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ASX energy shares will be on watch today on news that OPEC+ has stuck a deal to return oil production to pre-COVID-19 levels.

Oil prices dipped on the news as traders are anticipating extra supply to hit the market from next month. The Brent benchmark slipped 0.4% in early trade to add to the 2.6% drop from last week, reported Bloomberg.

Weaker oil prices to weigh on ASX energy shares

The development will add to jitters for oil-exposed ASX share prices as futures pricing points to a 0.5% fall in the S&P/ASX 200 Index (Index:^AXJO) following negative leads from Wall Street.

Some of the sector’s heavyweights include the Woodside Petroleum Limited (ASX: WPL) share price, Santos Ltd (ASX: STO) share price, Oil Search Ltd (ASX: OSH) share price and Beach Energy Ltd (ASX: BPT) share price.

Saudi Arabia and the United Arab Emirates (UAE) have finally overcome differences to reach a new deal on the weekend.

Oil supply to lift as OPEC+ strikes new deal

This paves the way for the Organization of Petroleum Exporting Countries and Russia (called OPEC+) to pump an extra 400,000 barrels of oil a day from August until output from the bloc hits pre-pandemic levels.

OPEC+ is currently withholding 5.8 million barrels a day to support the oil price during the COVID-induced global recession.

The group recently failed to reach a new deal to extend the production curbs after UAE refused to sign up.

The news sent the oil price surging higher as OPEC+ will not be able to lift supply unless all members agree to the new terms.

UAE returns to the OPEC fold

To get the UAE to play ball, OPEC’s de facto leader Saudi Arabia agreed to allow the UAE to increase its baseline. The baseline is the benchmark applied to each country by which output cuts are measured.

But the UAE isn’t the only OPEC member to get higher baselines. Saudi Arabia, Iraq, Kuwait and Russia also got their baselines lifted.

Experts believe that extra oil supply is needed quickly as demand is recovering with the reopening of the global economy.

ASX energy shares can’t shake worries

But the bright demand outlook is being clouded over by fresh outbreaks of the Delta-variant. The more contagious mutation is threatening the reopening of countries like Australia, Singapore and the UK – just to name a few.

Further, oil traders are nervously eyeing Iran since the easing of sanctions against the oil-producing country. Bloomberg reported that first crude exports from Iran are expected in the coming days.

Hang tight fellow Fools! This week could be a particularly volatile time for ASX energy shares.

The post ASX energy shares in focus as OPEC+ strikes deal to lift oil production appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher
• 5 things to watch on the ASX 200 on Monday
• Santos (ASX:STO) share price falls as company abandons drilling in the Bight
• ASX 200 companies take heed: Telstra (ASX:TLS) boss says Australia faces ‘unprecedented’ cyber threat
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Brendon Lau owns shares of Santos Limited. Connect with me on Twitter @brenlau.

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 Bruce Jackson.

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The CSL Limited (ASX: CSL) share price has been a poor performer over the last few weeks.

Since this time last month, the biotherapeutics company’s shares are down 9%.

This compares to a 1.5% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the CSL share price out of form?

The weakness in the CSL share price over the last 30 days appears to have been driven by a couple of mixed broker notes.

One of those came from the team at Citi on 23 June. Its analysts downgraded CSL shares to a neutral rating from buy on valuation grounds following a period of outperformance. Citi held firm with its $310.00 price target.

A few days later CSL was hit with another broker downgrade. This time it came from the team at Credit Suisse. According to that note, its analysts downgraded CSL’s shares to a neutral rating and cut the price target on them to $310.00.

Credit Suisse made the move on the belief that the market had not taken into account potential margin weakness caused by tough plasma collection conditions. It suspects that the recovery could take longer than expected due to continued pressure on collections, particularly after the US prevented Mexicans from crossing the border to donate.

The broker suspects that the gross margin of its CSL Behring business could fall to 54.1% in FY 2022. This compares to 61.2% in FY 2020.

Is this a buying opportunity?

