Tag: Motley Fool

S&P/ASX 200 Index (ASX: XJO) banks are in the spotlight today as First Republic Bank (NYSE: FRC) teeters on the brink of collapse in the United States.

Friday saw another massive fall in the First Republic Bank share price.

After stock in the bank had already crashed 49.4% last Tuesday, First Republic shares closed Friday down another 43.3%. All told, the First Republic share price is now down a disastrous 98% since the banking crisis began to unfold in the US on 8 March.

That crisis has already seen the collapse of two US banks, Silicon Valley Bank and Signature Bank.

Contagion from those collapses also spread to Europe and led to the government-engineered takeover of Credit Suisse by rival bank UBS.

We’ll have a look at why First Republic is now teetering on the brink of collapse below.

But first, how are the big four ASX 200 bank shares holding up today?

How are ASX 200 banks responding today?

The big four ASX 200 banks are displaying their resilience today.

Here’s how the big bank stocks are tracking in morning trade on Monday:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.2%
• National Australia Bank Ltd (ASX: NAB) shares are up 0.6%
• Westpac Banking Corp (ASX: WBC) shares are up 0.3%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 0.5%

It appears investors are confident that the ASX 200 banks won’t be subject to the same pressures sending numerous US banks into receivership.

That’s likely driven by recent reports revealing that the big four banks are the most capitalised in the world, as gauged by their common equity tier 1 (CET1) ratios.

If you’re unfamiliar, CET1 ratio measures the core equity capital of the ASX 200 banks compared to their risk-weighted assets.

With that said, here’s why First Republic finds itself well underway on the road to collapse.

What’s happening with First Republic Bank?

First Republic Bank has been badly hit by fast-rising interest rates in the US.

The bank’s large holdings of low-interest rate loans left it particularly vulnerable to the past year’s series of rate hikes from the US Federal Reserve.

Following another horror day for the bank’s shares on Friday, the US Federal Deposit Insurance Corporation (FDIC) looks all but set to place First Republic Bank under receivership.

Should that eventuate, it would mark the third bank collapse in the US this year. None of which, remarkably, have done lasting damage to the share prices of the big four ASX 200 banks.

Commenting on First Republic’s woes, professional bond investor James Wilson said (quoted by ABC News):

The First Republic collapse is set to be the second-largest bank to fail in US history, in a sign that credit markets are showing signs of seizing as a result of the aggressive [interest rate] tightening cycle we have seen from the [Federal Reserve] and global central banks.

The fear and contagion is spreading through and while inflation data continues to print at lofty levels, the Fed will not be able to cut rates unless we have a systemic issue which may be approaching.

In the most recent development, Bloomberg reports that the FDIC has reached out to major US banks including JPMorgan Chase & Co, PNC Financial Services Group, and Citizens Financial Group to submit offers to take over the embattled bank.

If that approach fails, US regulators could step in to take ownership of the bank.

With their world-leading capital positions, that’s a development we’re unlikely to see with the big four ASX 200 banks.

The post What’s happening with ASX 200 banks today as First Republic teeters on the brink of collapse? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Investing in ASX 200 shares? Here’s what to expect from the RBA tomorrow
• Looking to buy ANZ shares? Here’s what to watch in this week’s results
• Why did the NAB share price smash the ASX 200 in April?
• Analysts say these ASX 200 dividend stocks are top buys
• Another ASX company to disappear

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended JPMorgan Chase and PNC Financial Services. 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.

