company’s share price often falls in line with its dividend on the day shares trade without the rights to that payout.

Stockholders can expect that interim dividend to hit their bank accounts on 27 June.

That means investors will receive a total of $1.34 in passive income from each Westpac share over the past 12 months.

That works out to a trailing yield of 6.4% for investors who bought in at the current share price.

Or just about $318 in passive income from a $5,000 investment.

What if you bought Westpac shares in June?

June was a tough month for most ASX 200 stocks.

Westpac shares were no exception.

The stock traded at a closing low of $19.19 on 17 June.

Brave or well-advised investors who snapped up shares on the day will be sitting on share price gains of 10%.

Perhaps even better, they’ll be earning significantly more passive income.

At that price, Westpac shares traded on a yield of 7%.

Meaning you’d already have netted a handy $349 and change from that $5,000 investment.

The post Snapped up $5,000 worth of Westpac shares on the June dip? Here’s the passive income you’re earning now appeared first on The Motley Fool Australia.

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More reading

• The top 10 ASX shares held by millionaires
• These ASX 200 dividend stocks are highly rated for a reason
• Why Appen, CSR, Silver Lake, and Westpac shares are falling
• Why is the Westpac share price sinking today?
• 5 things to watch on the ASX 200 on Thursday

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 recommended Westpac Banking Corporation. 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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Suncorp Group Ltd (ASX: SUN) shares could be a bit of a bargain right now.

That’s the view of analysts at Goldman Sachs, which are tipping meaningful upside for the insurance giant’s shares over the next 12 months.

What is Goldman saying about Suncorp shares?

According to a note this week, Goldman Sachs has retained its buy rating with a modestly improved price target of $14.53.

Based on the latest Suncorp share price of $12.38, this implies potential upside of over 17% for investors over the next 12 months.

But the returns won’t stop there! Goldman is also forecasting fully franked dividend yields of approximately 6.4% in both FY 2023 and FY 2024. This boosts the total 12-month potential return to almost 24%.

Why is the broker positive?

The broker explains that it is bullish on Suncorp shares due to the tailwinds the company is experiencing right now. It said:

We are favourably disposed to Suncorp, noting in large part the tailwinds that exist in the general insurance market – i.e., very strong renewal premium rate increases and the benefit of higher investment yields. We think the strong rate momentum that SUN is getting should likely offset volume pressures as they optimise their risk exposures in certain portfolios such as home but also likely policy lapses / buy downs.

Goldman then adds:

We think that while SUN’s underlying margin is likely to face pressure into FY24 from higher reinsurance costs again, increased perils allowances, AMA contract renegotiation and possibly lower reserve release assumptions, we note that SUN is putting through significant price increases to reflect these pressures with the benefits flowing through with a lag. Further, we note that we could start to see more meaningful benefits from underlying claims inflation abating into FY24E. Separate to our thesis, we also see possible catalysts on the horizon for SUN including capital return post the bank sale and the possibility of a whole of account quota share arrangement similar to IAG. We are Buy-rated on SUN.

The post Why Goldman Sachs is bullish on Suncorp shares appeared first on The Motley Fool Australia.

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More reading

• Invested $9,000 in Suncorp shares in 2018? Here’s how much dividend income you’ve realised
• Brokers say these ASX dividend shares are top buys

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

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The QBE Insurance Group Ltd (ASX: QBE) share price will be one to watch on Friday.

That’s because the insurance giant has just released its first-quarter update.

QBE share price on watch following Q1 update

All eyes will be on the QBE share price this morning after the company revealed that it has started FY 2023 positively.

According to the release, the company recorded an 11% increase in gross written premiums for the three months.

This would have been even stronger had it not been for currency headwinds. On a constant currency basis, QBE delivered gross written premium growth of 14% over the prior corresponding period.

Management advised that group-wide renewal rate increases averaged 10% for the period, supported by a re-acceleration across property classes, and higher rate increases for QBE Re.

Ex-rate growth of 9%, or 5% excluding Crop, exceeded expectations despite the impact of planned program terminations in North America, and a reduction in growth across certain Financial lines segments.