Given that the CSL share price has now fallen to $277.72, the price targets of both Citi and Credit Suisse offer decent upside of 11.5% over the next 12 months.

In addition, the team at UBS still have a buy rating and $330.00 price target on the company’s shares. This implies potential upside of almost 19% over the next 12 months.

So, while the CSL share price has underperformed over the last 30 days, the next 30 could be more positive. Just as long as its full year results in August don’t contain any nasty surprises.

The post The CSL (ASX:CSL) share price is down 9% in a month, here’s why appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher
• CSL (ASX:CSL) share price lower amid reported mRNA vaccine delays
• This fundie is underweight CSL (ASX: CSL) shares. Here’s why.
• Why the CSL (ASX:CSL) share price has trailed the ASX 200 by 23% in the last year
• Are the 10 highest paid ASX 200 CEOs worth their paypackets?

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. owns shares of and has recommended CSL Ltd. 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 Bruce Jackson.

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Amazon.com Inc (NASDAQ: AMZN) shares are a pretty amazing testament to the power of buy-and-hold investing.

According to Google Finance, the stock was US$6.78 in November 2001, just after the dot-com crash. Now, almost 20 years later, it’s trading at US$3,631.20.

That’s a 535-multiple increase.

In other words, if you had bought $10,000 of Amazon shares in November 2001, you would now be sitting on $5.35 million.

As a world-famous online retailer, Amazon is often cited as the classic example of how stocks can make you wealthy.

But did you know there’s an ASX share that’s done even better over that time?

Amazon and REA has very similar beginnings

Coincidentally, REA Group Limited (ASX: REA) was born in the same year as Amazon — in 1995 — as realestate.com.au.

That’s not where the similarities end, according to Montaka Global Investments senior research analyst Amit Nath.

“Just like the great tech tales of Silicon Valley, our Aussie protagonist, REA Group, was started in a garage (1995), IPO’d just before the dotcom bust (1999) and lost 90% of its value shortly thereafter (2001).”

But the difference after that was Rupert Murdoch’s News Corporation (ASX: NWS) came to the rescue before REA Group was run completely into the ground.

And it’s ended up as News’ best investment in recent decades. 

“News Corp took 44% of REA Group in exchange for $2 million in cash plus $8 million worth of TV and print advertising — giving REA Group a total equity valuation of $23 million,” Nath wrote on a Montaka blog.

“Fast forward 20 years to today and News Corp owns 61% of REA Group, which has a market capitalisation of $21 billion — or 910 times the valuation Murdoch paid in 2001.”

So there you go. An investment that’s multiplied 910-times over, in the same time that Amazon shares multiplied 500 times.

If you had $10,000 worth of REA shares after the dot-com bust, you’d now be all smiles with $9.1 million.

REA shares still have excellent prospects

Like Amazon, Nath believes REA Group is still a great investment in current times.

Due to its market dominance, Nath believes Australians have no choice but to continue using realestate.com.au.

“It is impossible to function as a real estate agent (or broker) without a subscription to REA Group’s professional tools and access to its property listing portal,” he said.

“As REA Group continues to reduce friction costs of buying, selling, and renting properties for customers, it is likely to capture a larger share of transaction economics over time.”

After all these years, REA Group is still the primary driver for News Corp’s growth.

And the hot residential real estate market at the moment continues to feed into the company’s revenue pipeline.

REA shares closed the week at $162.45. Goldman Sachs elevated its price target to $198 only on Friday.

That’s a 22% upside for a stock that’s trading at a 154.85 price-to-earnings ratio.

Nath said he believes “REA Group will continue to be a wonderful investment over the long term”.

“We believe in owning the long-term winners in attractive markets while they remain undervalued — we firmly believe REA Group comfortably fits within this criteria.”

The post Better than Amazon: This ASX share has multiplied 910 times in 20 years appeared first on The Motley Fool Australia.

