Tag: Motley Fool

The Lake Resources NL (ASX: LKE) share price has tumbled 80% over the past 12 months.

The ASX lithium share is currently trading at 46 cents, which is a 78.7% decline over the year.

By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is down 4.5% over the year.

But things could be turning around following Lake Resources’ announcement that its environmentally-friendly direct lithium extraction (DLE) technology process “has now been proven” to work.

This at least partly debunks one of the claims made by a United States short seller in July last year.

Lake Resources share price stabilises in April

On 3 April, Lake Resources told the market about a potentially game-changing development in its evolution from a lithium explorer to a clean lithium producer.

Since that day, the Lake Resources share price appears to be stabilised. It is currently trading at 45 cents, which is the same level it closed at on Friday, 31 March, ahead of the Monday announcement.

Could this be the beginning of the end of this ASX lithium share’s depressing 12-month decline?

A painful year for investors

It’s been a rough road for Lake Resources shareholders since the company’s troubles began in April 2022.

Let’s do a quick recap.

On 5 April 2022, the Lake Resources share price hit an all-time high of $2.65. For investors who bought in at 7 cents in early 2021 when global lithium prices began their massive upswing, this was an incredible 3,685% capital gain. Yee-hah!

Then began the fall.

On 20 June 2022, Lake Resources announced the shock resignation of its CEO Steve Promnitz, in a seemingly acrimonious split. Promnitz sold his 10.2 million shares the next day.

There was also commentary swirling about overly optimistic demand projections for lithium.

These two factors, along with the 150% gain in the Lake Resources share price between February and April, led to it making its debut as one of the top 10 most shorted ASX shares on the market in July.

The short interest at the time was 8.9%.

Then came another enormous hit. US short seller J Capital published a report with a series of claims against Lake Resources.

What did the short seller claim?

J Capital listed a number of concerns, one of them pertaining to the DLE technology provided by Lake Resources’ technology partner, Lilac Solutions.

A bit of background here.

Lake Resources has long sought to separate itself from other lithium producers by marketing itself as a “clean lithium developer” due to its use of DLE technology to produce greener lithium.

Lake Resources says the ion exchange extraction technology will deliver high-purity battery materials (desirable for enhanced performance) and lithium carbonate with a lower carbon footprint.

In short, they reckon their lithium is cleaner and greener than any other producers’ lithium, thereby potentially making Lake Resources more appealing to ESG-focused customers and investors.

But J Capital analysts weren’t convinced the technology would work as planned, commenting:

Lake is one of several lithium explorers planning to use an unproven direct lithium extraction (DLE) technology to remove lithium from brine.[…]

We believe, however, DLE will still use large amounts of water and produce toxic waste.

Lake has failed to get an operational pilot plant on site three years after promising it would. Investors still have no evidence that the Lilac DLE technology works at scale and if so at what cost.

Lake Resources went into a trading halt and then responded, saying the report “puts forth incorrect information on technical matters and inaccurate assertions on Lake Resources’ progress to date”.

The Lake Resources share price recovered slightly over the next month to reach $1.595 on 11 August.

But then it lost momentum, and a long downward spiral ensued.

Good news at last for the ASX lithium share

On 3 April, Lake Resources announced independent verification of above 99.8% grades and purity for lithium carbonate that was converted from 40,000 litres of lithium chloride produced at its flagship Kachi Project in Argentina using the DLE technology.

Lake Resources CEO David Dickson said the results proved the DLE process worked.

This is a new process that has now been proven to produce high grade lithium in our ‘mining and
refining’ facility – this means a critical part of the value adding chain is being captured by Lake.

It also sets a new standard for what it means to be a responsible member of the lithium supply chain.

In its statement, the company said Project Kachi was “poised to lead the industry in the production of high-quality lithium with minimal environmental footprint”.

Lake Resources elaborated:

This test, performed by Saltworks with independent analysis by two third party labs, validates the
major commercial process systems for the Kachi Project and confirms its ability to produce high-quality, battery-grade lithium carbonate from Lake’s brine resource using Lilac DLE technology.

The quality of the Li2CO3 product from the Saltworks test exceeds the Project Design Specification and
the battery grade specifications of major South American brine lithium producers.