from The Motley Fool Australia https://ift.tt/ChSQkwI

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share even though its short interest eased slightly to 11.7%. There are concerns that airlines may not be offering as much margin to travel agents due to a lack of competition.
• Megaport Ltd (ASX: MP1) has seen its short interest ease a touch to 11.1%. Short sellers may be regretting this one. They appear to have been caught up in a short squeeze last week after a stronger than expected update sent this network as a service company’s shares rocketing over 40% higher.
• Zip Co Ltd (ASX: ZIP) has short interest of 10.3%, which is up slightly week on week. Traders appear to be betting against this buy now pay later provider achieving its profit goals.
• Sayona Mining Ltd (ASX: SYA) has seen its short interest rebound to 9.1%. Short sellers continue to target the lithium industry due to continued weakness in prices of the battery making ingredient.
• Core Lithium Ltd (ASX: CXO) has short interest of 8.9%, which is down slightly week on week again. This lithium miner’s shares trade at a significant premium to peers according to some brokers.
• Jervois Global Ltd (ASX: JRV) has 8.5% of its shares held short, which is up week on week. This cobalt developer recently suspended the final construction of the Idaho Cobalt Operations due to low cobalt prices. It has already spent US$130 million on its construction.
• Temple & Webster Group Ltd (ASX: TPW) has seen its short interest remain flat at 8.5%. The housing market downturn and shift back to offline shopping appear to be weighing on sentiment.
• Lake Resources N.L. (ASX: LKE) has 8.3% of its shares in the hands of short sellers. This is another lithium share being targeted by short sellers amid falling battery material prices.
• JB Hi-Fi Limited (ASX: JBH) has short interest of 8%, which is down week on week. Short sellers may believe that this retail giant’s sales could suffer due to the housing market downturn and cost of living crisis.
• AMA Group Ltd (ASX: AMA) has 7.9% of its shares held short. This may be due to concerns over the state of this smash repair company’s balance sheet.

The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Megaport shares can rise another 40%: Goldman Sachs
• These were the best-performing ASX 200 shares in April
• 2 ASX lithium shares this US institutional investor is buying up big (and one it’s selling)
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 Megaport, Temple & Webster Group, and Zip Co. The Motley Fool Australia has recommended Flight Centre Travel Group, Jb Hi-Fi, Megaport, and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/yhZkG18

The S&P/ASX 200 Index (ASX: XJO) is off to the races this morning as the Australian share market starts the week off on a strong footing. At the time of writing, the ASX 200 has gained a healthy 0.7%, lifting the index back over to 7,360 points. But let’s talk about the Transurban Group (ASX: TCL) share price.

Transurban shares are doing even better than the broader market right now. This ASX 200 toll road operator is having a top morning, currently enjoying a market-beating gain of 0.8%. That lifts the Transurban share price to $15.11 right now, just a whisker off the company’s 52-week high of $15.23.

This encouraging performance comes after Transurban made a major announcement to investors this morning.

Just before market open, Transurban gave shareholders a dividend distribution guidance upgrade for FY2023.

This would be big news for any ASX 200 share. But Transurban is a popular share amongst income investors, thanks to its sturdy history of dividend payouts. Let’s check out what all the fuss is about.

Tolling the cat: dividend pay rise coming to investors

Transurban has announced that “the FY23 distribution is expected to be 58.0 cents per stapled security”. The company pointed out that this figure would represent a 41.5% increase on the 41 cents per share that investors enjoyed over FY2022. It also comes in at 1 cent per share above the previous guidance investors were given.  

Transurban shareholders have already welcomed an interim dividend of 26.5 cents per share that the company paid out back on 13 February. That means that investors can expect the August final dividend for FY2023 to come in at 31.5 cents per share under this guidance.

Investors now seem to be in line for an FY2023 payout that is higher than what was previously expected. As such, it’s perhaps no surprise that the Transurban share price is getting a major boost this Monday.

If the company is on the money when it comes to its dividend guidance, it would give the Transurban share price a forward dividend yield of 3.84% today.

Transurban share price snapshot

Transurban shares have had a stellar year in 2023 so far. This ASX 200 toll road company is now up 18.3% year to date. Over the past 12 months, Transurban shares have gained just over 5%:

At the current Transurban share price, this ASX 200 blue chip share has a trailing dividend yield of 3.47%.

