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Are you looking for some quality ASX dividend shares to add to your income portfolio?

Then you might want to look at the ones listed below. Here’s what you need to know about these dividend shares:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to look closely at is Accent Group. It is a retail group with a focus on the leisure footwear market. Accent has been growing at a solid rate over the last few years thanks to the popularity of its store brands, its network expansion, and strong consumer demand.

The latter certainly has been the case in FY 2021, with the redirection in consumer spending underpinning strong demand. This led to Accent reporting a 6.6% increase in first half sales to $541.3 million and a 57.3% increase in net profit after tax to $52.8 million.

Bell Potter is confident its growth will continue and is forecasting dividends of 11.7 cents per share in FY 2021 and then 12.3 cents per share in FY 2022. Based on the current Accent share price of $2.79, this will mean fully franked yields of 4.2% and 4.4%, respectively. Bell Potter has a buy rating and $3.30 price target on the company’s shares.

Scentre Group (ASX: SCG)

This shopping centre-focused property company has been tipped as a dividend share to buy. This is because of improving trading conditions (save for the recent lockdowns) and the Australian Westfield owner’s positive leverage to inflation.

With Australian inflation expectations currently at their highest level since 2015, Goldman Sachs believes this is a big positive for Scentre. Its analysis indicates that Scentre is far more positively leveraged to inflation than any other Australian real estate investment trusts under its coverage.

In light of this, the broker is very positive on the investment opportunity here and has put a buy rating and $3.60 price target on the company’s shares. Goldman is also forecasting a 14 cents per share dividend in FY 2021 and a 17 cents per share dividend in FY 2022. Based on the latest Scentre share price of $2.74, this equates to 5.1% and 6.2% yields.

The post 2 quality ASX dividend shares with generous yields appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in July 2021
• Why analysts rate Westpac (ASX:WBC) and this dividend share as buys
• Brokers name 2 ASX dividend shares to buy
• Leading brokers name 3 ASX shares to sell today
• Here are 2 ASX dividend shares with attractive yields

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 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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It was another solid month for the S&P/ASX 200 Index (ASX: XJO) in June. Over the period the benchmark index recorded a gain of 2.1% to 7,313 points.

Unfortunately, not all shares were able to follow the market’s lead. Here’s why these were the worst performing ASX 200 shares in June:

Nuix Ltd (ASX: NXL)

The Nuix share price was the worst performer on the ASX 200 last month with a disappointing 20.2% decline. The investigative analytics company’s shares were sold off again in June following a series of negative developments. One was yet another downgrade to its guidance on 31 May. This was followed by the exit of several executives, police raids on its offices, and insider trading revelations. Investors appear concerned what impact these developments will have on its customer base.

Gold Road Resources Ltd (ASX: GOR)

The Gold Road share price was out of form and sank 18.5% over the month. A disappointing production update late in the month weighed heavily on the gold miner’s shares. As did a pullback in the gold price. In fact, the precious metal had its worst month in around four years in June. For similar reasons, Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST), Ramelius Resources Limited (ASX: RMS), Regis Resources Limited (ASX: RRL), and Silver Lake Resources Limited (ASX: SLR) all recorded very large declines during the month.

OZ Minerals Limited (ASX: OZL)

The OZ Minerals share price had a disappointing month and sank 11.1% over the period. This weakness appears to have been driven by a decline in copper prices. The base metal came under pressure due to concerns that Chinese authorities are going to try to curb a recent rally in commodity prices.

Austal Limited (ASX: ASB)

The Austal share price wasn’t far behind with a decline of 9.3% in June. Investors were selling the shipbuilder’s shares after it downgraded its earnings guidance due to COVID-19 related delays. Austal expects its earnings before interest and tax (EBIT) to be in the range of $112 million to $118 million in FY 2021. This is down from its previous EBIT guidance of $125 million.

The post These were the worst performing ASX 200 shares in June appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares in June
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises, Telstra up, AGL sinks
• 2 ASX 200 shares that might be buys for growth
• ASX gold miners like Regis (ASX:RRL) hit a 52-week low 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. owns shares of and has recommended Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty 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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The S&P/ASX 200 Index (ASX: XJO) was on form again in June, rising by a sizeable 2.1% to 7,313 points.