Kachi ‘on track’ for commercial-scale development

On Monday, Lake Resources announced another “major milestone” for Kachi with first production of 2,500kg of lithium carbonate equivalents (LCE).

The company said it was a “historic advancement in lithium production technology”.

The company said:

The project is now on track to move from its pilot phase into commercial-scale development, which will make it the first lithium brine project in South America to produce lithium at commercial scale without the use of evaporation ponds for lithium concentration.

This is the first successful implementation of ion exchange for lithium production in South America, home to most of the world’s lithium brine resources.

The 2,500 kg of LCEs was extracted at Kachi with … 1,000x less land compared with evaporation ponds, and 10x less water compared with conventional aluminum-based absorbents.

In a joint statement from Lilac and Lake Resources, the two company CEOs commented:

Today, we’ve proven that it is possible to produce high-purity lithium faster and without evaporation ponds – all while protecting surrounding communities and ecosystems.

Is Lake Resources a buy at today’s share price?

As we covered last month, Bell Potter thinks the Lake Resources share price could grow five-fold in the next year. At the time, the broker had a speculative buy rating with a price target of $2.52.

Short positioning on the ASX lithium share has dropped by 30% over the past six months. According to the latest ASIC data, 6.83% of Lake Resources shares are shorted compared to 10.13% six months ago.

The post ‘A new process now proven’: Lake Resources share price stabilises as short seller’s claim debunked appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why EML, Lake Resources, Lindsay, and Sayona Mining shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Lake Resources share price leaping 10% higher on ‘major milestone’
• If I’d invested $500 in Lake Resources shares at launch, here’s how much I’d have now!

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

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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Allkem Ltd (ASX: AKE)

According to a note out of Bell Potter, its analysts have retained their buy rating on this lithium miner’s shares with an improved price target of $19.89. This follows the release of the company’s third-quarter update. And while the broker notes that Allkem expects lithium prices to weaken in the fourth quarter, this is in line with its own expectations. In light of this, the broker remains positive and rates the company highly due to its portfolio of growth projects and strong balance sheet. The Allkem share price is trading at $11.61 on Friday.

Challenger Ltd (ASX: CGF)

A note out of Morgans reveals that its analysts have upgraded this annuities company’s shares to an add rating with a trimmed price target of $7.52. While the broker felt that Challenger’s quarterly update was soft, it remains positive on the future and believes that recent share price weakness has created a buying opportunity for investors. Particularly given how the roll-through of recent strong interest rates rises provides a supportive backdrop for earnings over the next few years. The Challenger share price is fetching $6.19 today.

Westpac Banking Corp (ASX: WBC)

Analysts at Goldman Sachs have retained their conviction buy rating on this banking giant’s shares with a trimmed price target of $25.86. While the broker acknowledges that net interest margin (NIM) pressures are accelerating across the sector, it feels Westpac’s shorter-duration portfolio will see it outperform peers. In addition, it likes the bank due to its cost reduction plans and attractive valuation compared to historic levels. The Westpac share price is trading at $22.34 this afternoon.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Should lithium investors buy the dip in the Allkem share price?
• Can Westpac shares really deliver 15% upside AND a 6% dividend yield?
• Why 29Metals, Allkem, Alliance, and Rio Tinto shares are falling today
• 3 ASX 200 shares making big moves following quarterly updates
• Allkem share price slides despite strong quarterly production from the ASX 200 lithium stock

Motley Fool contributor James Mickleboro has positions in Allkem and Westpac Banking. 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 Challenger and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If an ASX income investor is looking for big dividends on the share market, the first place they will probably go to is the ASX 200 bank sector. ASX bank shares have long been stalwarts of dividend-focused investors, thanks to decades of large and fully franked dividend payments to investors.  

Most investors will naturally gravitate toward the big four banks. Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) are the clear market leaders, with long histories of providing baking services to Australians. They have a reputation for strength and stability, and as such, feature in most income investors’ portfolios.

But they are not the only choices facing dividend-hungry investors today. In fact, there is an ASX bank outside the big four that currently offers a dividend yield even better than the likes of CBA, ANZ, Westpac and NAB. It’s Bendigo and Adelaide Bank Ltd (ASX: BEN).