More reading

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• Now’s the time to buy up mega-cap tech shares
• 2 excellent ASX growth shares analysts love
• ASX investors were buying Tesla and Apple shares last week
• How did the S&P/ASX All Technologies Index (XTX) perform in FY21?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Against all of the odds it seems, the S&P/ASX 200 Index (ASX: XJO) shook off the prior week’s malaise and recorded a week in the green last week. That’s despite the ongoing COVID-19 crises across the country deepening last week, with Sydney now in lockdown until at least 30 July, and Melbourne entering its own 5-day snap shutdown.

On paper, it looks as though last week was a rip roarer for ASX 200 shares. The ASX 200 Index put on a very healthy 1.03% to finish back above 7,300 points at 7,348.1 by Friday afternoon.

The ASX banks had a rather lousy week, with Commonwealth Bank of Australia (ASX: CBA) losing 0.4% over the week, National Australia Bank Ltd (ASX: NAB) down 0.46%, Westpac Banking Corp (ASX: WBC) shares shedding a nasty 1.8%, and Australia and New Zealand Banking Group Ltd (ASX: ANZ) dropping 1.5%.

But out of the ASX 200 blue-chip shares, it seemed only to be the ASX banks that were in the red last week. Other blue chips like Telstra Corporation Ltd (ASX: TLS), CSL Limited (ASX: CSL) and Woolworths Group Ltd (ASX: WOW) all managed decent gains. But they paled in comparison to what the ASX resources sector put up last week.

ASX 200 resources shares strike gold

It was a week to remember for mining shares. BHP Group Ltd (ASX: BHP) was perhaps the most noteworthy performer. The Big Australian managed a very impressive 4.8% gain for the week, and managed to hit another new all-time high on Friday. This one at $51.91 per share. Hot on its heels was Rio Tinto Limited (ASX: RIO), which put on 4.1%. But both were pipped by Fortescue Metals Group Limited (ASX: FMG), which rose by an astonishing 8% last week.

But it wasn’t just the big iron ore miners either. Gold miner Newcrest Mining Ltd (ASX: NCM) was up 4.6% last week, while lithium miner Orocobre Limited (ASX: ORE) rose 7.3% and hit new all-time high of its own.

Long story short, ASX investors largely have mining shares to thank for last week’s ASX 200 gains.

How did the markets end the week?

As you may have gathered, it was a pretty top week for the ASX 200.

Monday kicked things off with a healthy gain of 0.83%. Tuesday then saw a pretty flat day, with the ASX 200 losing 0.02%. This was reversed on Wednesday when the index pushed 0.32% higher. Thursday once again saw investors push back slightly, with a loss of 0.26%.

But Friday’s gain of 0.17% sealed the deal for the week. Since the ASX 200 started the week out at 7,273.3 points and finished up at 7,348.1, we can clock last week’s gain at 1.03%.

Meanwhile, the All Ordinaries Index (ASX: XAO) fared even better. The All Ords started out at 7,545.3 points and finished up at 7,630.7 points – marking its gains at 1.13% for the week just gone.

Which ASX 200 shares were the biggest winners and losers?

Time now for our most salacious of segments, our Foolish gossip pages where we look at the ASX 200’s best winners and poorest losers of the week. So fetch the wine and cheese as we, as always, start with the losers:

Worst ASX 200 losers	% loss for the week
Zip Co Ltd (ASX: Z1P)	(14.5%)
Afterpay Ltd (ASX: APT)	(12.2%)
Polynovo Ltd (ASX: PNV)	(11.6%)
Mesoblast Limited (ASX: MSB)	(5.7%)

Well, Zip Co was our ASX 200 wooden spooner from last week, with a nasty near-15% drop. This buy now, pay later (BNPL) company was hit hard by the rumours that a certain company that no one wants as a competitor, Apple Inc (NASDAQ: AAPL), may be whipping up a BNPL product of its own. News that PayPal Holdigns Inc (NASDAQ: PYPL) is removing late fees from its own BNPL product probably didn’t help either.

It wasn’t just Zip feeling Apple/PayPal burn either. Fellow BNPL provider Afterpay was also feeling the heat last week, and shed more than 12% as well.