The post Transurban share price jumps on dividend boost appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Brokers say these ASX dividend shares are buys for passive income
• 5 things to watch on the ASX 200 on Tuesday
• Guess which ASX 200 share is gaining on a record quarter
• Creating a diversified income stream: Top ASX dividend shares to buy today according to analysts
• Analysts reckon you should add these ASX dividend shares to your retirement portfolio

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

from The Motley Fool Australia https://ift.tt/C0WjoTL

If you’re building an income portfolio but don’t have sufficient funds to maintain a truly diverse portfolio, then exchange traded funds (ETFs) could be the answer.

That’s because there are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares.

Two that could be worth considering are listed below:

Vanguard Australian Shares Index ETF (ASX: VHY)

The first ASX ETF for income investors to consider is the Vanguard Australian Shares High Yield ETF.

This rules-based ETF provides investors with low-cost exposure to a diverse group of 70+ ASX shares that have higher forecast dividends relative to the market average.

In respect to rules, Vanguard restricts the proportion invested in any one industry to 40% and 10% for any one company. Furthermore, Australian Real Estate Investment Trusts (A-REITS) are excluded from the index.

This ultimately means you’ll be buying companies as large as BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), and as small as Dicker Data Ltd (ASX: DDR) and Elders Ltd (ASX: ELD).

The ETF currently trades with an estimated forward dividend yield of 5.5%.

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

Another ASX ETF that could be a great option for income investors is the BetaShares S&P 500 Yield Maximiser.

This ETF has been designed to give investors access to the top 500 companies listed on Wall Street.

However, thanks to its covered call strategy, the actively managed fund is expected to earn quarterly income that is significantly greater than the dividend yield of the underlying share portfolio over the medium term.

Among the companies included in the fund are giants such as Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and Walmart.

As of 31 March, its units were providing investors with a trailing 7.4% distribution yield.

The post Buy these ASX ETFs for their big dividends this month appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 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
• How I’d invest $20,000 to earn reliable passive income 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 Dicker Data. The Motley Fool Australia has positions in and has recommended BetaShares S&p 500 Yield Maximiser Fund and Dicker Data. The Motley Fool Australia has recommended Elders and 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.

from The Motley Fool Australia https://ift.tt/eSk7CAu

S&P/ASX 200 Index (ASX: XJO) investors will be keeping a close eye on the Reserve Bank of Australia (RBA) tomorrow afternoon.

At 2:30pm AEST RBA governor Philip Lowe will announce the central bank’s next interest rate decision.

Last month, as you’ll recall, the RBA opted to keep rates on hold at the current 3.6% to give it time to assess the impact of previous rate rises on inflation.

“The board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,” Lowe said at the time.

That came after the bank had hiked the official cash rate at 10 consecutive previous meetings from an all-time low of 0.10% last May.

The ASX 200 lifted 0.2% immediately following April’s announcement.

Of course, that’s all monetary policy water under the bridge.

The big question now is, what can ASX 200 investors expect from the RBA tomorrow?

Can ASX 200 investors expect another pause from the RBA?

For some expert insight into the question, we defer to the top economists at Australia’s big four banks.

While they aren’t unanimous in their outlook, three of the big four expect the RBA will hold fire again in May. This would likely offer some additional tailwinds for ASX 200 shares tomorrow afternoon.

The only big bank expecting a rate lift from the RBA tomorrow is Commonwealth Bank of Australia (ASX: CBA). CBA expects this will be the final increase we’ll see from the central bank.

According to CBA head of Australian economics Gareth Aird (quoted by Savings.com):

We retain our call for the RBA to increase the cash rate by 25 basis points to 3.85% at the May Board meeting, our forecast for the peak in the cash rate. Money markets disagree with our view. As we go to press just 3 basis points are priced for the May Board meeting (i.e. a 12% chance of a 0.25% rate increase).

It is not the first time we have gone into a board meeting with a call not supported by the markets and undoubtedly it won’t be the last.