Positively, organic growth in Crop continued, and management currently estimates that Crop gross written premium will be ~US$4.0 billion in FY 2023, with a net earned premium of ~US$1.4 billion.

One negative is that catastrophe activity has remained elevated through the beginning of 2023. This is underscored by Cyclone Gabrielle and the North Island flooding events in New Zealand, alongside a series of storms in North America and Australia.

As of the end of April, the net cost of catastrophe claims is ~US$480 million, which compares to QBE’s catastrophe allowance of US$535 million for the half. It’s going to be tight!

Investment performance

Something that could support the QBE share price today is the company’s investment performance. QBE delivered a strong investment result for the quarter, underpinned by supportive interest rates.

The first-quarter exit core fixed income running yield improved to 4.2%. This is up from the FY 2022 exit running yield of 4.1%.

Outlook

A final thing that could boost the QBE share price today is the company’s outlook.

Management revealed that its strong start to the year for premium growth, alongside its expectation that premium rate increases will remain supportive, means that it now expects FY 2023 group constant currency gross written premium growth of ~10%. This is up from its previous guidance for mid-to-high single digits growth.

In addition, it also revealed that it expects its group combined operating ratio to come in at ~94.5%. In case you’re not familiar with this metric, anything below 100% means an underwriting profit.

The post QBE share price on watch following strong Q1 update appeared first on The Motley Fool Australia.

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More reading

• 2 top ASX 200 dividend shares to buy this week: brokers
• Up 23% in the past year. Is it too late to buy this ASX 200 insurance share?
• Morgans names the best ASX 200 dividend shares to buy in May
• Perfect balance: 2 ASX 200 shares set to surge while paying dividends
• 2 ASX 200 dividend shares to buy now: brokers

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

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Have you invested in Pilbara Minerals Ltd (ASX: PLS) shares? You might have a hold in the market’s least risky ASX lithium companies.

That is, according to Shaw and Partners portfolio manager James Gerrish, who recently made such comments to Market Matters. The expert dubbed the S&P/ASX 200 Index (ASX: XJO) stock the “lower-risk exposure in a risky sector”, my Fool colleague Tony recently reported.

What might that mean for Pilbara Minerals shares and ASX lithium fans alike? Let’s take a look.

Are Pilbara Minerals shares a lower-risk ASX lithium buy?

Pilbara Minerals is one of the market’s largest lithium stocks. Indeed, it’s currently the ASX’s largest lithium pure-play.

Though, that might not be the case for long – Allkem Ltd (ASX: AKE) announced its plan to create a $15.7 billion lithium giant by merging with Livent Corp (NYSE: LTHM) this week. Pilbara Minerals’ $13.6 billion market capitalisation would be dwarfed by the unified entity.

However, unlike Allkem, Pilbara Minerals is a dividend-paying stock. It declared its maiden dividend earlier this year, offering investors 11 cents per share for the first half of financial year 2023.

And that’s partly why Gerrish likes the look of Pilbara Minerals shares. Looking forward, he forecasts the company to lift its production and, in turn, its earnings and dividends.

Pilbara Minerals recently pulled the trigger on bolstering its Pilgangoora Project’s nameplate production capacity to around one million tonnes of spodumene concentrate per annum.

The expansion will be funded through the company’s strong balance sheet and ongoing cash flows. It boasted a $2.45 billion net cash position as of 31 March.  

However, as Gerrish noted, the lithium space is generally inherently risky. Getting a lithium mine off the ground can take years, and many lithium hopefuls are still working to get there.

Unlike many of Pilbara Minerals’ peers, the company has achieved production. As have the likes of Mineral Resources Ltd (ASX: MIN) and Allkem.

Still, it’s worth noting most, if not all, lithium companies face a common risk factor: lithium prices.

What might the future hold for the ASX 200 lithium stock?

Morgans believes falling lithium prices will see Pilbara Minerals post a 4 cent per share final dividend.

Though it expects the value of the battery-making material to bounce in the future, my colleague James reports.

For that reason, the broker has a $5 price target on Pilbara Minerals shares. Macquarie is more bullish still, tipping the stock to soar to $7.70 – a potential 69% upside.