Moving on from BNPL and we had healthcare company Polynovo. Investors can probably look to the Tuesday sales update as the catalyst here. Although this update was initially well received, it didn’t impress brokers, which my Fool colleague James covered here.  In fact, between Tuesday’s opening share price and Friday’s closing one, Polynovo lost more than 17% of its value.

Last and least, in terms of losses anyway, was Polynovo’s fellow healthcare company, Mesoblast. It was a set of clinical trial results that seemed to have gotten investors jittery here. This company is now down a rather unenviable 17.5% year to date so far.

Now with the losers out of the way, let’s check out last week’s ASX 200 winners:

Best ASX 200 gainers	% gain for the week
Spark Infrastructure Group (ASX: SKI)	17.4%
NRW Holdings Limited (ASX: NWH)	13.9%
Perenti Global Ltd (ASX: PRN)	13.2%
ARB Corporation Limited (ASX: ARB)	10.4%

Taking out the ASX 200 gong last week was renewable energy company Spark Infrastructure.

Spark shares were too hot to handle last week, rising by a very pleasing 17.4%. It seems a takeover offer, which Spark rejected, was the primary cause here. The Ontario Teachers’ Pension Plan Board and Kohlberg Kravis Roberts together put up an offer of $2.70 in cash per share. But Spark felt this offer undervalued the company. Investors didn’t seem to mind.

Next up we had mining company NRW Holdings. NRW’s gains seemed to have come from news that another company in Boggabri Coal Operations has exercised an option to acquire a majority of NRW’s subsidiary Golding Contractors’ major mining equipment. Investors seemed to approve, judging by the near-14% jump the shares experienced.

Engineering company Perenti also had a great time, rising a touch over 13% last week. This was despite the absence of any major news or announcement from the company.

And finally, we had outdoor recreation company ARB, which also rose a healthy 10.4%. This gain can be attributed to ARB’s market update the company released last week. This update contained ARB’s FY21 earnings numbers, which seemed to be better than what investors were expecting.

A wrap of the ASX 200 blue-chip shares

Before we, er, wrap… things up, here is a look at how the major ASX 200 blue-chip shares are faring as we start on yet another week:

ASX 200 company	Last share price	Trailing P/E ratio	Trailing Dividend Yield	52-week high	52-week low
CSL Limited (ASX: CSL)	$277.72	35.44	1.01%	$320.42	$242
Commonwealth Bank of Australia (ASX: CBA)	$98.19	21.84	2.53%	$106.57	$62.64
Westpac Banking Corp (ASX: WBC)	$24.91	21.32	3.57%	$27.12	$16
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	$27.43	16.62	3.83%	$29.64	$16.40
National Australia Bank Ltd (ASX: NAB)	$25.96	19.92	3.47%	$27.84	$16.56
Macquarie Group Ltd (ASX: MQG)	$155.49	18.86	3.02%	$162.06	$118.36
Fortescue Metals Group Limited (ASX: FMG)	$25.78	9.31	9.58%	$26.40	$15.62
BHP Group Ltd (ASX: BHP)	$51.87	28.11	3.98%	$51.91	$33.73
Rio Tinto Limited (ASX: RIO)	$130.60	16.21	4.7%	$132.94	$90.04
Newcrest Mining Ltd (ASX: NCM)	$26.90	16.72	1.62%	$38.15	$23.08
Woodside Petroleum Limited (ASX: WPL)	$22.76	–	2.26%	$27.60	$16.80
Telstra Corporation Ltd (ASX: TLS)	$3.77	25.3	4.24%	$3.79	$2.66
Woolworths Group Ltd (ASX: WOW)	$38.24	34.13	2.64%	$44.06	$35.96
Wesfarmers Ltd (ASX: WES)	$59.12	35.65	2.79%	$59.63	$43.50
Coles Group Ltd (ASX: COL)	$17.05	21.68	3.55%	$19.26	$15.28
Transurban Group (ASX: TCL)	$14.49	–	2.52%	$15.64	$12.36
Sydney Airport Holdings Pty Ltd (ASX: SYD)	$7.91	–	–	$8.04	$4.99
Afterpay Ltd (ASX: APT)	$103.21	–	–	$160.05	$65.53