Bendigo Bank is a relative minnow compared to its larger brethren. It’s currently trading with a market capitalisation of $4.95 billion, less than 3% of CBA’s $170 billion size at present.

But this smaller ASX bank is still an entrenched Australian bank with a solid customer base, strong earnings and, yes, a monstrous dividend yield.

How does the Bendigo Bank dividend stack up against the big four ASX bank shares?

Let’s illustrate. So right now, CBA offers the smallest trailing dividend yield of the big four at 4.18%. NAB is a little better at 5.24%, and Westpac is at 5.6%. ANZ leads the big four with its present yield of 5.98%.

But Bendigo Bank blows the big four away with its dividend yield of 6.36% today. That comes fully franked too, which grosses up that yield all the way to 9.09%. 

This dividend yield comes from Bendigo Bank’s last two dividend payments. Investors bagged a 29 cents per share interim dividend just last month. Preceding this payment, there was the final dividend of 26.5 cents per share that shareholders enjoyed last September.

The latest interim dividend was a pleasing hike from the 26.5 cents per share payment from last year. But the bank still isn’t back to paying out the dividends it was back in 2018 and 2019. In both years, investors enjoyed a total of 70 cents per share in dividend income.

But even so, the dividend pay rise investors have just enjoyed, as well as the big four-smashing dividend yield of over 6% today, certainly make this ASX bank share stand out amongst its peers today.

The post Want big dividends? This ASX bank share smashes the big four appeared first on The Motley Fool Australia.

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More reading

• Are these ASX All Ords shares ready to buy at fundamentally fire sale prices?
• The bigger Bendigo Bank dividend is being paid today. Here’s the latest
• ASX shares are paying out $19 billion in dividends this week. Are you getting a piece?
• ASX 200 bank stocks: ‘No different’ or ‘extremely strong’?
• Bendigo Bank shares worst of the ASX 200 banks following UBS downgrade

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Commonwealth Bank of Australia (ASX: CBA) shares are down 0.5% at the time of writing.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $100.92. Shares are currently swapping hands for $100.43.

The 0.5% intraday decline is broadly in line with losses being posted by the other big four banks.

That’s today’s price action for you.

Now here’s why CBA shares have been making headlines this week.

What’s putting the ASX 200 bank in the headlines?

CommBank made headline news on Wednesday after the bank admitted in Federal Court that management was aware thousands of staff were underpaid a total of $16.1 million since 2010, yet they allowed the practice to continue.

Finance Sector Union national secretary Julia Angrisano said the bank’s admission should cause everyone “deep unease”.

CommBank is potentially facing fines of $660,000 per breach under a provision of the Fair Work Act. With 7,402 impacted staff, that could add up!

A spokesman for Australia’s biggest bank said:

We acknowledge that any instance of employees not being paid their correct entitlements is unacceptable. CBA and CommSec have co-operated fully and engaged constructively with the FWO during its investigation and the proceedings.

CBA shares closed flat on Wednesday.

The big four bank was back in the headlines on Thursday.

That came amid fresh news that CommBank is carrying out exclusive due diligence to potentially acquire business lender ScotPac, owned by Affinity Equity Partners. The Motley Fool first reported on that potential takeover on 28 March.

CBA has now hired advisory company Gresham to carry out due diligence on ScotPac.

CBA shares closed up 1.6% on Thursday.

Yesterday the bank also reported on the expansion of its range of green financing to support its clients.

The maximum loan for the bank’s Green Loan will increase from the prior $20,000 to $30,000. The range of eligible products that can be funded under the loan will also be expanded from mid-2023.

“CommBank is dedicated to supporting Australia’s energy transition, and rewarding our customers for making more sustainable choices,” CBA retail banking group executive Angus Sullivan said.

How have CBA shares been tracking?

As you can see in the chart below, CBA shares have dropped 7% over the past 12 months. The stock is up 4% since 21 March.

The post Here’s why CBA shares have been making headlines this week appeared first on The Motley Fool Australia.

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More reading

• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• Could CBA be about to add $1 billion to its loan book?
• Own CBA shares? Here’s why the bank could ‘face the full wrath of the law’
• Which is the best ASX 200 bank share to buy today?
• The CBA share price just surged past $100. Too late to buy?