However, Goldman Sachs isn’t so hopeful. It has a neutral rating and a $4.10 price target on the ASX 200 lithium share – representing a 10% downside. The broker has long been bearish on lithium prices.

It’s also worth mentioning Morgans flagged it as a potential takeover target, alongside Allkem, last month.

Goldman Sachs, on the other hand, doesn’t expect any takeover talk regarding Pilbara Minerals shares any time soon. Nor is the company’s management focusing their efforts on merger and acquisition opportunities.

The post Are Pilbara Minerals shares a ‘lower-risk’ ASX lithium buy right now? appeared first on The Motley Fool Australia.

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More reading

• The top 10 ASX shares held by millionaires
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• ASX lithium shares rocket higher amid Allkem merger news
• What might the Allkem mega merger mean for Pilbara Minerals shares?

Motley Fool contributor Brooke Cooper 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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Shareholders of S&P/ASX 200 Index (ASX: XJO) mining shares, beware. The iron ore price could be in for more trouble, according to one leading broker.

Some of the ASX 200’s biggest miners are involved in producing iron ore, such as BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), Fortescue Metals Group Ltd (ASX: FMG), and Mineral Resources Ltd (ASX: MIN).

Any changes in the iron ore price can have an impact on their profitability. It costs roughly the same each month to extract one million tonnes of iron ore out of the ground, so any extra revenue the miners get for that production largely adds to net profit before tax (NPAT).

But it’s the same in reverse. When the iron ore price goes down, the fall in revenue largely wipes off the net profit.

So, it wouldn’t be good news for the ASX 200 mining shares if the iron ore price were to fall.

Iron ore price tipped to drop

The broker Citi has suggested the bounce back of the iron ore price above US$100 is likely to be “unsustainable”, according to reporting in The Australian.

Citi referred to China’s recent confirmation that steel output has been cut, though steel prices and steel mill margins have improved in the last week.

The Australian reported on the broker’s pessimistic commentary regarding iron ore prices:

Iron ore has been experiencing a relief rally due to the tailwinds of improved steel margins, following a sharp rebound in rebar and HRC prices, but we believe that this rally is unsustainable, as demand is likely to remain under pressure in the absence of any meaningful supply response.

We maintain our view that there is unlikely to be a quick turnaround in steel demand from the property sector, as new starts remained weak.

In the meantime, the latest PMI data suggest that the manufacturing sector has slipped into weakness akin to the construction sector.

Additionally, property sales appear to be losing steam since April, after the initial pent-up demand dries out.

Citi noted that in prior years, a rapid decline in the steel margin has led to a reduction in steel production, which then hurt iron ore demand. Steel mills have recently reduced their production, according to The Australian.

What next for the ASX 200 mining shares?

Time will tell whether the share prices of BHP, Fortescue, and Rio Tinto go higher or lower from here. The iron ore price has been unpredictable in the last few years. Certainly, the early-2023 rise of the commodity to more than US$120 per tonne may have surprised some investors.

Meantime, each ASX miner is pursuing a strategy of diversifying its operations. BHP just acquired copper miner OZ Minerals, Rio Tinto is working on the huge copper project Oyu Tolgoi in Mongolia, and Fortescue is trying to create a global portfolio of green hydrogen production facilities.

Until iron ore becomes a smaller slice of their earnings, the share prices of these three ASX 200 mining shares could be heavily influenced by falls (and rises) of the iron ore price. We can see on the chart below how each of them has dropped since 19 April 2023 amid the decline in the commodity price.

The post ASX 200 mining shares in focus: Top broker says current iron ore price is ‘unsustainable’ appeared first on The Motley Fool Australia.

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More reading

• The top 10 ASX shares held by millionaires
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Flight Centre shares are trading around 52-week highs. Too late to buy?
• Why I think the NAB share price is a buy right now

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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If you’re looking to supercharge your returns, then there are a couple of ASX energy shares that analysts believe could do this.

Here’s what analysts are saying about these energy shares:

Beach Energy Ltd (ASX: BPT)

The team at Bell Potter reckons that Beach Energy is an ASX energy share to buy right now.