And finally, here is the lay of the land for some leading market indicators:

• S&P/ASX 200 Index (XJO) at 7,378.1 points.
• All Ordinaries Index (XAO) at 7,630.7 points.
• Dow Jones Industrial Average Index (DJX: .DJI) at 34,688 points after falling 0.86% on Friday night (our time).
• Bitcoin (CRYPTO: BTC) going for US$31,771 per coin.
• Gold (spot) swapping hands for US$1,812 per troy ounce.
• Iron ore asking US$219.67 per tonne.
• Crude oil (Brent) trading at US$73.59 per barrel.
• Australian dollar buying 73.99 US cents.
• 10-year Australian Government bonds yielding 1.28% per annum.

That’s all folks. See you next week!

The post ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher appeared first on The Motley Fool Australia.

More reading

• Telstra (ASX:TLS) share price in focus after confirming Digicel Pacific acquisition talks
• The Westpac (ASX:WBC) share price has fallen 8% over the last 30 days
• 2 excellent ASX dividend shares rated as buys
• Rio Tinto (ASX:RIO) share price on watch after broker upgrade
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Apple, CSL Ltd., POLYNOVO FPO, PayPal Holdings, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, COLESGROUP DEF SET, Macquarie Group Limited, Telstra Corporation Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended ARB Corporation Limited, Apple, and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Monday.

This follows the release of an announcement out of the telco giant this morning.

Why is the Telstra share price on watch?

This morning Telstra responded to a news story in the Fairfax press at the weekend suggesting that the company may be on the verge of making an acquisition.

According to the release, Telstra has confirmed that it has been in discussions regarding a potential transaction to acquire telecommunications company, Digicel Pacific in the South Pacific region. This will be in partnership with the Australian Government.

However, it has warned that the discussions are incomplete and there is no certainty that a transaction will proceed. Telstra intends to keep the market updated as appropriate.

What is Digicel Pacific?

Digicel Pacific was founded in 2006 by Denis O’Brien, an Irish entrepreneur, and is a leading provider of communications services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu.

It has a strong market position and an extensive network coverage in the South Pacific region. In calendar year 2020 it generated EBITDA of US$235 million.

What is happening?

Given that Telstra is currently offloading assets, news of a potential acquisition will no doubt have come as a surprise to investors.

The release explains that Telstra was initially approached by the Australian Government to provide technical advice in relation to Digicel Pacific, which it notes is a commercially attractive asset and critical to telecommunications in the region. After which, the two parties began looking at a potential acquisition of the Pacific-based telco.

Positively, if Telstra were to proceed with a transaction, it would be with financial and strategic risk management support from the Government.

Management also highlights that in addition to a significant Government funding and support package, any investment would also have to be within certain financial parameters, with Telstra’s equity investment being the minor portion of the overall transaction.

The Telstra share price is up 25% in 2021.

The post Telstra (ASX:TLS) share price in focus after confirming Digicel Pacific acquisition talks appeared first on The Motley Fool Australia.

More reading

• Why Telstra (ASX:TLS) and this ASX dividend share could be buys
• ASX 200 companies take heed: Telstra (ASX:TLS) boss says Australia faces ‘unprecedented’ cyber threat
• Here are 3 heavily traded ASX 200 shares today
• Why Telstra (ASX:TLS) shares could be a buy before reporting season
• Telstra (ASX:TLS) share price struggles as Optus cries foul

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 owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Westpac Banking Corp (ASX:WBC) share price is having a tough month on the ASX.

Right now, it’s fallen 7.53% over the last 30 days. This time last month, shares in Westpac were trading for $26.94. Now, they’re swapping hands for $24.91.

So, what’s been going on to drive the Westpac share price down? Let’s take a look.

