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As well as giving investors opportunities to invest in indices and sectors from across the globe, some exchange traded funds (ETFs) have been set up to allow you to focus on a particular investment objective.

One of those objectives is dividend income.

With that in mind, let’s get better acquainted with two ASX ETFs that provide investors with a nice income stream.

Here’s what you need to know about them:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The BetaShares S&P 500 Yield Maximiser could be a top ASX ETF to buy if you’re searching for income.

This ETF is somewhat unconventional. That’s because it uses a clever equity income investment strategy over a portfolio of shares comprising the famous S&P 500 Index on Wall Street.

By doing so, the fund manager is able to deliver a greater dividend yield than you would expect to receive from buying the 500 stocks. Betashares notes that the additional income generated by UMAX’s strategy may partly offset potential losses in falling markets.

For example, at present, the BetaShares S&P 500 Yield Maximiser’s units are offering investors an impressive 6.9% distribution yield.

Among the shares listed on the S&P 500 index are dividend-payers such as Apple, Bank of America, Exxon Mobil, Home Depot, and Walmart.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The Vanguard Australian Shares High Yield ETF is a more traditional ASX ETF.

It uses broker research to build a diverse portfolio of ASX shares that have higher forecast dividend yields relative to the rest of the market.

Vanguard highlights that the ETF could be suitable for buy and hold investors that are seeking long-term capital growth, some tax effective income, and with a higher tolerance for the risks associated with share market volatility.

At present there are 72 ASX shares included in the portfolio. These include giants such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES), and Woodside Energy Group Ltd (ASX: WDS).

The Vanguard Australian Shares High Yield ETF currently trades with an estimated forecast dividend yield of 5.3%.

The post Buy these ASX ETFs for big dividend income appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX ETFs for their big dividends this month
• These ASX dividend shares have big yields
• Is the Vanguard Australian Shares High Yield ETF (VHY) a strong ASX buy for passive income?
• 2 fantastic ETFs for ASX investors to buy next week
• 5 steps to bring in $1,000 per month in passive income

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 BetaShares S&p 500 Yield Maximiser Fund, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield 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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 Warren Buffett and his US$114 billion fortune are renowned among investors. Not only is the ‘Oracle of Omaha’ an incredibly successful stock picker, but he is also generous with his investing advice.

And while I generally find mountains of value in Buffett’s liberally offered wisdom, there’s one topic on which I wholeheartedly reject following his lead when investing on the ASX.

Here are two pieces of Buffett’s investing advice I follow to the letter, and one that I ignore.

2 pieces of Warren Buffett advice I live by

Number 1:

Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.

There are many Buffett quotes that portray a message similar to the one above. And for good reason, in my opinion.

As we absorb endlessly scrolling tickers and peruse dry fundamentals, it’s easy to forget that investing on the stock market is, essentially, the same as buying chunks of businesses.

Buffett built much of his wealth by buying such chunks of quality businesses at decent prices and holding them as they grew.

That’s the same long-term approach I aim to take when investing on the ASX.

Number 2:

Widespread fear is your friend as an investor, because it serves up bargain purchases.

The second piece of Buffett wisdom I aim to live by isn’t always easy to follow. Fear is rarely a comfortable sensation to stomach, particularly when it seems like your hard-earned cash could be at stake.

But market corrections and bear markets are an almost unavoidable part of investing. And there’s nearly always a silver lining when it comes to tough times on the market.

They often see shares in quality businesses tumble, creating an opportunity for bargain-hunting investors to ‘buy the dip‘. Without a little fear, such opportunities might never come knocking.

And the 1 piece of Warren Buffett advice I ignore:

We think diversification, as practiced generally, makes very little sense for anyone that knows what they’re doing. Diversification is the protection against ignorance.

Now, I’d never go so far as to disagree with Buffett. It’s clear he knows what he is doing when it comes to wealth building.

Not to mention, the above quote is often consumed without context, found within the accompanying video, wherein Buffett continues, “[diversification] is a perfectly sound approach for somebody who does not feel they know how to analyse businesses”.

I don’t doubt that the brains behind Berkshire Hathaway find little merit in diversification. However, it stands to reason that very few investors are as good at analysing businesses as Buffett has proven to be.