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to buying ASX 200 gold shares, Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) are two of the most prominent choices facing ASX investors wanting to invest in gold.

Newcrest and Northern Star are the largest and second-largest ASX gold miners on the share market by market capitalisation respectively. So what better pair to compare for a better buy right now? Let’s get started.

So in comparing these two ASX gold shares, it’s important to note that the Newcrest share price has been markedly elevated in recent weeks thanks to a takeover bid from the US gold miner Newmont Corporation. Newmont has offered an all-scrip deal to acquire Newcrest, which the company’s board and shareholders are still considering. This bid values Newcrest at approximately $29.4 billion, or $32.87 per share.

For context, Newcrest shares started 2023 at $20.84 a share and are now up almost 40% year to date. So this is obviously impacting Newcrest’s valuation today. But we’ll plough through with a comparison with Northern Star regardless.

So here’s a table that compares some of these two gold shares’ major metrics so we can make a fair comparison between the two:

	Newcrest Mining	Northern Star Resources
Share price (at the time of writing)	$28.98	$13.88
Market capitalisation	$25.88 billion	$15.97 billion
Price-to-earnings (P/E) ratio	19.71	74.77
Dividend yield (at the time of writing)	1.78%	1.62%
Gold reserves (FY22)	120,000,000 ounces (measured and indicated)	20,683,000 ounces (proved and probable)
Gold production (FY22)	1,956,000 ounces	1,530,000 ounces
Major mine locations	Australia, Canada, PNG	Australia, USA (Alaska)
Underlying profit (FY22)	$872 million	$273 million
AISC per ounce mined	$732	$1,555

So after comparing these two companies, my own clear favourite is Newcrest.

Why Newcrest is my pick for the best ASX gold share

Like any mining company, a gold miner is only as strong as its underlying costs. Newcrest’s impressive All In Sustaining Cost (AISC) per ounce of $732 gives the company far more wriggle room if gold prices descend from their current historical highs than Northern Star’s $1,555.

Say gold descends to $1,400 per ounce over the next year. That pricing would render Northern Star unprofitable, but Newcrest would still be making money. That gives me far more confidence in Newcrest as a gold investor.

Further, Newcrest has far more gold reserves left in its mines than Northern Star does. That adds to my conviction that Newcrest is the better option today.

So regardless of whether the Newmont bid goes through with Newcrest, it’s the miner that I would have more confidence in investing in today, comparing all of the above metrics. You’ll even get slightly higher dividend income from Newcrest at the current share price.

The post Better ASX gold share to buy now: Newcrest vs. Northern Star appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Wednesday
• Here’s the forecast for popular ASX 200 mining shares from UBS
• ASX 200 gold shares are booming in 2023 with more gains forecast: fund manager
• 5 things to watch on the ASX 200 on Monday

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

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Investing in S&P/ASX 200 Index (ASX: XJO) shares can be a rewarding strategy. Indeed, the index has gained 23% over the last five years – that’s a 4.6% average annual return before considering dividends.

On that note, what if passive income was my investing goal? Many ASX 200 shares provide dividends twice a year.

Here’s how I’d build a $7,500 annual passive income by investing $100 a week in ASX 200 dividend shares.

Why I think ASX 200 shares can be attractive investments

I am personally a fan of investing in ASX 200 companies. As the name suggests, the index houses 200 of the Aussie bourse’s largest and most influential companies.

ASX 200 shares boasted an average market capitalisation of around $11.4 billion at the end of last quarter, according to data from the S&P Global. That means most could be considered blue-chip stocks – known to generally offer greater stability and security through the market’s ebbs and flows.

Not to mention, ASX 200 shares offer an average dividend yield of 4.58%. That’s certainly nothing to scoff at!

Such a yield could turn a decent weekly investment into a substantial annual income, thanks to the power of compounding.

Building a $7,500 passive income with ASX 200 stocks

I think I could muster up $100 to invest each week and continue doing so consistently over the coming years.

At that rate, I could sink $5,200 a year into ASX 200 shares – enough to provide $238.16 of passive income annually.

While any extra cash is welcome, that amount probably won’t stretch far. So, instead of spending it, I plan to reinvest my dividends, using them to buy more stocks – thereby compounding my returns.