While a good number of shares climbed higher with the market, some climbed more than most. Here’s why these were the best performing ASX 200 shares in June:

Altium Limited (ASX: ALU)

The Altium share price was the best performer on the ASX 200 last month with a 29.8% gain. This electronic design software provider’s shares rocketed higher after it announced the receipt of a takeover approach from Autodesk. The US software giant made a formal, non-binding, indicative and unsolicited proposal of $38.50 per share to acquire the company. This represented a 41.5% premium to its last close price at the time. However, the Altium Board believes it undervalues the company and rejected the proposal.

Afterpay Ltd (ASX: APT)

The Afterpay share price wasn’t far behind with a gain of 27.4% in June. Investors were fighting to get hold of the payments company’s shares after it announced the expansion of its one-time card footprint in the United States. This will mean that Afterpay will soon let US consumers shop with 12 of the most popular and largest merchants in the country. This includes Amazon, Nike, Nordstrom, Target, and Walgreens. Combined, the new merchant additions represent almost half of all U.S. ecommerce volume.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price was a very strong performer in June, rising 27.4% over the period. Improving sentiment in the tech sector and the announcement of a research collaboration agreement with Mayo Clinic gave the health imaging technology company’s shares a big boost. In respect to the latter, the agreement will serve as the framework for collaboration between the two parties to facilitate development and commercialisation in the field of artificial intelligence (AI), leveraging the Visage AI Accelerator platform.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price was back on form and stormed 23.2% higher in June. This appears to have been driven by the release of a number of positive broker notes during the month in response to the improving outlook for metallurgical coal. One of those brokers was Ord Minnett, which upgraded Whitehaven Coal’s shares to a buy rating with a $3.00 price target. This is still over 50% higher than where the Whitehaven Coal share price ended the month.

The post These were the best performing ASX 200 shares in June appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises, Telstra up, AGL sinks
• 2 ASX 200 shares that might be buys for growth
• ASX gold miners like Regis (ASX:RRL) hit a 52-week low today
• FANG+ ETF (ASX:FANG) tumbles 10% on ex-dividend day

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 AFTERPAY T FPO, Altium, and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Altium, and Pro Medicus Ltd. 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 the new financial year now upon us, we asked our Foolish contributors to compile a list of some of the ASX shares experts are saying to buy in July.

Here is what the team have come up with…

Tristan Harrison: Adairs Ltd (ASX: ADH) 

Adairs is a homewares and furnishings ASX share.  

It has been one of several companies that have seen a high level of demand during the COVID-19 pandemic as people spend more on their homes.  

The business has plans for more profit growth with a focus on online sales, strong margins, growth of the Mocka brand in Australia, and a new national distribution centre. That new distribution centre is expected to deliver annual savings of approximately $3.5 million per annum. 

According to Commsec, Adairs shares are valued at 12x FY22’s estimated earnings with a forecast FY21 grossed-up dividend yield of 8.8%. The Adairs share price has gained around 29% so far in 2021.

Motley Fool contributor Tristan Harrison does not own shares of Adairs Ltd. 

Bernd Struben: Accent Group Ltd (ASX: AX1)

My top pick for July is sports and footwear retailer Accent Group. Accent has delivered market-beating share price growth over the past 12 months (up by around 100%), as well as year to date (up by around 21%). Atop capital growth, Accent pays an annual dividend yield of approximately 4.3%, fully franked.

Analysts at financial advisory firm Bell Potter have a positive outlook for Accent. Bell Potter has a buy rating on Accent shares, with a price target of $3.30 per share. That’s around 18% higher than the $2.79 per share Accent is currently trading at. At today’s share price, the retail conglomerate has a market capitalisation of around $1.5 billion.

Motley Fool contributor Bernd Struben does not own shares of Accent Group.

Sebastian Bowen: Metcash Limited (ASX: MTS)

My ASX share pick for July is grocery and hardware retailer Metcash, the company behind the IGA and Mitre 10 store chains.

Metcash has had a great week so far this week. Monday saw the release of its full-year earnings, which saw pleasing growth in both revenue and profits. It also saw Metcash raise its already-robust dividend by roughly 40%. Investment bank Goldman Sachs is currently bullish on Metcash shares, citing the company’s earnings stability, recent purchase of Total Tools equity, and planned share buybacks.