For the average investor, diversification offers protection against single-sector or -company downturns. By building a diverse portfolio, one might even boast a better chance of owning the market’s next big thing.

Thus, I believe the majority of investors could benefit from building a diverse portfolio of ASX shares, and perhaps adding a few other asset classes for good measure.

The post 2 pieces of Warren Buffett investing advice I live by, and the 1 that I ignore appeared first on The Motley Fool Australia.

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More reading

• What’s the forecast for the Fortescue share price this month?
• How my ASX share portfolio is ready for a stock market crash
• ‘Sell-off is overdone’: Morgans says this ASX share is a bargain
• Why Goldman has this ASX All Ords share on its conviction list and is tipping almost 50% upside
• ‘Upside surprise’: 2 small-cap ASX shares ready to break out

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 Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Fortescue Metals Group Ltd (ASX: FMG) share price fell in April, but could it recover in May?

Fortescue shares slid nearly 7% from $22.49 to $20.94 a share in April. On Tuesday, Fortescue shares fell 0.29% to close at $20.58 apiece.

Let’s take a look at what could be ahead for the Fortescue share price.

What is the outlook ahead?

Analysts are bearish on the Fortescue share price going forward, as my Foolish colleague James reported recently.

Fortescue is a major iron ore producer that is also diversifying to green renewables via Fortescue Future Industries.

The iron ore price is a major factor likely to weigh on Fortescue shares going forward, along with progress on the company’s decarbonisation plans.

Goldman believes Fortescue shares are trading at a premium to fellow mining giants Rio Tinto Ltd (ASX: RIO) and BHP Group Ltd (ASX: BHP). Goldman said:

[T]he stock is trading at a premium to RIO & BHP on our estimates; 1.4x NAV [net asset value] vs. BHP at c. 0.95x NAV and RIO at 0.9x NAV, c. 5.5x NTM EV/EBITDA (vs. BHP/RIO on c. 5x/3.5x), and FY24 FCF of c. 4% vs. BHP/RIO on c. 7/10%.

Uncertainties around Fortescue Future Industries (FFI) diversification and Pilbara decarbonisation and impact on dividend and balance sheet.

Bell Potter and Morgan Stanley have also recently placed sell ratings on Fortescue shares.

Looking at the iron ore price, analysts recently expressed concerns the iron ore price is “not out of the danger zone“.

As my Foolish colleague Tristan reported, Morgan Stanley analysts believe there could be an oversupply of iron ore soon due to China’s steel production “catching up with the reality of sluggish underlying demand”.

China is the world’s largest iron ore importer. The commodity is essential in producing steel. In a research report yesterday, ANZ commodity strategists Daniel Hynes and Soni Kumari predicted China’s steel production growth could “weaken”. They said:

China’s steel production in March rose 6.9% y/y to 95.6mt, taking Q1 total output to 255mt (+4% y/y).

But this strength in production is unlikely to sustain amid lower profit margins and curbs on loss-making steel mills.

Iron ore is currently fetching US$107 a tonne, according to Trading Economics.

On a positive note, Fortescue has recently started production at the Iron Bridge Magnetite Project in Western Australia. The product is now ready for shipping and suitable for steelmaking. Fortescue chairman Andrew Forrest described the news as a “game changer”.

Share price snapshot

The Fortescue share price has climbed nearly 5% in a year and has risen 0.34% in the year to date.

This ASX 200 iron ore share has a market cap of about $63.4 billion based on the latest share price.

The post What’s the forecast for the Fortescue share price this month? appeared first on The Motley Fool Australia.

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More reading

• Analysts name 4 key reasons to buy BHP shares
• 5 things to watch on the ASX 200 on Wednesday
• Can copper be the next big boost for the BHP share price?
• Fortescue’s Twiggy could wipe this ASX 300 share from the bourse. Here are the details
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Monica O’Shea 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 Westpac Banking Corp (ASX: WBC) dividend will soon be allocated to investors. But, people need to own shares today if they want to receive it.

The ASX bank share recently announced its FY23 half-year result for the six months to 31 March 2023.

Westpac ex-dividend date

As announced earlier this week, the bank’s board decided to declare an interim dividend of 70 cents per share. This represented a year-over-year increase of 15%.