Here’s how this strategy could work to build my nest egg substantially over the coming decades, all before considering share price gains:

Years invested	$ invested	Portfolio value
1	$5,200	$5,200
5	$26,000	$28,493
10	$52,000	$64,137
15	$78,000	$108,726
20	$104,000	$164,505

That’s right, only considering the power of compounding dividends, my $100 weekly investment could grow into a $164,505 portfolio in two decades.

At that point, it would be capable of providing more than $7,500 of passive income each year.

Just imagine how much it could provide if the value of my shares were to grow by 4.6% annually as well.

Of course, all that assumes ASX 200 shares will continue to pay an average dividend yield of 4.58%, and past performance isn’t an indicator of future performance. It’s also important to remember that no investment is guaranteed to provide returns.

Could I speed up the process?

But what if 20 years was a bit too long of an investment timeline? Well, there are plenty of ASX 200 shares offering above-average dividend yields.

Some such stocks include ANZ Group Holdings Ltd (ASX: ANZ), Harvey Norman Holdings Ltd (ASX: HVN), Woodside Energy Group (ASX: WDS). They currently boast respective yields of 6%, 8.4%, and 11.1%.

Though, a high dividend yield doesn’t necessarily make a good passive income buy.

The post Passive income plan: I’d invest $100 a week in ASX 200 shares to earn $7,500 of annual dividends appeared first on The Motley Fool Australia.

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More reading

• Lynas share price gains despite quarterly revenue taking a 28% dive
• The Woodside share price is sliding today. Here’s why
• 5 things to watch on the ASX 200 on Friday
• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• Here are the top 10 ASX 200 shares today

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

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The BHP Group Ltd (ASX: BHP) share price is dropping on Friday, down 2.23% in early afternoon trading.

It’s not just the BHP share price that’s taken a slide, however. With the iron ore price down 1.9% overnight to US$115 per tonne, all the S&P/ASX 200 Index (ASX: XJO) iron ore miners are in the red at the time of writing.

But ASX 200 investors have a little more to consider with BHP today, after the miner released its quarterly update for the three months ending 31 March.

How did the results compare to expectations?

The BHP share price could be under some extra pressure today after the company cut production guidance at several of its mines.

Production guidance at its Escondida copper mine in Chile was reduced to between 1,050 and 1,080 kt. Prior guidance forecast a production range of 1,080 to 1,180 kt.

Shipments of iron ore, BHP’s biggest revenue generator, through Port Hedland also slipped over the quarter.

Iron ore shipments of 66.5 million tonnes fell short of consensus expectations of 67.9 million tonnes.

But the quarterly update was far from all bad news, which is why the BHP share price likely isn’t faring any worse than its rivals today.

Despite some headwinds over the quarter, BHP maintained production guidance for the full 2023 financial year for iron ore, metallurgical coal, energy coal and copper.

“Last week, OZ Minerals shareholders voted overwhelmingly in favour of BHP’s offer,” BHP CEO Mike Henry noted on the copper front.

“We are now focused on the safe integration of the two businesses, and we look forward to building an internationally competitive copper business in South Australia.”

Guidance for nickel production, however, was lowered slightly to between 75,000 and 85,000  tonnes. That’s down from the previous forecast of 80,000 to 90,000 tonnes.

BHP also maintained its full-year unit cost guidance.

BHP share price snapshot

As you can see in the chart below, today’s decline leaves the BHP share price right about where it commenced trading on 3 January.

The post BHP share price slips amid reduced production targets appeared first on The Motley Fool Australia.

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More reading

• BHP share price on watch following third-quarter update
• 5 things to watch on the ASX 200 on Friday
• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• ASX 200 mining shares sink as iron ore price nears 2023 low
• BHP shares: Bull vs. Bear

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The A2 Milk Company Ltd (ASX: A2M) share price has fallen 16% since 7 March 2023. That’s significant underperformance compared to the S&P/ASX 200 Index (ASX: XJO), which has declined by just 0.4% over the same time period.

The company has been through a lot since the start of the COVID-19 pandemic. But investors have become more confident since May 2022, sending the A2 Milk share price up 40% in that time.