The broker has a buy rating and a 12-month price target of $3.97 per share for Metcash. The Metcash share price jumped 2.31% on Wednesday to close at $3.99.

Motley Fool contributor Sebastian Bowen does not own shares of Metcash Ltd.

James Mickleboro: Life360 Inc (ASX: 360)

This San Francisco-based app maker could be a share to consider buying in July. Life360’s family-orientated app provides features such as real-time location sharing, crash detection, and messaging to a massive 28 million monthly active users.

The company has also recently strengthened its offering with the acquisition of Jiobit for US$37 million. Management believes the addition of the wearable location device provider is very supportive of its growth strategy and opens up cross-selling opportunities.

Morgan Stanley recently initiated coverage on Life360 shares with an overweight rating and an $8.60 price target. The Life360 share price closed Wednesday’s session more than 6% higher at $6.68.

Motley Fool contributor James Mickleboro does not own shares of Life360 Inc.

Brendon Lau: Qube Holdings Ltd (ASX: QUB)

The Qube share price could be one to watch in July after Citigroup highlighted several positive tailwinds that are likely to support the company through FY22.

The volume of cargo moving through Melbourne and Sydney ports has risen and the demand to transport minerals is strong. Further, high soft commodity prices could also add to demand for Qube’s logistics services.

Citi recently upgraded its price target on the Qube share price to $3.61 from $3.57 and says there is upside risk to its forecast. The broker is recommending Qube shares as a Buy.

Motley Fool contributor Brendon Lau does not own shares of Qube Holdings.

The post Top ASX shares to buy in July 2021 appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Why Life360, Paradigm, Sayona Mining, & Telstra shares are charging higher
• Life360 (ASX:360) share price up 206% in last 12 months
• Here are 3 ASX tech shares tipped for big things
• Bullish brokers drive Metcash (ASX:MTS) share price to multi-year high

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ADAIRS FPO and Life360, Inc. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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 Wednesday the S&P/ASX 200 Index (ASX: XJO) was back on form and recorded a small gain. The benchmark index rose 0.15% to 7,313 points.

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

ASX 200 expected to edge lower

The Australian share market looks set to edge lower on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 3 points or 0.05% lower this morning. This follows a mixed night of trade on Wall Street, which saw the Dow Jones rise 0.6%, the S&P 500 climb 0.1%, and the Nasdaq fall 0.2%.

IGO update

The IGO Ltd (ASX: IGO) share price will be one to watch on Thursday. This follows news that it has now completed its transformational transaction to form a new lithium joint venture with Tianqi Lithium. The joint venture will initially focus on the world-class Greenbushes Lithium Mine. In addition to this, the company has the Kwinana Lithium Hydroxide Refinery. It will be the first fully automated lithium hydroxide refinery in Australia.

Oil prices rise

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices pushed higher again. According to Bloomberg, the WTI crude oil price is up 0.75% to US$73.53 a barrel and the Brent crude oil price has risen 0.5% to US$75.13 a barrel. Lower US stockpiles gave prices a boost.

Gold price strengthens

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could push higher today after the gold price strengthened overnight. According to CNBC, the spot gold price is up 0.4% to US$1,770.70 an ounce. Despite this gain, the precious metal had its worst month in more than four years due to a hawkish US Federal Reserve.

Telstra given buy rating

The Telstra Corporation Ltd (ASX: TLS) share price jumped on Wednesday after announcing the sale of its tower assets. Analysts at Goldman Sachs have responded to the news by reiterating their buy rating and $4.20 price target on its shares. Goldman notes that Telstra received more than it was expecting for the assets.

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

More reading

• ASX 200 rises, Telstra up, AGL sinks
• Why the Telstra (ASX:TLS) share price jumped 4% higher today
• 2 ASX 200 shares that might be buys for growth
• ASX gold shares could be in for a lift: Saxo Markets
• ASX gold miners like Regis (ASX:RRL) hit a 52-week low 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 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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If small caps are too high on the risk scale for your tastes, then you might be better off looking at the mid cap space. These companies are lower down the risk scale but still have the potential to generate outsized returns for investors in the future.

With that in mind, I have picked out two mid caps that are highly rated right now. Here’s what you need to know about them:

Bravura Solutions Ltd (ASX: BVS)

The first mid cap ASX share to look at is Bravura. It is a leading provider of software solutions for the wealth management and funds administration industries.