CBA forecasts interest rates will fall to 2.85% by May 2024, which would be welcome news to mortgage holders and ASX 200 investors alike.

National Australia Bank Ltd (ASX: NAB) doesn’t think the RBA will lift rates tomorrow, or at all in the mid-term future. NAB economists expect rates to remain at 3.60% before falling to 3.10% in May 2024.

“We further trimmed our rate expectations in the month, expecting the RBA to remain on hold until mid-2024, before rates are cut back towards neutral,” NAB’s economists said.

They added:

We acknowledge the risk of further rate rises remains – especially if inflation or wages surprise to the upside – but the slowing data flow is likely to make rate rises harder to justify as time goes on.

ANZ Group Holdings Ltd (ASX: ANZ) senior Economist Adelaide Timbrell also forecasts a dovish turn from the RBA.

“Trimmed mean inflation and the monthly CPI indicator were both lower than expected, supporting our view that the RBA will keep the cash rate at 3.6% in May,” she said.

But Timbrell cautioned that a pause tomorrow doesn’t indicate the end of the tightening cycle. ANZ expects rates to peak at 3.85% in August before falling back to 3.60% in November 2024:

Looking further ahead, though, persistently strong services inflation, reflecting excess demand in the economy, suggests that more RBA tightening will be needed in coming months.

If Timbrell is correct, that could flag some upcoming headwinds for ASX 200 shares.

Rounding off the list of big four banks, Westpac Banking Corp (ASX: WBC) is also forecasting a pause tomorrow, and the bank dropped its peak rate expectations. Westpac expects the official cash rate will be down to 2.35% by May 2025.

“We have always argued that May would likely be the peak of the tightening cycle so we are now lowering our forecast cash rate peak from 3.85% to 3.60%,” Westpac chief economist Bill Evans said.

Evans added:

Given the uncertainty around the current outlook and a need to contain inflation expectations, the board is almost certain to maintain its clear tightening bias. However, as we move through the remainder of 2023 the credibility of that bias is likely to fade.

As for your fearless editor?

Thanks for asking!

I’m doubling down on my incorrect forecast for April. I now expect the RBA to lift rates by a modest 0.15% tomorrow before holding fire to assess the lagging impact of rate rises on inflation in June.

Should that eventuate, the ASX 200 might dip on the announcement, but I wouldn’t expect any outsized moves.

The post Investing in ASX 200 shares? Here’s what to expect from the RBA tomorrow appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Looking to buy ANZ shares? Here’s what to watch in this week’s results
• Why did the NAB share price smash the ASX 200 in April?
• Analysts say these ASX 200 dividend stocks are top buys
• Another ASX company to disappear
• Don’t get duped: Why cheap ASX shares can still rip you off

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.

from The Motley Fool Australia https://ift.tt/ya4OZhd

Are you looking for some ASX 200 shares to add to your retirement portfolio?

If you are, then the ASX 200 shares listed below could be top options in the current environment. Here’s what you need to know about them:

CSL Limited (ASX: CSL)

The first ASX 200 share that could be a top option for a retirement portfolio is CSL. It is one of the world’s leading biotherapeutics companies and the owner of a collection of industry-leading, life-saving, and lucrative therapies such as Privigen, Hizentra, Idelvion, and Afstyla.

In addition, as well as not being afraid to make major earnings accretive acquisitions, the company reinvests in the region of 11% to 12% of its sales back into research and development (R&D) each year. This means that it has an R&D pipeline containing some very lucrative products that could support its future growth.

And with demand for its products unaffected by the overall economic environment, it has defensive qualities that could make it a good option for retirees.

Citi is very positive on CSL. It currently has a buy rating and $350 price target.

Telstra Group Ltd (ASX: TLS)

Another ASX 200 share that could be a great option for retirees is Telstra. It is Australia’s largest telco, providing millions of people and businesses with internet and phone services across the country.

These are services that few would go without, even in a recession, which bodes well for Telstra in the current environment.