The A2 Milk share price is down 1.2% to $5.78 at the time of writing today.

What has driven A2 Milk shares higher in the past year?

The FY23 first-half result showed a recovery for both revenue and earnings as A2 Milk executed on its refreshed growth strategy.

Total revenue rose 18.6% to $783.3 million, despite sales in Australia and New Zealand falling 24.6%. Chinese and Asian sales were up 54%, while sales in the United States lifted 61.8%, and Mataura Valley Milk (MVM) sales were up 18.4%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) improved by 10.5% to $107.8 million. Net profit after tax (NPAT) grew by 22.1% to $68.5 million.

There were other positives, including the $150 million share buyback which started in the first half of FY23 and was 60.1% complete. The company also advised it had a “strong” balance sheet, with closing net cash of $707.2 million.

A2 Milk noted that it had reached historical highs in China with brand awareness. At the same time, it reached record market shares in the Chinese label infant formula in mother and baby stores (MBS) and domestic online channels.

The company’s English label infant formula share improved in cross-border e-commerce (CBEC) and daigou channels.

Did it get too frothy?

Sometimes, the market can become too optimistic about a company’s prospects.

Earnings are expected to rise over the next couple of financial years, according to Commsec. In FY23, it might make 19.1 cents of earnings per share (EPS), which would put the A2 Milk share price at 30x FY23’s estimated earnings.

FY24 EPS could grow to 23.6 cents, which would put the A2 Milk share price at 24x FY24’s estimated earnings.

A2 Milk warned with its HY23 result that it expected low double-digit revenue growth in FY23. It said:

The increasingly challenging China infant formula market dynamics to continue due to fewer births in CY22 and the rolling impact from fewer births in prior years on later stage infant formula products.

It is also expected that the English label market will continue to be impacted by the evolving channel dynamics and a further shift towards the China label market. The China infant formula market is also expected to experience a degree of disruption with the market transitioning from current to new GB registered product during CY23.

I think the key for driving the A2 Milk share price higher is earnings growth. The business is seeing the positives of revenue growth. Growing the scale of the business can help improve its chance of increasing the EBITDA margin.

Ongoing revenue growth in China and the US is very promising because of how large those markets are. I think the business can keep growing in the US with its liquid milk sales and, hopefully, infant formula success.

While the company is spending a lot on marketing, it should help deliver revenue growth.

I think A2 Milk is worth a long-term buy, but there could still be a lot of volatility in the next few couple of years. But, it should help that A2 Milk is carrying out a share buyback, which can increase the value and EPS of the company’s remaining shares.

The post The A2 Milk share price has fallen 16% in around two months: Time to buy? appeared first on The Motley Fool Australia.

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More reading

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• Why have A2 Milk shares come off the boil again?
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• Why is the A2 Milk share price underperforming on Tuesday?
• Should I buy A2 Milk shares at $6?

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 A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ask any ASX dividend income investor, and they will probably tell you that their passive income portfolio contains at least one ASX 200 big four bank share. And National Australia Bank Ltd (ASX: NAB) shares would certainly be a good guess.

Like other big four banks such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), NAB shares have a long-built reputation as dividend machines.

NAB has actually had a very decent few years on the ASX. In years gone by, NAB was typically the smallest ASX bank by market capitalisation, coming in behind CBA, Westpac and ANZ Group Holdings Ltd (ASX: ANZ).

But today, NAB is comfortably sitting in the number two position, only behind CBA in terms of size. This is mostly thanks to NAB shares holding their ground steadily over the past few years, while Westpac and ANZ have both been big money losers:

But we should never use past reputations or performances alone to analyse the merits of investing in any ASX share for the future. So let’s look at NAB’s dividends today and just how much income investors can expect from NAB shares going forward.

What is NAB’s current dividend yield?

Like most ASX dividend shares, NAB has paid out two dividends over the past 12 months. Investors received an interim dividend of 73 cents per share in May last year, as well as a final dividend of 78 cents per share in November. Both payments came fully franked, as is typical for a big bank share.

That 2022 total of $1.51 per share was a pleasing rise over 2021’s total of $1.27 per share. But we’re still not back to the $1.98 in annual dividends NAB shares were dishing out in 2018.