The broker is positive on Beach Energy due to its diversification and positive free cash flow outlook. The latter is due to expectations that its capital expenditure has now peaked. It explains:

BPT has a strong, fully funded production growth outlook, diversified across five energy basins and across four separate gas markets, including LNG. BPT is rolling-off peak capex into a step-change in production and free cash flow in FY24, has a strong balance sheet, and has a capital management framework with franked dividends a key component. With a positive view on Australian east coast gas and LNG markets, and BPT’s strong earnings growth outlook, we maintain a Buy recommendation.

Bell Potter has a buy rating and $2.18 price target on its shares. Based on the current Beach Energy share price of $1.42, this suggests potential upside of 53% for investors over the next 12 months.

Karoon Energy Ltd (ASX: KAR)

Morgans is very positive on this ASX energy share. So much so, it has the company on its best ideas list this month with a valuation significantly higher than current levels.

It likes Karoon Energy due to its production growth and strong balance sheet. The broker commented:

Unique as a reasonable scale pure conventional oil producer, benefitting directly from rising oil prices. Karoon has significant net cash and is fully funded through a doubling of production over the next 12 months. There are also potential catalysts just around the corner with Karoon flagging at its recent result that it plans to shortly update the market with more detail on its growth plans, Bauna’s outlook, and its ESG approach.

Morgans has an add rating and $3.65 price target on the ASX energy share. Based on its current share price of $2.01, this implies potential upside of 81% for investors.

The post Analysts say these ASX energy shares could supercharge your returns appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 energy shares expected to jump after oil prices surge

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

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The exchange-traded fund (ETF) Vanguard MSCI Index International Shares ETF (ASX: VGS) is one of the most popular choices for investors — the fund has net assets (and investor capital) of more than $5 billion. And the VGS ETF pays dividends, which I’ll talk about later.

For readers who haven’t heard of this investment option before, the idea is that it provides exposure to more than 1,400 businesses listed outside Australia, which is handy for Aussies looking for global diversification.

The dividend, or distribution, that an ETF pays is partly dictated by the dividends of the fund’s underlying holdings. If the ETF’s investments pay high-yielding dividends to the ETF, then the fund will end up paying a high yield to investors.

So, let’s first talk about what shares the VGS ETF is invested in.

Vanguard MSCI Index International Shares ETF holdings

At the end of March 2023, its biggest positions were some of the world’s largest and strongest technology businesses including Apple, Microsoft, Amazon.com, Nvidia, Alphabet, Tesla, and Meta Platforms.

These businesses have proven to be very strong competitors in their respective industries. However, none of them is known for having large dividend yields.

Some of the names I mentioned don’t pay a dividend at all for various reasons, such as having a focus on re-investing cash flow generated for growth.

A few of the names do pay dividends, such as Apple and Microsoft, but the dividend yields are currently low. That’s because the businesses don’t have a high dividend payout ratio and they also have a reasonably high price/earnings (p/e) ratio. The higher the p/e ratio, the lower the dividend yield. For example, Microsoft has a dividend yield of 0.9%, according to Google Finance.

It’s a similar story for many of the IT businesses in the portfolio, which is important because the IT industry accounts for around 21% of the VGS ETF’s weighted exposure.

Now let’s have a look at the actual dividend yield of the Vanguard MSCI Index International Shares ETF, according to Vanguard.

Dividend yield

Vanguard, the ETF provider, produces a set of statistics each month so that investors can get some insights into the valuation metrics of the portfolio.

The monthly stats for March 2023 show the dividend yield for the VGS ETF was 2%. Vanguard explains this is the weighted average dividend yield of the shares it holds.

It’s worth pointing out that sometimes the distribution from the ETF to investors can be larger than the dividend yield alone because the distribution can include crystallised/realised capital gains made by the fund on any share sales.

So, the ETF’s distributed income is a combination of both its dividend income and capital gains.

Is a 2% dividend yield big enough for VGS ETF investors?

I don’t think that 2%, or even 3%, is likely to be enough for dividend investors these days. Investing in shares means taking on volatility and risk, and there are risk-free term deposits now offering an interest rate of more than 4%.

If I were looking at generating investment income, I’d want to look at ASX dividend shares that offered a dividend yield that was at least similar to what term deposits were offering.