Another positive is the company’s significantly improved outlook. After going backwards for a little under a decade, its earnings are heading in the right direction again. In fact, the company is targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.

Goldman Sachs appears to believe that Telstra will deliver on its ambitions. It currently has a buy rating and $4.70 price target on its shares. It is also expecting fully franked dividend yields in the region of 4% for the coming years.

The post These ASX 200 shares could be top options for your retirement portfolio: experts appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why did the Telstra share price crack new multi-year highs in April?
• ‘Under the radar success’: 3 quality ASX 200 growth shares to buy right now
• Top ASX shares to buy in May 2023
• 6 excellent ASX 200 dividend shares that aren’t banks or miners
• This is how you can generate passive income in May with ASX shares

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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.

from The Motley Fool Australia https://ift.tt/TV0LYBi

The ASX small-cap shares I’m going to share in this article have excellent potential to deliver long-term returns, in my opinion. I think they can outperform the S&P/ASX 200 Index (ASX: XJO) this year and beyond.

In most cases, it’s much easier to double a business in size from $250 million to $500 million than $25 billion to $50 billion. It becomes more difficult to grow a business the bigger it gets.

There has been a lot of volatility in the past 15 months surrounding retailers and how they’re going to perform in the coming period. All of the inflation and higher interest rates could impact things. But, there could also be longer-term opportunities.

Shaver Shop Group Ltd (ASX: SSG)

The small-cap ASX share describes itself as an Australian and New Zealand specialty retailer of male and female personal grooming products. It wants to be the market leader in ‘all things related to hair removal’.

It has over 120 stores across Australia and New Zealand selling a core product range comprising male and female hair removal products such as electric shavers, clippers and trimmers, and wet shave items. It also sells other items like oral care, hair care, massage, air treatment and beauty categories.

The company’s recent gross profit margin strength has enabled the gross profit to increase, despite the slight fall in total sales in the first month and a half in the second half of FY23.

Shaver Shop believes it operates in a “large and growing market driven by changing consumer preferences and new product innovation”. It thinks it can grow its market share, particularly in New Zealand, while generating good cash flow.

A key reason why I think it can outperform over the long term is because of how cheaply it’s priced. Using the Commsec FY24 projected numbers, the small-cap ASX share is priced at 8 times FY24’s estimated earnings with a grossed-up dividend yield of 14%.

City Chic Collective Ltd (ASX: CCX)

The City Chic share price has suffered around 80% over the past year. Many things have gone wrong for the business over the last couple of years.

Its FY23 half-year result was reportedly cycling a “strong prior corresponding period”, with sales down 8%. The company made an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) operational loss of $3.4 million, while the statutory net loss was $27.2 million, with an additional inventory provision in the region of Europe, Middle East and Africa (EMEA).

But, I think the building blocks are there for a good earnings base in the future, with its presence in the US, UK and Europe.

The business says that it has strategic initiatives underway, targeting historical margins to deliver sustainable profit growth. That includes increasing the profit margin by lowering promotional activity in line with the “market improvement” and lower inbound logistics costs. It’s also expecting to have a positive net cash position by the end of the current financial year.

The small-cap ASX share is also aiming to scale its international businesses and leverage the customer base and operating structures to “drive profitable growth”.

Using the estimates on Commsec, the business is trading at 8 times FY25’s estimated earnings.

The post 2 small-cap shares I rate to beat the ASX 200 in 2023 (and beyond) appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Investing for passive income? I’d pick up this little-known ASX dividend share
• This ASX All Ords stock is down 80% in a year, and one billionaire is buying up big

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

from The Motley Fool Australia https://ift.tt/H3L5J8s

The ASX share Dusk Group Ltd (ASX: DSK) could pay an extremely high dividend yield in the coming years. In fact, it could be one of the highest yields that investors can find on the ASX by FY25.

Dusk is a retailer of home fragrance products designed by the company and exclusive to Dusk. Its products include candles, ultrasonic diffusers, reed diffusers, and essential oils, as well as fragrance-related homewares.