Bravura has a portfolio of solutions that are both high quality and have significant market opportunities. This includes the popular Sonata wealth management platform, which allows financial advisers to connect and engage with clients via computers or smart devices.

In addition, the company’s portfolio includes FinoCamp, Midwinter, and Delta Financial Systems. FinoCamp builds unique and highly flexible software that supports the UK wealth market, Midwinter is a financial planning software provider, and Delta Financial Systems provides technology to power complex pensions administration in the UK market.

After a couple of years of significant headwinds from Brexit and COVID-19, Bravura looks to be back on the right path again. It recently reaffirmed its guidance for FY 2021 net profit after tax of $32 million to $35 million and second half revenue growth of 10% half on half.

Goldman Sachs is a fan of the company. It currently has a buy rating and $3.90 price target on its shares. The broker believes it has a massive growth opportunity in the UK and ANZ markets.

Hipages Group Holdings Ltd (ASX: HPG)

Another mid cap ASX share to look at is Hipages. It is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers. The Hipages platform not only helps tradies grow their businesses by providing job leads, it also allows them to communicate with customers and run general admin duties.

At the last count, over three million Australians had used Hipages, providing more work to over 34,000 trade businesses subscribed to the platform.

Goldman Sachs is also very positive on the company and sees it as a great long term option. It highlights that the company currently captures around 5% of total industry advertising spend. However, it sees scope for this to increase to 40% to 60% in the future as the company builds out its ecosystem.

Goldman Sachs recently put a buy rating and $3.40 price target on its shares.

The post 2 top mid cap ASX shares that could be buys for growth investors 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. owns shares of and has recommended Bravura Solutions Ltd and Hipages Group Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. 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 S&P/ASX 200 Index (ASX: XJO) went up by around 0.2% to 7,313 points.

Here are some of the highlights from the ASX:

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price went up 4.4% today in response to the company announcing the sale of 49% of its business for $2.8 billion.

A consortium made up of Future Funds, Commonwealth Superannuation Corporation and Sunsuper will buy almost half of the Towers business.

It’s the largest mobile tower infrastructure provider in Australia with around 8,200 towers.

The transaction values Telstra InfraCo Towers at $5.9 billion. Telstra expects net cash proceeds after transaction costs of $2.8 billion at completion and the Towers entity will have no debt.

Andrew Penn, the CEO of Telstra, said:

Telstra’s objective in seeking a strategic partner has been to maximise overall value for our shareholders, maintain control of the assets and agree terms that secure Telstra’s mobile network leadership and competitive differentiation into the future. I am pleased that we have been able to achieve that ahead of schedule through this transaction announced today.

We had previously intended to commence the process to seek external strategic investment in the Towers business in early FY22, with a view to completing any transaction by the end of the 2022 calendar year. We were approached by the consortium earlier in the year as they recognised the value of these assets and provided a compelling rationale to progress the transaction ahead of schedule. We believe the value of the transaction; the high calibre consortium members and the terms of the agreement which protect Telstra’s network differentiation, support our decision to accelerate the process.

Telstra said that it intends to return approximately 50% of net proceeds to shareholders in FY22. The ASX 200 share anticipates providing further details about the manner of the shareholder return, including a potential share buy-back in FY22 at its full-year results in August. The remainder of the proceeds will be used for debt reduction to ensure it maintains balance sheet strength and flexibility.

AGL Energy Ltd (ASX: AGL)

The AGL share price fell around 10% after giving a business update.

AGL said its board believes proceeding with the proposed demerger will be in the best interests of shareholders, protecting value and providing greater strategic focus.

AGL Energy will become Accel Energy, a baseload power producer focused on redevelopment of its sites as low-carbon industrial energy hubs.

Accel Energy will demerge AGL Australia, one of the country’s leading multi-product energy retailer backed by flexible energy trading, storage and supply.

The ASX 200 company said that there is strong support from lenders for new borrowing facilities for both entities.

It’s anticipated that completion of the demerger will be in the fourth quarter of FY22, subject to relevant approvals.

Accel Energy will retain a minority ownership interest of between 15% to 20% of AGL Australia after the demerger.

AGL also said its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be within the lower half of its previous range of $1.59 billion to $1.85 billion.