The month that’s been for the Westpac share price

New Zealand decision

On June 24, Westpac broke the tension by announcing it had decided to keep its New Zealand banking business.

The Westpac share price fell 0.96% on the back of the news.

Back in March, the bank announced it was reassessing whether it would continue to operate its New Zealand business. Westpac stated it was considering numerous options, one of which was demerging the business.

Ultimately, the demerger didn’t come to fruition. Westpac’s CEO Peter King said:

WNZL is a strong business that has been serving New Zealand for 160 years. We remain committed to delivering for customers and fulfilling our purpose of helping Australians and New Zealanders succeed.

Insurance divestment

On 1 July, Westpac released news it had sold Westpac General Life Insurance and Westpac General Insurance Services Limited to Allianz.

After the announcement, the Westpac share price dropped to close 0.62% lower.

Allianz paid $725 million for the two businesses. It’s expected to pay another $25 million later this year.

Compensation payment and fraud allegations

July 2 wasn’t a good day for Westpac.

In the morning, it announced it would pay out $87 million in compensation for failing to provide its customers with needed information.

The bank compensated 32,000 customers who were affected by its financial advice business’ failings between 2005 and 2019.

Then, that afternoon, the bank announced it was taking Forum Finance to court after it discovered potential fraud within a portfolio of equipment leases arranged by Forum.

Westpac said it planned to begin proceedings against Forum in the Federal Court of Australia. Westpac said none of its customers had been affected. However, around $200 million (after tax) of its own coin had been exposed.

Despite all of the bad news, the Westpac share price only fell 0.04%.

Asset sales

Finally, on 6 July, Westpac announced it sold Westpac Life NZ to Fidelity Life Insurance.

The Westpac share price fell 0.43% on the back of the news.

Westpac received around $373 million from the sale. The sale is still subject to numerous approvals but it’s expected to be completed before the end of this year.

Westpac share price snapshot

Despite a poor month’s performance, the Westpac share price has been going well lately.

It’s gained 26% year to date. It has also increased by 39% over the last 12 months.

The post The Westpac (ASX:WBC) share price has fallen 8% over the last 30 days appeared first on The Motley Fool Australia.

More reading

• Does Google plan to disrupt the ASX banks of CBA, ANZ, NAB and Westpac?
• NAB (ASX:NAB) share price slides as potential Forum fraud deepens
• It hasn’t been a great week for the ANZ (ASX:ANZ) share price so far
• Westpac (ASX:WBC) share price falls on broker downgrade
• CBA (ASX:CBA) share price outperformed Westpac over the past 3 months

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 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 Bruce Jackson.

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With interest rates likely to remain at low levels for some time to come, dividend shares may remain the best way to generate a passive income for a while yet.

But which dividend shares should you consider? Two that have been given buy ratings are listed below:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is Coles. It could be a quality option due to its strong market position, cost cutting and automation plans, and its favourable dividend policy.

And while its sales and earnings may go in reverse in the immediate term due to elevated sales from a year earlier, it is expected to return to growth again once the tough comparables ease.

Goldman Sachs expects this to be the case and is forecasting solid dividend growth in both FY 2021 and FY 2022. The broker has pencilled in fully franked dividends per share of 62 cents per share in FY 2021 and then 67 cents per share in FY 2022.

Based on the latest Coles share price of $17.05, this will mean yields of 3.6% and 3.9%, respectively. Goldman has a buy rating and $19.40 price target on the supermarket giant’s shares.

Transurban Group (ASX: TCL)

Another ASX dividend share to consider is Transurban. It is one of the world’s leading toll road operators that owns a portfolio of key roads across Australia and North America.

Although traffic volumes have been under pressure because of the pandemic, they continue to improve as restrictions ease and mobility increases. This bodes well for its distributions in the coming years after lower than normal payouts because of COVID-19.

One broker that remains positive on Transurban and is expecting it distributions to rebound strongly is Macquarie. Last week it put an outperform rating and $15.20 price target on the company’s shares.

