Tag: Motley Fool

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

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

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

• Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share despite its short interest easing to 11.8%. Revenue margin headwinds appear to be behind this.
• Megaport Ltd (ASX: MP1) has seen its short interest increase to 11.3%. Short sellers have been increasing their positions since this network as a service provider announced the sudden departure of its CEO and CFO.
• Zip Co Ltd (ASX: ZIP) has short interest of 10.2%, which is up marginally week on week once again. Regulatory concerns may be weighing on this buy now pay later provider’s shares.
• Sayona Mining Ltd (ASX: SYA) has seen its short interest increase to 9.3%. Short sellers continue to increase their positions despite the lithium miner announcing the restart of the NAL project.
• Core Lithium Ltd (ASX: CXO) has short interest of 9.2%, which is down week on week. Unfortunately for short sellers, Core Lithium shares stormed higher last week after it announced its first shipment of lithium.
• Temple & Webster Group Ltd (ASX: TPW) has seen its short interest rise to 8%. There are concerns that this online furniture retailer could underperform in the tough economic environment.
• JB Hi-Fi Limited (ASX: JBH) has returned to the top ten with short interest of 7.7%. There are concerns that this retail giant’s sales could suffer because of the housing market downturn and cost of living crisis.
• Breville Group Ltd (ASX: BRG) has short interest of 7.3%, which is flat week on week. As with JB Hi-Fi, short sellers appear to believe this appliance manufacturer could be struggling in the current environment.
• Nextdc Ltd (ASX: NXT) has entered the top ten with short interest of 7.1%. This was bad timing by short sellers. This data centre operator’s shares rocketed higher last week after announcing a major contract win.
• Brainchip Holdings Ltd (ASX: BRN) has seen its short interest ease slightly to 7%. This semiconductor company’s pitiful sales performance and crazy valuation are attracting short sellers.

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

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More reading

• Top brokers name 3 ASX shares to buy next week
• ‘Meaningful growth’: 2 ASX shares to buy for cheap after a terrible month
• Brokers are raving about this ASX 200 tech share benefiting from ChatGPT’s rise
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Brokers name 3 ASX shares to buy now

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport, Temple & Webster Group, and Zip Co. The Motley Fool Australia has recommended Flight Centre Travel Group, Jb Hi-Fi, Megaport, and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There’s a lot of choice on the ASX 200 index. To narrow things down, let’s take a look at a couple of highly rated ASX 200 shares that analysts believe can rise materially from current levels.

Here’s what you need to know about these ASX 200 shares:

Goodman Group (ASX: GMG)

The first ASX 200 share that has been tipped as a buy is Goodman.

It is leading industrial property company with a world class portfolio of assets that are in-demand with end users across the globe.

Citi is bullish on the company and has a buy rating and $24.00 price target on its shares. This compares to the latest Goodman share price of $19.18.

The broker believes that strong tailwinds will drive solid earnings growth for the foreseeable future. It commented:

GMG’s 1H23 result highlighted the extent of tailwinds still existing for industrial property which make for a strong earnings growth outlook not just this year but into multiple years in the future. Higher than expected FUM, record development margins this period (~100%) and increased potential for rental reversion should support overall earnings growth into the future. Debt costs may be higher but lower gearing ensures limited impact to this. We believe GMG will continue to outperform given its high-quality exposure and strong earnings growth potential in an uncertain macro environment.

Qantas Airways Limited (ASX: QAN)

Another ASX 200 share that has been named as a buy is Qantas. It is Australia’s flag carrier airline and the operator of the Qantas and Jetstar brands.

Morgans is a big fan of the company and has it on its best ideas list again this month. The broker even went so far as to name Qantas as its top pick in the travel sector.

Its analysts have an add rating and $8.35 price target on its shares. This compares to the latest Qantas share price of $6.50. It commented:

QAN is now our preferred pick out of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply. QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

The post Buy these ASX 200 shares for huge returns: brokers appeared first on The Motley Fool Australia.

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More reading

• Qantas shares: Future dividend darlings?
• Is the Qantas share price vulnerable to these ‘serious risks on the horizon’?
• Big Wednesday: 12 ASX 200 stocks cracking new 52-week highs
• Snapped up $8,000 of Qantas shares in 2018? Here’s how much passive income you’ve received
• Why did the Qantas share price soar higher than the ASX 200 in March?

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

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When interest rates are pushed up ten consecutive months, it’s not surprising that some things will break.

Overseas we saw banks collapsing in the US and one of the biggest and oldest global financial institutions in Credit Suisse disappearing overnight in Switzerland.

Here in Australia, the housing market has plunged and consumers are locking up their wallets.

Perversely, this pain is exactly what central banks like the Reserve Bank and the US Federal Reserve desire, in order to pour cold water on high inflation.

So in such troubled times, what are the S&P/ASX 200 Index (ASX: XJO) shares that could, not only endure, but thrive?

Ophir portfolio managers Steven Ng and Andrew Mitchell had some ideas:

Make no mistake, dark clouds are here

The Ophir fundies did not sugar-coat the dangers stock markets face in the near future.

“If, indeed, recession is ahead for the US, which looks more likely than not, history shows S&P 500 Index (SP: .INX) earnings fall by a median of -13%,” read Ng and Mitchell’s latest letter to investors.

“Historically, US earnings are still well above their long-term trend line (by about 24%). They have been boosted by excessive fiscal and monetary policy during COVID, as well as expanding margins as companies put through big price increases for customers.”