Even so, this represents solid income for investors. That total of $1.51 per share gives the NAB share price a trailing dividend yield of 5.25% right now. So if an investor had $10,000 worth of NAB shares, bought at today’s pricing, they would have bagged $525 in dividend income over the past 12 months. That’s more than any savings account or term deposit offered by NAB itself right now.

But what about the future? Should investors expect the same level of passive income from NAB’s dividends going forward?

Are NAB shares a buy for passive income?

Well, there’s no way to tell right now, since dividends are always at the discretion of the company at the time of their payment.

But we can check out what a top ASX broker reckons.

As my Fool colleague James covered just this morning, ASX broker Goldman Sachs is bullish on NAB’s future. For one, it has a buy rating with a 12-month share price target of $33.06 on the ASX bank right now.

But when it comes to dividends, Goldman is also optimistic. It has pencilled in a 12-month total of $1.68 in dividends per share for the 2023 financial year, and again for FY2024.

If that turns out to be accurate, it would give NAB shares a forward dividend yield of 5.85% on the current share price.

So it seems that NAB is set to continue to fund large, fully-franked dividends for its investors going forward, if Goldman is on the money of course.

 

The post Here’s how much investing in NAB shares will pay you in dividends every year appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Piedmont Lithium Inc (ASX: PLL) share price is taking a steep fall on Friday, down 5.4% in late morning trade.

The ASX lithium stock closed yesterday trading for 84 cents per share. Shares are currently trading for 80 cents apiece.

Indeed, most ASX lithium shares are selling off today (though not as sharply) as investors remain skittish about the short-term outlook for the price of the battery-critical metal.

Here’s what else ASX investors are considering today.

Why is the ASX lithium share under pressure today?

The Piedmont Lithium share price looks to be under extra pressure on Friday following a tough day of trading for its US-listed stock yesterday (overnight Aussie time). Shares closed down 8.0% on the NASDAQ.

This follows an update on the company’s proposed Tennessee Lithium Project, located in the United States.

Piedmont Lithium released the results of its Definitive Feasibility Study (DFS) for the 30,000 tonne per year lithium hydroxide (LiOH) plant. The plant uses waste-reducing Metso:Outotec conversion technology.

The DFS has affirmed the potential for Piedmont to develop an American-based lithium hydroxide business using spodumene concentrate from market sources. Piedmont already has existing offtake agreements with Sayona Quebec and Atlantic Lithium.

Piedmont is estimating an after-tax net present value (NPV at an 8% discount rate) of US$2.5 billion and an after-tax internal rate of return (IRR) of 32%. The DFS assumed fixed prices of US$26,000 per tonne of lithium hydroxide and US$1,600 per tonne of spodumene concentrate over the project’s expected 30-year lifecycle.

Development of the project remains subject to the receipt of material permits and the arrangement of project financing. Perhaps it’s that yet to be arranged financing that’s adding some extra pressure to the Piedmont Lithium share price today, as a sizeable capital raise could dilute share value.

What did management say?

Commenting on the DFS results, Piedmont CEO Keith Phillips said:

America’s pro-EV and battery manufacturing policies are providing an advantage to Piedmont at a time when many analysts are projecting lithium shortages to continue into the 2030s…

Tennessee Lithium is positioned to be a key resource for EV and battery manufacturers. Through long-term supply agreements with our partners, we can source raw material from spodumene that we own or in which we have an economic interest, providing greater control of our feedstock while capturing the economics of integrated production.

Addressing the required capital needs, Phillips added, “We can advance development of the operation with revenues anticipated from the restart of North American Lithium and our recent offtake agreements with Tesla and LG Chem.”

Permitting and project financing activities at the Tennessee Lithium Project are advancing. Piedmont aims to commence construction in 2024.

Piedmont Lithium share price snapshot

As you can see in the chart below, the Piedmont Lithium share price has had a strong run in 2023 after tumbling from its recent November highs.

Despite today’s retrace, the ASX lithium share has gained 22% year to date.

The post Why is the Piedmont Lithium share price tumbling today? appeared first on The Motley Fool Australia.

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• Why is the Sayona Mining share price having such a stellar end to the week?
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• Why are ASX lithium shares sinking today?

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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