Macquarie is forecasting dividends of 36 cents per share in FY 2021 and then 59.1 cents per share in FY 2022. Based on the latest Transurban share price of $14.49, this will mean yields of 2.5% and then 4.1%.

The post 2 excellent ASX dividend shares rated as buys appeared first on The Motley Fool Australia.

More reading

• 2 buy-rated ASX dividend shares
• 2 top ASX dividend shares with BIG yields
• Transurban (ASX:TCL) share price jumps following broker upgrade
• 2 excellent ASX 200 dividend shares that could be buys
• Worst ASX 20 shares of the past year: CSL (ASX:CSL) makes the cut

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 owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rio Tinto Limited (ASX: RIO) share price could be on the rise on Monday.

This follows the release of a bullish broker note out of Goldman Sachs this morning in relation to the mining giant.

What did Goldman say about the Rio Tinto share price?

According to the note, the broker sees a lot of value in the Rio Tinto share price at the current level.

The note reveals that its analysts have upgraded the mining giant’s shares to a buy rating with a $144.40 price target. Based on the latest Rio Tinto share price, this implies potential upside of 10.5% excluding dividends.

But if you include dividends, this potential return stretches materially. Goldman estimates that Rio Tinto’s shares will provide fully franked yields of 14.1% in FY 2021, 13.9% in FY 2022, and then 11.2% in FY 2023.

Why is the broker bullish?

Goldman notes that Rio Tinto had a disappointing second quarter and fell short of its expectations for iron ore shipments. And while it suspects that it could yet underperform its guidance in FY 2021 due to operational challenges, this has been offset by the broker’s iron ore forecasts.

It explained: “Our commodities team now expects the iron ore market to return to surplus in 2023 only and have upgraded 2H21 Fe to US$195/t (US$117/t previously), and 2022 to US$160/t (US$95/t previously), and highlight ongoing steel mill preference for mid-high grade over low grade.”

Goldman believes this will lead to strong free cash flow generation and underpin generous dividend payments.

The broker commented: “Although we are calling for a c. US$60/t or 30% drop (from spot) in iron ore prices into 2022, we forecast record FCF/dividends in 2021 (18%/14% yield) & 2022 (16%/14%). RIO is not a growth story (we forecast -4% Cu Eq growth for RIO at the group level in 2021) it is a FCF story in our view.”

It also feels the Rio Tinto share price is undervalued compared to historical multiples at peak earnings.

Goldman explained: “On an EV/EBITDA basis, 1-2yr multiples for RIO look strong at 3-3.5x, below the 4-5x level in 2011 when earnings last peaked, yet RIO’s balance sheet and FCF look much stronger now.”

All in all, this could make it worth considering if you’re not averse to investing in the resources sector.

The post Rio Tinto (ASX:RIO) share price on watch after broker upgrade appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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There is a group of ASX shares with dividend yields of more than 5%. That means that $1,000 invested could produce an annual income of more than $50 from that investment.

Higher dividend yields may not always be desirable. It could mean a high dividend payout ratio, which leaves less profit for re-investment for growth. A lower valuation can also lead to a higher yield, but a lower price/earnings ratio can also have implications.

However, there are some ASX dividend shares that have both a high dividend yield and are generating underlying growth:

Pacific Current Group Ltd (ASX: PAC)

Pacific describes itself as a multi-boutique asset management outfit dedicated to providing exceptional value to shareholders, investors and partners. It applies its strategic resources, including capital, institutional distribution capabilities and operational expertise to help its partners grow. At the end of April 2021, it had 15 boutique asset managers globally.

It’s currently rated as a buy by the broker Ord Minnett. It has a price target on Pacific Current of $6.70, which suggests the share price could increase by more than 10% over the next 12 months.

Pacific continues to see growth of its funds under management (FUM). This can help increase the underlying profitability of the business (excluding the impacts of performance fees year to year).