Underlying net profit after tax (NPAT) is expected to be around the middle of the previous range of $500 million to $580 million.

For FY22, AGL expects a material step-down of earnings as a result of lower wholesale electricity prices of the past two years now being realised through forward sold positions, as well as the non-recurrence of insurance proceeds and increases to wholesale gas supply costs.

The post ASX 200 rises, Telstra up, AGL sinks appeared first on The Motley Fool Australia.

More reading

• Why the Telstra (ASX:TLS) share price jumped 4% higher today
• 2 ASX 200 shares that might be buys for growth
• ASX gold miners like Regis (ASX:RRL) hit a 52-week low today
• These 2 high-yielding ASX dividend shares are rated as buys by brokers
• FANG+ ETF (ASX:FANG) tumbles 10% on ex-dividend day

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 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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Some small cap ASX shares could be worth looking at for the long-term.

Smaller businesses may have a bigger and longer growth runway because of the smaller size of the company compared to their larger counterparts.

However, just because a business is small doesn’t mean that a company is worth owning.

Here are two small cap ASX shares to consider:

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is an e-commerce beauty business with a portfolio of over 260 brands and 10,800 products. It operates in both Australia and New Zealand.

The company is seeing a structural shift in consumer behaviour towards online retail, based on continued strong retention of customers acquired during the COVID-19 lockdown.

Adore Beauty is seeing an acceleration of growth during these COVID affected times. In FY19, revenue increased 38.6%. Management are expecting revenue growth of between 43% to 47% in FY21.

Indeed, the company announced its FY21 third quarter saw revenue growth of 47% on the prior corresponding period. Active customers were up 69% over the prior corresponding period to 687,000.

Adore Beauty is planning to continue to invest with discipline to drive revenue growth and further drive its online market share. Its investments include marketing, advertising, people, its mobile app, the loyalty program, content capabilities, range, adjacency expansion and private label development.

According to Frost & Sullivan, the beauty and personal care market in Australia is worth $11.2 billion and is expected to grow at a compound annual growth rate of 26% to 2024.

The small cap ASX share said that given the predominately fixed nature of the business’ cost base, it’s expecting scale benefits to increase operating leverage and deliver earnings before interest, tax, depreciation and amortisation (EBITDA) margin expansion in the longer-term as the company continues to grow revenue.

UBS currently rates Adore Beauty as a buy, with a price target of $5.60. The broker thinks the beauty business can benefit from the e-commerce growth and it’s a good time to buy after the share price has dropped quite a lot from its listing price.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is health technology software business that has a breast health platform which assists in the delivery of personalised patient care.

The company is seeing operating leverage. In its recent FY21 result, total revenue increased 57% whilst subscription revenue grew 99%. Gross profit went up 67% to NZ$18.1 million, reflecting a gross profit margin of over 91%. Operating costs only increased 8% year on year, or 4% excluding the CRA Health acquisition.

Volpara has outlined a number of areas where the business is expecting growth.

It’s targeting increased average revenue per user (ARPU) by selling a platform, not just a product. Its platform includes all of its products with multiple integrations that aims to make the suite even more compelling. Most new sales are now for two or three products, representing significantly increased ARPU. Its relationship with genetics companies is expected to increase that ARPU further.

The small cap ASX share says that it has a pipeline of new deals lined up thanks its networks, customer referrals and digital marketing.

Volpara also believes it can achieve growth through upselling by upgrading MRS users to its patient hub and Volpara products. Management suggested a 200% to 300% increase in recurring revenue for those that upgraded.

It’s still seeing a very high retention rate and there are further acquisition opportunities that can increase its market share and/or improve its skills and products to help increase ARPU and provide technology for the future.

Volpara is expecting revenue in FY22 of approximately NZ$25 million to NZ$26 million, which would growth of at least 27%.

The post 2 top small cap ASX shares that might be buys appeared first on The Motley Fool Australia.

More reading

• 3 exciting small cap ASX shares to put on your watchlist
• ASX 200 flat, e-commerce ASX shares soar, Metcash rises
• 2 buy-rated small cap ASX shares tipped for strong growth
• 2 stellar small cap ASX shares to watch
• 2 excellent ASX healthcare shares named as buys

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. owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. 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 BHP Group Ltd (ASX: BHP) share price continued its positive run on Wednesday.