The great thing about shares is that they can deliver growth. Good ASX dividend shares are capable of paying a good dividend yield and hopefully growing the payment to shareholders in the coming years.

The Vanguard MSCI Index International Shares ETF is not known for its dividend potential. However, I do believe in its ability to generate capital growth for investors over the long term. The fund has provided attractive total returns thanks to the rise in the value of its holdings as they achieve profit growth.

Over the three years to 31 March 2023, the VGS ETF returned an average of 12.9% per annum, with 10.8% per annum of that being capital growth. We can see that growth through the rise of the unit price.

The post I’m a dividend investor. Should I buy the Vanguard MSCI Index International Shares ETF (VGS)? appeared first on The Motley Fool Australia.

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More reading

• Was the Vanguard MSCI Index International Shares ETF (VGS) worth owning in April?
• 2 of the best ASX ETFs for global investing
• 3 top ASX ETFs hitting new 52-week highs on Friday
• I think this underrated reason is key to why ETFs can be great investments
• 3 reasons why the Vanguard MSCI Index International Shares ETF (VGS) could be an excellent investment for beginners

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Tristan Harrison 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 Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Meta Platforms, Nvidia, 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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It certainly has been a great time to be a shareholder of Latin Resources Ltd (ASX: LRS).

Since this time last month, the ASX lithium stock has risen by almost 30%.

Why is this ASX lithium stock on fire?

There are a number of reasons why this ASX lithium stock is on fire at the moment. Some are company specific, whereas others are industry related.

Let’s start with what Latin Resources has been doing and saying. Earlier this month, the company released an update on its flagship Salinas Lithium Project in the pro-mining district of Minas Gerais, Brazil.

Management revealed that its fully funded drilling campaign is now operating at full capacity, with eight diamond drilling rigs on site. This includes seven man-portable rigs and one track-mounted rig.

Pleasingly, drill production is at the budgeted rate and the company is well positioned to complete all of the planned in-fill and extension drilling on time. In addition, the intercepts so far have been very positive.

All in all, this means that Latin Resources is on target to release its all-important mineral resource estimate (MRE) update in June.

Latin Resources’ vice president of its Americas Operations, Tony Greenaway, commented:

We are very impressed with the consistent thick high-grade intercepts at Colina. These new results bode very well for our resource upgrade in June. We now have our full contingent of eight drilling rigs operating on site at Colina, including are larger track mounted machine.

What else?

Also giving this ASX lithium stock a boost has been recent highly positive industry news.

This includes lithium prices starting to rebound from recent lows and increased merger and acquisitions (M&A) activity.

The latter has seen Allkem Ltd (ASX: AKE) announce a merger with Livent Corp (NYSE: LTHM) and Liontown Resources Ltd (ASX: LTR) reject a takeover approach from Albemarle (NYSE: ALB).

This appears to be sparking hopes that other deals could be made in the near future. Perhaps even one for this ASX lithium stock.

The post Why has ASX lithium stock Latin Resources soared almost 30% in a month? appeared first on The Motley Fool Australia.

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More reading

• Why is ASX lithium share Latin Resources on ice today?

Motley Fool contributor James Mickleboro has positions in Allkem. 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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Have you ever wondered which ASX shares rich people have bought?

Maybe you’d like to emulate their portfolio? Surely if they’re wealthy then they must know what they’re doing?

Well, the cat need not be killed because this week investment platform Selfwealth Ltd (ASX: SWF) crunched the data to reveal the ASX-listed stocks that are most held by millionaires:

1. Fortescue Metals Group Ltd (ASX: FMG)
2. Vanguard Australian Shares Index ETF (ASX: VAS)
3. BHP Group Ltd (ASX: BHP)
4. Westpac Banking Corp (ASX: WBC)
5. CSL Limited (ASX: CSL)
6. ANZ Group Holdings Ltd (ASX: ANZ)
7. Commonwealth Bank of Australia (ASX: CBA)
8. Neuren Pharmaceuticals Ltd (ASX: NEU)
9. Macquarie Group Ltd (ASX: MQG)
10. A2 Milk Company Ltd (ASX: A2M)

The average size of the millionaire portfolio was $2.6 million. The largest one was a whopping $97 million.