The business has seen plenty of volatility since the start of COVID-19. The Dusk share price has dropped by more than 20% since mid-January, meaning the dividend yield is now higher.

Despite the fall, it’s worth noting the business has a market capitalisation of $96 million according to the ASX, while having net cash of $32.9 million at the end of the FY23 half-year result. A third of the company’s market capitalisation is backed by cash.

Dividend expectations for the ASX share

Dusk’s earnings and dividend are expected to fall in FY23, according to Commsec. The business is currently valued at eight times FY23’s estimated earnings with a possible grossed-up dividend yield of 12.3%.

But the business could see rising earnings and dividends by FY25 as the company expands and benefits from the (hopeful) improvement in economic conditions.

Dusk’s earnings per share (EPS) could rise to 25 cents by FY25, which could allow it to pay an annual dividend per share of 18 cents. This would represent a grossed-up dividend yield of around 16%.

The dividend yield and income alone from Dusk could deliver strong returns for investors.

What will help Dusk deliver earnings growth through the coming period?

In the first seven weeks of the second half of FY23, the business reported total sales were down 3% year over year. However, it had a number of positive comments to make:

The gross margin rate remains slightly above pcp [prior corresponding period] and inventory is clean. The Company expects to open a further 6 stores in Australia in 2H FY23 and the NZ store trial will continue with important learnings being implemented.

Our strategic focus on strong execution and a nimble operational model is unchanged. We operate a multi-channel business model with a differentiated and exclusive range and a compelling relative price proposition. We offer customers an affordable gift or personal luxury. These factors have been at the heart of our historic success, and we expect they will remain essential to our performance. The development of innovative new products that represent great value for money to our growing customer base will continue as we navigate through a challenging macro-economic environment.

Foolish takeaway

Dusk is doing what it can to set up growth for the future, and forecasts suggest that Dusk’s dividend yield is going to be very large in the next few years. The business could also be attractive to investors because of its very low price/earnings (p/e) ratio.

The post This ASX share could pay a 16% dividend yield by 2025 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• I’m looking for once-in-a-decade opportunities in the stock market recovery
• I believe these 2 beaten-up ASX shares are too cheap to ignore in April

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

from The Motley Fool Australia https://ift.tt/bpwAYiR

Another huge week awaits ASX shares.

These are the three biggest events to monitor, according to eToro market analyst Josh Gilbert:

1. Reserve Bank cash rate decision

Unsurprisingly, the 2:30pm Tuesday decision will have the biggest direct impact on sentiment for ASX shares.

Will the central bank raise interest rates again to fight inflation or hold it steady to help struggling Australians?

It’s a close call, with 55% of economists in a survey last week predicting a rise, while the other 45% tip a hold.

According to Gilbert, last week’s updated annual inflation of 7% didn’t really give a strong push for either side. 

“This reading offered no real surprises from what the RBA already knew after pausing in April, scaling back expectations for another rate hike this week,” he said.

“However, another increase can’t be ruled out, with inflation still way above the RBA’s target rate of 2% to 3%.”

The market is expecting a hold, so a hike on Tuesday afternoon could cause ripples.

“The central bank put rates on hold [in April] to give itself some time to breathe while assessing the state of the economy after its huge tightening cycle,” he said.

“Given that this data didn’t throw up any shocks, the market would be surprised by a hike this week.”

2. US Federal Reserve rate decision

There is also a rate decision pending in the US, which often has a big bearing on Australian shares.

Gilbert is forecasting America will see one last “insurance hike”. 

“US inflation is still the most important number in markets right now, driving the Fed and recession risks,” he said.

“Although headline inflation fell in March to 5%, the worry was that core inflation jumped to 5.6%, which is why the market is now expecting a 75% chance of another hike this week.”

In the US, unemployment is still low, consumer confidence actually increased last month, and the Nasdaq Composite (NASDAQ: .IXIC) is up more than 17% year to date.