The ex-dividend date is 11 May 2023. Investors need to own shares before this date to be entitled to the upcoming dividend.

This means investors need to own Westpac shares by the end of today’s trading — 10 May 2023. So there are only a few hours left to ensure entitlement to that dividend.

However, many other investors may have the same idea – so don’t be surprised if the Westpac share price drops on 11 May 2023 by a similar amount to the dividend amount.

When will the Westpac dividend be paid?

Westpac has revealed it is going to pay the 70 cents per share dividend on 27 June 2023.

As such, shareholders will only need to wait a month and a half for the money to hit their bank accounts.  

Growth expected to slow

Westpac’s profit has benefited from the higher lending profits. The bank’s FY23 half-year net profit rose 22% to $4 billion.

However, the ASX bank share is expecting credit growth for both housing and business will slow. It’s expecting more stress in the period ahead, particularly for small business. Westpac noted that “intense mortgage competition is expected to negatively impact industry and Westpac’s margins in the next half”.

But, management believes its balance sheet strength will enable it to support customers and navigate any future economic challenges.

The bank said interest rates are closer to their forecast peak, but it’s focused on how long they stay high and what this means for household budgets and discretionary spending.

Westpac share price snapshot

Since the start of the month, the ASX bank share has dropped 4%.

The post Hoping to bag the boosted Westpac dividend? You’ll need to buy shares today appeared first on The Motley Fool Australia.

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More reading

• The Westpac share price could offer a 20% return: Goldman Sachs
• 5 things to watch on the ASX 200 on Tuesday
• Why Lynas, Piedmont Lithium, Westpac, and Woodside shares are rising
• Here’s what you need to know about the 70 cents Westpac dividend
• Westpac share price on watch amid $4bn half-year profit

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 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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New Zealand accounting software provider Xero Limited (ASX: XRO) made many Australians wealthy last decade with a spectacular explosion of its share price.

But after topping the $150 mark in late 2021, the great technology sell-off over the past 18 months has been very unkind.

Xero shares are now trading at around the low $90s, as the business grapples with an investment market that no longer tolerates “growth at all costs” models.

So why would you buy Xero shares right now?

Here are three reasons you might consider:

1. Change in focus 

New chief executive Sukhinder Singh Cassidy started at Xero in February. Already by early March, she had changed its course.

For over a decade, the cloud software maker had been about gaining as many new customers as possible.

But Singh Cassidy announced that this relentless pursuit would now slow, in order for Xero to cut costs and become more profitable.

“As we aspire to build a higher performing global SaaS company and to enable Xeroʼs next phase of growth and drive better customer outcomes, we need to streamline and simplify our organisation,” she said in March.

“These changes, and our decision to reinvest in key strategic areas, will adjust our operating cost base as we balance growth and profitability, while taking a robust approach to capital allocation that supports long term value creation.”

The market has been a massive fan of this pivot, with the share price up more than 17% since that day.

2. Interest rate rises could be ending soon

One of the biggest reasons for the vicious sell-off in tech stocks has been the steep rise in interest rates since May last year.

But the torture is nearing the end, and that makes Shaw and Partners senior investment advisor Jed Richards bullish on Xero.

“Central banks may be nearing the end of interest rate tightening, as inflation shows signs of cooling,” he told The Bull.

“Consequently, expect a brighter outlook for the high-growth technology sector.”

3. Sticky product

A major plus for Xero is that its customers are in the business sector, rather than being end consumers.

Changing software used within a business is inconvenient at best and expensive at worst, both in terms of monetary cost and time wasted.

It’s not like a consumer switching smartphone apps.

This in-built client inertia is called “stickiness”, and Xero has a ton of it.

“Xero is a high quality cash generative business with impressive customer advocacy and duration,” read a recent Morgans memo.

“We see the current short-term weakness as a rare opportunity to buy a high quality global growth company at a discount to the lifetime value of its current customer base.”

The post 3 compelling reasons to buy Xero shares right now appeared first on The Motley Fool Australia.