How the millionaire portfolio differs from the peasants

Selfwealth chief executive Cath Whitaker observed a common theme in the millionaire portfolios.

“Our millionaire portfolio investors hold strong companies in strong sectors,” she said.

“When it comes to ETFs they go for the biggest, and when it comes to non-traditional single stocks they’ve picked those that have seen very high returns.”

Indeed, most of the list is made of established industry leaders. The one outlier in the top 10 list seems to be Neuren Pharmaceuticals.

That stock has exploded 268% over the past 12 months.

In an endorsement for active stock picking, the major difference between the millionaire portfolios compared to the general population was that there was only one exchange-traded fund stock featuring in the wealthy top 10.

According to Selfwealth, the top 10 ASX shares among the wider investor community are “dominated” by ETFs.

Remarkably, the millionaires are patriotic. The only non-ASX stock in the top 20 is personal computing giant Apple Inc (NASDAQ: AAPL), which came in at 15th.

The wider investor population loves ASX lithium shares, with five featuring among the most popular 20.

But for the millionaires, only Pilbara Minerals Ltd (ASX: PLS) features, and that’s coming in at a lowly 17th.

The post The top 10 ASX shares held by millionaires appeared first on The Motley Fool Australia.

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More reading

• Want to score the boosted ANZ dividend? You better hurry!
• These ASX 200 dividend stocks are highly rated for a reason
• Here are the top 10 ASX 200 shares today
• 3 reasons the CBA share price is heading lower: Goldman Sachs
• Why Appen, CSR, Silver Lake, and Westpac shares are falling

Motley Fool contributor Tony Yoo has positions in CSL and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and CSL. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended A2 Milk, Apple, and Westpac Banking Corporation. 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 big news this week is that mergers and acquisitions (M&A) activity is heating up in the lithium industry with the proposed merger of Allkem Ltd (ASX: AKE) and Livent Corp (NYSE: LTHM).

The news went down well with investors on both sides of the Pacific Ocean, sending their shares hurtling higher.

But what about brokers? How have they responded to the Allkem-Livent merger? Let’s find out.

Allkem merger creates a ‘top 3 lithium producer’

Analysts at Goldman Sachs have responded positively to the news. The broker highlights that it will create a “top 3 lithium producer” globally if the transaction completes.

In addition, its analysts highlight that the combination of the two lithium miners will result in a stronger balance sheet that supports their growth opportunities. It said:

The merger would also imply a stronger/more defensive balance sheet to fund the proposed and possible growth pipeline, where management noted the current execution pipeline will continue without taking pause as both businesses are already fully funded to execute respective projects.

Goldman also suggested that the M&A activity may not stop at the Allkem merger, which will be music to the ears of ASX lithium shareholders. It commented:

On lithium sector M&A more broadly, as we have highlighted, those in a position for strategic consolidation with South American lithium brine producers (other developers/emerging operators) may also have synergies in these types of lithium projects, while global miners/commodities business likely remain interested in lithium assets.

Goldman has retained its buy rating. However, it hasn’t changed its price target, which still sits at $12.90.

Brine processing techniques could be key

Morgans is also very positive on the Allkem merger with Livent. As well as the potential synergies, it highlights that the latter’s advanced brine processing techniques could help driver a stronger performance from Allkem’s assets. It said:

It is possible that the accelerated take up of different brine processing techniques at AKE’s projects, that are used by LTHM, could unlock the large potential of those resources much faster than we and the market have allowed.

However, due to the jump in the Allkem share price yesterday, the broker has downgraded its shares to a hold rating with a $14.40 price target. It commented:

We reduce our rating to HOLD given the extremely strong share price reaction. We think the deal makes sense for AKE but there is limited fundamental upside given today’s rally.

Though, it concedes that there’s potential for a third-party to come in with a counteroffer that starts a bidding war. Keep an eye out for that!

The post Here’s what brokers are saying about the Allkem merger with Livent appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why Allkem, Core Lithium, Graincorp, and Omni Bridgeway shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• ASX lithium shares rocket higher amid Allkem merger news

Motley Fool contributor James Mickleboro has positions in Allkem. 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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