But as a counter to that, the issues with the banking industry over there have tightened liquidity and slowed economic growth.

“Despite expectations for another rate hike, the market is still pricing in at least two rate cuts this year despite Jerome Powell saying there would be none,” said Gilbert.

“Rate cuts would spell good news for risk assets, particularly for tech and crypto, in the second half of the year.”

3. Apple results

The world’s biggest company by market capitalisation, Apple Inc (NASDAQ: AAPL), reports its latest numbers this week.

Last week’s positive reception to the performance of other tech giants has set the bar high.

“Apple investors’ expectations are high, with little to no room for error from the tech behemoth,” Gilbert said.

“The worry heading into the report is whether the global slowdown in computing device spending will dampen demand for its Mac computer, which accounts for 10% of Apple’s revenue.”

The big metric will be iPhone sales, which is Apple’s “primary revenue driver”. 

“Sales may be boosted by the re-opening of China, a large market for Apple as well as easing supply chain disruptions.”

With cost-cutting the theme of the moment throughout the tech industry, Apple will be expected to address its own plans.

“Given the current environment, I’d also expect to hear from Apple’s management on fine-tuning operating expenses for the full year to help margins, with its forecast for the next quarter likely to be scrutinised by the street.”

Gilbert reminded investors that already Apple’s revenue is expected to fall 4.8% and earnings by 6%.

“Apple investors aren’t accustomed to being disappointed on earnings, but they were let down last quarter, so a strong result and a beat will be needed in order to underpin Apple’s 30% [share price] gain in 2023.”

The post 3 things ASX investors should watch this week appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?

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

from The Motley Fool Australia https://ift.tt/ahXEzgB

Passive income is a fantastic way of earning extra cash on the side from the comfort of your own home.

Two ASX 200 iron ore shares to look at for passive income are Fortescue Metals Group Ltd (ASX: FMS) and BHP Group Ltd (ASX: BHP).

So how could I earn $400 in monthly income by investing in these two ASX 200 iron ore shares?

Could I generate $400 monthly income from Fortescue and BHP?

Starting from the beginning, a $400 monthly income equates to $4,800 of annual income.

Secondly, the calculations we are looking at here reflect the dividend payments made to shareholders over the past 12 months. Keep in mind, he dividend payments for ASX 200 iron ore shares could change in future years.

Fortescue paid a fully franked interim dividend of 75 cents per share in the first half of this year. This follows the company paying a final dividend of  $1.21 per share fully franked in the second half of last calendar year. In total, Fortescue has paid $1.96 in total dividends in the last year.

This equates to a trailing dividend yield of about 9.4% based on the company’s last closing share price of $20.94. Fortescue shares have lost nearly 4% in the last year as can be seen below.

Now, let’s take a look at BHP. The company paid an interim dividend of $1.36 in the first half of this year. This follows the company paying a $2.55 final dividend in the second half of last year. In total, this means BHP paid $3.91 in dividends to shareholders in the last year.

Based on BHP’s last closing price of $44.40, this equates to a trailing dividend yield of 8.8%.

How much would I need to invest to get $400 a month in dividends?

My average dividend yield, if I invested the same amount in both BHP and Fortescue, would be 9.1%.

Therefore, to generate $400 a month (or $4,800 in yearly passive income) with a 9.1% average dividend yield, I would need to invest $52,747 overall.

Alternatively, I could invest $4,396 per month for the next 12 months in these two ASX 200 iron ore shares to reach my goal.

The post How I’d generate $400 in monthly passive income from 2 ASX 200 iron ore shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why did the BHP share price dive 6% in April?
• Bull and bear factors impacting BHP shares
• Looking to buy ASX 200 iron ore shares? Here are 5 reasons not to
• Did Fortescue really just buy 60,000 sheep?
• Top brokers predict BHP shares to surge past $50 again in 2023

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.

from The Motley Fool Australia https://ift.tt/K9fNwk4