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More reading

• ‘High growth rate’: 2 ASX tech shares you need to look at right now
• 2 exciting ASX growth shares I’d buy and hold to 2030
• Morgans names more of the best ASX 200 stocks to buy in May
• Top brokers name 3 ASX shares to buy next week
• Nasdaq rebound! Brokers say these ASX 200 tech shares are buys

Motley Fool contributor Tony Yoo has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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House prices appear to have reached their bottom given two consecutive months of rises in the median Australian home value, according to independent data provider CoreLogic.

CoreLogic’s national Home Value Index (HVI) increased by 0.5% in April and 0.6% in March.

CoreLogic’s research director Tim Lawless says:

Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift.

Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average.

So what does this mean for ASX 200 building shares? Only good things, according to one expert.

What do rising house prices mean for ASX 200 shares?

Rising house prices are always positive for ASX 200 real estate shares such as property developers, real estate investment trusts (REITs), and other companies associated with the property sector.

These include building companies, building materials suppliers, and household furniture and appliance retailers.

Over the coming months, Jun Bei Liu of Tribeca Investment Partners expects ASX 200 building shares to benefit from higher home buyer demand and sales now that house prices appear to have bottomed.

As reported by The Sydney Morning Herald, Liu says:

The likes of Boral Limited (ASX: BLD), Stockland Corporation Ltd (ASX: SGP), and Mirvac Group (ASX: MGR) are going to see quite a bit of demand. It doesn’t mean earnings will return quickly, but the share price will move ahead of earnings for those builders.

Liu also singled out CSR Limited (ASX: CSR) shares to benefit from rising house prices and activity, too.

The CSR share price is already up 18% in the year to date. The Boral share price is up 40%, the Stockland share price is up 24%, and Mirvac shares are up 10%.

The share prices of other major ASX 200 building shares like James Hardie plc (ASX: JHX) and Brickworks Limited (ASX: BKW) are also up by 30% and 14% respectively.

As we previously reported, many brokers reckon James Hardie shares, in particular, were oversold in 2022.

Boral, CSR, Brickworks, and James Hardie are all ASX 200 materials shares. Stockland and Mirvac are diversified property development companies.

Liu points out that rising house prices have far-reaching benefits for the broader economy.

She says:

Ultimately, house prices rising is very good for the Australian economy because it’s such a big component that underpins consumer confidence, business confidence, and economic activity, and flows through to salaries, employment, and everything else. Most things will benefit from it.

Building activity in Australia has declined significantly over the past year due to rising interest rates, supply chain disruptions, and labour shortages in the construction sector.

The post 3 ASX 200 building shares that could rise now that house prices have bottomed appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• No savings at 40? Here’s how I’d aim to build a passive income of $3,000 a month
• What’s going wrong for ASX 200 share A2 Milk today?

Motley Fool contributor Bronwyn Allen has positions in James Hardie Industries Plc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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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Woolworths Group Ltd (ASX: WOW) shares could be a strong buy according to one leading broker.

In fact, the broker is so positive on the retail giant that it has its shares on its coveted conviction list.

Who is bullish on the Woolworths share price?

The broker that is positive on Woolworths shares is Goldman Sachs, with a recent note revealing that its analysts have a buy rating and $42.80 price target on them.

Based on the current Woolworths share price of $38.55, this suggests that its shares could rise 11% from current levels.

Furthermore, the broker is forecasting a fully franked dividend yields of 2.7% in FY 2023 and 3% in FY 2024.

Why is Goldman tipping it as a buy?

Goldman is very positive on the Woolworths’ outlook and is expecting the company to deliver solid revenue and earnings growth in the coming years.

Its analysts highlight that their “updated forecasts imply FY22-25e ~3.4% sales CAGR and ~9.6% CAGR for EBIT/NPAT respectively.” The latter is particularly impressive for such a large, defensive company like Woolworths.

But where is this growth coming from? The broker believes the company’s loyalty program and omni-channel advantage will be the keys to its success. In addition, its ability to pass through cost inflation to customers is a big positive in the current environment. It explains:

We are Buy rated (on Conviction List) on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock. Catalysts include 1H23 results with better-than-expected mix improvement to drive positive price and margins and a consistent demonstration of market share gains in FY23/24 that could lead to re-rating of the business vs COL/MTS.