In the quarter ended 31 March 2021, its total FUM rose 8.9%. Including the new investment in Astarte Capital Partners, FUM went up by 9.3%.

Pacific said that it continues to see “strong” inflows across the portfolio, including GQG, ROC, Carlisle, Proterra and Victory Park.

At the time of the quarterly update, Pacific Current Paul Greenwood said:

While GQG continued to post large FUM gains, we were again encouraged by the breadth of growth across the portfolio. As we emerge from the pandemic it appears that many of our portfolio companies are very well positioned to grow, and as a result we expect continued capital raising success in 2021 and 2022.

According to Ord Minnett, at the current Pacific Current share price, the ASX dividend share offers a projected grossed-up dividend yield of 9% for FY22.

Accent Group Ltd (ASX: AX1)

Accent is a large shoe business in Australia which sells through a wide variety of stores and has a number of exclusive distribution agreements in the country.

The company has a number of different initiatives to continue growing its revenue and margins.

Accent is looking to increase its percentage of sales made online to 30% over time.

It’s looking to continue to rollout more stores to increase its customer reach and grow economies of scale. Accent was expecting to open at least 90 new stores in FY21 across all banners. It’s going to keep opening stores in FY22. 

The ASX dividend share expects The Athlete’s Foot franchise buyback program to recommence from late 2021. The Athlete’s Foot continues to improve its gross profit margin with distributed brands and vertical products. It’s also opening more stores across its different brands. For example, 12 to 15 PIVOT stores are expected to be trading by June 2021. The Stylerunner store in Armadale is/was performing well ahead of expectations and the company expected four Stylerunner stores to be trading by June 2021.

In the first eight weeks of the second half of FY21, like for like retail sales were up 10.7% on the prior corresponding period.

Regarding dividends, Accent says it continues to be defined by “strong cash conversion and the consistent strong returns it delivers on shareholders’ funds.”

According to Commsec, at the current Accent share price, it offers a forecast FY21 grossed-up dividend yield of 6.6%.

The post 2 ASX dividend shares that could be buys with yields above 5% appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of PACCURRENT FPO. 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 Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a solid week in a positive fashion. The benchmark index rose 0.2% to 7,348.1 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market is expected to start the week in the red. According to the latest SPI futures, the ASX 200 is expected to open the day 37 points or 0.5% lower. This follows a poor end to the week on Wall Street, which saw the Dow Jones fall 0.85%, the S&P 500 drop 0.75%, and the Nasdaq tumble 0.8%.

Oil prices rise

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be no watch today after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.2% to US$71.81 a barrel and the Brent crude oil price has risen 0.15% to US$73.59 a barrel. Traders were buying oil after US inventories declined. However, news that OPEC plans to completely end production cuts by September 2022 could weigh on prices once oil markets open again.

SEEK downgraded

The SEEK Limited (ASX: SEK) share price could come under pressure today. This follows a broker note out of Goldman Sachs which reveals that its analysts have downgraded SEEK shares to a sell rating with an improved price target of $30.80. It made the move on an uncertain ad volume outlook and elevated valuation.

Gold price falls

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could come under pressure today after the gold price dropped on Friday night. According to CNBC, the spot gold price fell 0.8% to US$1,815 an ounce. The gold price retreated from a one-month high after the US dollar strengthened.

Rio Tinto upgraded to buy rating

The Rio Tinto Limited (ASX: RIO) share price could be great value according to analysts at Goldman Sachs. Although the mining giant fell short of its expectations in the fourth quarter, the broker has still upgraded its shares to a buy rating with a $144.40 price target. The broker made the move after adjusting its iron ore and free cash flow forecasts. Goldman believes this will allow double digit dividend yields for the next three financial years.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

More reading

• Santos (ASX:STO) share price falls as company abandons drilling in the Bight
• ASX 200 companies take heed: Telstra (ASX:TLS) boss says Australia faces ‘unprecedented’ cyber threat
• These were the worst performing ASX 200 shares last week
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• ASX 200 up, Evolution Mining drops, Appen rises

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. 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 SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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