The mining giant’s shares rose 1% to close the day at $48.57.

This latest gain means the BHP share price is now up 13% since the start of the year.

Can the BHP share price climb even higher?

The good news is that it may not be too late to invest according to analysts at Goldman Sachs.

This morning the broker retained its buy rating and $53.80 price target on the company’s shares. Based on the current BHP share price, this implies potential upside of ~11% over the next 12 months.

And if you include dividends (Goldman is forecasting US$2.52 per share in FY 2021 and US$2.58 per share in FY 2022), the potential total return stretches to approximately 18%.

Why is Goldman positive on BHP?

There are three key reasons that Goldman Sachs is bullish on the mining giant. The first is the strong free cash flow the company is currently generating thanks to favourable commodity prices.

It explained: “Strong earnings growth and FCF: We forecast a c. 50% increase in EBITDA and a doubling of FCF in FY21 (equating to c. 10-11% FCF yield), driven by our positive view on met coal, copper and oil prices.”

Another reason it feels the BHP share price is good value is the company’s growth prospects.

Goldman said: “Strong production growth: BHP’s group Cu Eq production should increase by 4-5% in FY22 and 6-7% in FY23, driven by a +250-270kt lift in copper volumes from Spence and Escondida, +10MMboe of oil volumes with new production from Mad Dog II/Atlantis Phase 3/Shenzi. BHP will likely also see a significant margin and FCF kicker in the Pilbara from the high grade South Flank deposit. Longer term, we see possible 50% volume growth to +150MMboe driven by Trion, Calypso (formerly T&T North), Shenzi North (formerly Wildling), and Scarborough.”

The final reason for the broker’s positive view is its ongoing portfolio optimisation, which it appears to believe will create value for shareholders.

It concluded: “Potential benefits from ongoing portfolio optimisation: Ongoing with the announcement to divest thermal and weak coking coal, and Bass Strait gas.”

Overall, this could make BHP worth considering if you’re looking for exposure to the resources sector.

The post Why this broker thinks the BHP (ASX:BHP) share price can storm higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 up 0.5%: Telstra asset sale, AGL demerger, Nuix crashes again
• Why this expert thinks commodities are about to rally again
• BHP (ASX:BHP) announces first deal in thermal coal selloff
• ASX 200 Weekly Wrap: Share market breaks 5 week winning streak
• 5 things to watch on the ASX 200 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 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 Telstra Corp Ltd (ASX: TLS) share price found itself as one of the top-performing S&P/ASX 200 Index (ASX: XJO) shares on Wednesday.

After a solid day in the green, the Telstra share price was up 4.44% at market close, trading at $3.76.

What’s driving the Telstra share price?

Investors were buying up shares in the blue-chip telco giant after the company announced that it had sold a 49 per cent interest in its Telstra Infraco Towers business.

Telstra advised that a consortium comprising the Future Fund, Commonwealth Superannuation Corporation and Sunsuper agreed to acquire the 49 per cent interest and come on board as a strategic partner.

The transaction is expected to be completed in the first quarter of FY22, with Telstra expecting to receive net cash proceeds after transaction costs of $2.8 billion.

Telstra advised that it intends to return approximately 50 per cent of the proceeds to its shareholders in FY22, including a potential share buy-back.

The company said that it will use remaining proceeds towards debt reduction to “maintain balance sheet strength and flexibility”.

What did management say?

Telstra CEO, Andrew Penn welcomed the significant milestone, saying:

Our T22 strategy is delivering on multiple fronts and I am proud of what we have achieved.

Today’s announcement is a further endorsement of the strategy, as the establishment of our infrastructure assets as a separate business was designed to enable us to better realise the value of these assets, take advantage of potential monetisation opportunities and create additional value for shareholders and that is exactly what today’s announcement achieves.

Telstra share price rallies to pre-COVID levels

The Telstra share price has been a standout performer in 2021, lifting by almost 25% year-to-date.

Telstra shares haven’t traded at $3.70 levels since 24 February 2020, right before the COVID-19 induced selloff.

While today’s transaction appears to be great news in terms of shareholder value, Goldman Sachs thinks the business has a lot of room to grow, and lifted its share price target to $4.20 yesterday.

The post Why the Telstra (ASX:TLS) share price jumped 4% higher today appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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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