The post Why Woolworths shares are a strong buy: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Goldman Sachs names the high-quality defensive ASX shares to buy now
• Here’s what brokers are saying about the Woolworths share price post-Q3 update
• Top brokers name 3 ASX shares to buy today
• Volatility got you down? 3 steps to building a robust income from ASX 200 dividend shares

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

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If you’re wondering whether BHP Group Ltd (ASX: BHP) shares are good value at $44.47, then it may be worth listening to what Goldman Sachs has to say on the matter.

According to a recent note, its analysts believe a lot of value is on offer with the Big Australian’s stock at present.

As a result, it has a buy rating and $49.90 price target on the miner’s shares.

But why is it positive on BHP shares? Well, summarised below are four key reasons why the broker thinks investors should be snapping up shares right now.

4 reasons to buy BHP shares

The first reason the broker is bullish on the mining giant is unsurprisingly its valuation, which is meaningfully lower than historical averages. It explains:

BHP is currently trading at ~5x NTM EBITDA, at a discount to the 25-yr average EV/EBITDA of ~6-7x, but above S32 on ~3x, RIO on ~3.5x, but below FMG on ~6x. BHP is trading at a discount to NAV at 0.9x (A$48.7/sh), in-line with S32 at ~0.9x NAV but at a premium to RIO at ~0.8x NAV. That said, we believe this premium vs. peers can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore), high returning copper growth, and lower iron ore replacement & decarbonisation capex.

Another reason to be positive on BHP shares is its commodity mix, which the broker believes is well-positioned in the current environment. It adds:

We remain bullish on BHP’s commodity mix: With iron ore fundamentals supportive into 2Q23, copper on growing deficits even with global growth risks and metallurgical coal on constrained global supply growth.

Goldman also sees opportunities to create value from the miner’s copper pipeline. It said:

We continue to believe BHP’s major opportunity (and challenge) is offsetting copper reserve depletion and grade decline in Chile from 2023 through investing in BHP’s copper reserves/resources (40Mt/200Mt) which are the largest globally. We include ~US$12bn of copper projects out of the >US$20bn we have identified, delivering 600-700ktpa of copper out of potential ~1.3Mtpa total (including OZL) pre depletion. We now forecast Cu Eq production (CAGR) of around ~2.5% over the decade (up from prior ~1.5%) with the OZL growth projects, which is now broadly in-line with peers RIO, S32 & FMG. RIO still has better near to medium term Cu Eq growth on our estimates (see Exhibit 7).

Finally, cash is king when it comes to investing and BHP is generating bucketloads of the stuff. Goldman commented:

From a FCF/DPS perspective, BHP is trading on a robust NTM FCF/DPS yield of c. 7%/6%, but below Buy-rated RIO (on CL) on 10%/7% & S32 on 13%/10%. We now see BHP’s minerals capex increasing to ~US$10.5bn by mid-decade (above peer RIO at ~US$9bn).

The post Analysts name 4 key reasons to buy BHP shares appeared first on The Motley Fool Australia.

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More reading

• Can copper be the next big boost for the BHP share price?
• Top brokers name 3 ASX shares to buy next week
• If I invest $10,000 in BHP shares how much passive income will I receive?
• Analysts name 2 ASX 200 dividend shares to buy for passive income
• 4 ASX 200 shares just upgraded by 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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Even though lithium prices have cooled off over recent months, battery ingredients such as that and rare earths will remain in high demand in the long run.

This is especially because of one modern phenomenon.

“Lithium-ion batteries are not new — they’ve been powering laptops, mobile phone batteries, and even off-grid camping setups for some time,” Shaw and Partners portfolio manager James Gerrish said on Market Matters. 

“However, it’s the growth in electric vehicles that is driving the demand for this lightweight, high-energy-density input.”

If you’re spooked by the 70% pullback in lithium price over the past half-year, Gerrish reminded that it shouldn’t affect the long-term worthiness of those stocks.

“Commodities are cyclical… high prices incentivise new production that ultimately solves those high prices,” he said.

“While we cannot see lithium prices re-scaling the 2022 highs for many years, there is still plenty of opportunity.”

In fact, the sell-off has made it a tempting time to buy.

“Following a sharp correction, Market Matters believes the risk/reward in lithium & other related commodities has improved.”

Let’s take a look at the three ASX shares Gerrish nominated as the best buys in the battery materials space:

10% profit in 2 weeks? Yes, please

Pilbara Minerals Ltd (ASX: PLS) is the pick of the lot for Gerrish at the moment. He would use any daily dips to buy more.

“We recently bought Pilbara Minerals in the Flagship Growth Portfolio and are now sitting on a ~10% paper profit in around two weeks,” he said.

“We view Pilbara as the lower-risk exposure in a risky sector, where growing production will underpin growing earnings and dividends.”

He admitted the last guidance showed costs heading up for the lithium miner.

“Pilbara reported average realised price of US$4,840/t which was down 15% Q/Q and that theme will continue, but the margins for this early producer remain solid.”

The company’s financial position looks secure enough to keep pumping out the dividends.

“Their cash balance rose $457 million in the quarter, pushing their bank balance up to a net cash position of ~$2.7 billion. This will support fully franked dividends in the range of 5%.”

A more speculative punt for Gerrish is Global Lithium Resources Ltd (ASX: GL1), which he described as “a higher-risk exploration company with solid upside”.

“Global is a $400 million lithium exploration company that is not in production and is therefore not producing earnings,” he said.

“However, they are undertaking a large-scale exploration program at their Western Australia assets with good prospects in a solid area around Kalgoorlie.”

Recent test results were “encouraging”, he added.

“They are progressing through various stages of permitting and feasibility in their two operations.”

On the rare earths side, Gerrish is “long and bullish” on Iluka Resources Limited (ASX: ILU).

“They are advancing the Eneabba phase 3 project, which consists of the construction of the first integrated rare earths facility in Australia — and this remains on track.”

Iluka’s bread and butter is mineral sands, which doesn’t attract as high a valuation as rare earths producers.

But this is why it might prove to be a bargain buy right now.

“The proportion of their earnings that will come from rare earths in the future will increase meaningfully, from ~3% today to around 15% in the next 5 years.”

The post The 3 best lithium and rare earths ASX shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why Arafura Rare Earths, Imugene, Pilbara Minerals, and Worley are charging higher
• What’s with ASX 200 lithium stocks today?
• 5 things to watch on the ASX 200 on Tuesday

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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If you’re looking for dividends, then you might want to check out the ASX 200 dividend shares listed below.

Both of these shares have recently been named as buys by leading brokers. Here’s what you need to know:

Macquarie Group Ltd (ASX: MQG)

The first ASX 200 dividend share that could be a buy is Macquarie.

Although the market didn’t respond overly positively to the investment bank’s full-year results this month, the team at Morgans remains a fan and appears to believe recent weakness has created a buying opportunity for investors.

In response to the result, Morgans has retained its add rating with a $201.80 price target. The broker commented:

MQG is a quality franchise, exposed to structural growth areas, and the company performed exceptionally well in a more difficult FY23 environment. With >10% share price upside to our price target, we continue to maintain our ADD recommendation.

As for dividends, the broker is expecting partially franked dividends of $6.33 per share in FY 2023 and $6.75 per share in FY 2024. Based on the current Macquarie share price of $177.43, this will mean yields of 3.55% and 3.8%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another ASX 200 dividend share that has been named as a buy is insurance giant QBE.

Analysts at Citi are positive on the company. This is due to its top line momentum, improving yields, and attractive valuation. The broker has a buy rating and $16.20 price target on its shares. It explains:

Top line momentum and improving yields remain attractive QBE’s FY22 result demonstrates strong top line momentum, a good part of which should continue into FY23E. Yields are also materially expanding and this should provide a strong boost to future earnings. […] With valuation still looking attractive too, we retain our Buy call, lifting our TP to A$16.20.

In respect to dividends, Citi expects QBE to pay a 61 cents per share dividend in FY 2023 and then a 71 cents per share dividend in FY 2024. Based on the latest QBE share price of $15.30, this equates to yields of 4% and 4.65%, respectively.

The post 2 top ASX 200 dividend shares to buy this week: brokers appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• ‘A quality franchise’: Why this broker sees major upside ahead for Macquarie shares
• Why Macquarie, Meteoric Resources, Pointsbet, and Syrah shares are falling
• Up 23% in the past year. Is it too late to buy this ASX 200 insurance share?
• Is the Macquarie share price good value following the bank’s results?

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 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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