This does make the Ophir team “cautious”. But it doesn’t mean they’re getting defensive.

Ng and Mitchell urged investors to stay focused on the long term.

“In this uncertain environment it’s important to remember the opportunity cost of not being invested in the share market can be very high, given it is an endeavour where long-term returns are overwhelmingly skewed in your favour.”

The stocks that can fight through tough economic conditions

So what are the ASX shares the Ophir team is buying at the moment?

Firstly, they have shifted some of their smallest-cap holdings for slightly larger businesses.

“Given heightened downside risks, this provides us with extra liquidity advantages so we can more easily pivot portfolio positioning.”

Secondly, the team has gone overweight for companies with “more resilient, less macro-sensitive earnings”. 

“For example, we hold insurers AUB Group Ltd (ASX: AUB) and NIB Holdings Limited (ASX: NHF), which are seeing an upswing in premiums,” read the letter.

“And Resmed CDI (ASX: RMD) in the healthcare industry, which is benefiting from structural growth in its key product for its core customer base (those with sleep apnea).”

The last 12 months have been turbulent for most non-mining stocks, but this trio has stood firm.

The AUB share price has risen a handsome 22.6% over that time, NIB is up 13.3% and ResMed is 5.54% higher.

A bonus is that AUB (2%) and NIB (3.25%) both offer dividend yields to soothe the volatility that’s expected in the next year or so.

The post ‘Resilient earnings’: Buy 3 ASX 200 shares to win through troubled times appeared first on The Motley Fool Australia.

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More reading

• Brokers say these defensive ASX 200 healthcare shares are buys
• Why this ASX 200 ‘stable stock’ is poised to outperform: Goldman Sachs
• Build your portfolio around these ASX 200 blue chip shares: brokers
• My top 5 ASX shares to buy and hold forever in anticipation of the bull market
• The broker community’s 3 best ASX 200 shares to buy for 2023

Motley Fool contributor Tony Yoo has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Aub Group and NIB Holdings. 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.5% to 7,361.6 points.

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

ASX 200 expected to rise

The Australian share market looks set to rise on Monday despite a poor finish to last week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% higher this morning. In the United States, the Dow Jones was down 0.4%, the S&P 500 fell 0.2%, and the NASDAQ dropped 0.35%.

Oil prices rise

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a decent start to the week after oil prices rose on Friday. According to Bloomberg, the WTI crude oil price was up 0.45% to US$82.52 a barrel and the Brent crude oil price rose 0.25% to US$86.31 a barrel. This was driven by news that the IEA is predicting record demand this year on the back of a recovery in Chinese consumption.

Coles caught up in Latitude cyberattack

The Coles Group Ltd (ASX: COL) share price will be on watch on Monday after the supermarket giant confirmed that some of its customer data was stolen through the recent Latitude Group Holdings Ltd (ASX: LFS) cyberattack. The company advised that historical Coles Credit Card holder data has been affected. However, Latitude has not yet advised Coles of the number of impacted customers or specific details of the breach.

Gold price sinks

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough start to the week after the gold price sank on Friday night. According to CNBC, the spot gold price dropped 1.8% to $2,017.70 per ounce. This was caused by a rebounding US dollar on growing rate hike bets.

Evolution downgraded

The Evolution Mining share price could come under added pressure due to the release of a broker note out of Morgans. According to the note, the broker has downgraded the gold miner’s shares to a hold rating with a $3.70 price target. The broker made the move on valuation grounds and due to its recent production guidance downgrade.

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

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More reading

• Spare change? I’d turn $3 a day into a passive income stream in under 15 years
• Here are the top 10 ASX 200 shares today
• Gold price nears record highs. Could it be time to pay attention to these ASX 200 gold shares?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• What’s next for Wesfarmers shares after cashing out $700 million from Coles?

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

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Are you looking for dividend shares to buy?

If you are, you may want to look at the two listed below that have been forecast to provide big yields.

Here’s what you need to know about these buy-rated ASX dividend shares:

Elders Ltd (ASX: ELD)

The first high yield ASX 200 dividend share that could be a buy is Elders. It is an Australian agribusiness company that provides a range of services to rural and regional customers.

Goldman Sachs is a fan of the company due to its belief that the Australian agricultural environment is structurally strong and Elders is uniquely placed to benefit. The broker also highlights that farmer balance sheets and industry data hint at strong intentions for investment and expanded production in response to a tightening global agricultural market.

In respect to dividends, the broker is expecting fully franked dividends per share of 53 cents in FY 2023 and 57 cents in FY 2024. Based on the current Elders share price of $8.30, this will mean yields of 6.4% and 6.9%, respectively.

Goldman Sachs currently has a buy rating and $18.40 price target on the company’s shares.

Stockland Corporation Ltd (ASX: SGP)

Another ASX 200 dividend share that could be a buy is Stockland. It is a residential and land lease developer and retail, logistics and office real estate property manager.

The team at Citi is positive on the company and recently upgraded its shares to a buy rating with a $4.60 price target. Its analysts believe the market is too negative on the company and don’t expect property prices to fall as much as feared.

In fact, the broker is so positive it has made Stockland its top pick in the sector.

Citi is also forecasting some big dividend yields. It expects dividends per share of 26.6 cents in FY 2023 and FY 2024. Based on the current Stockland share price of $4.20, this will mean yields of 6.3% in both financial years.

The post Here are 2 ASX 200 dividend shares to buy with 6%+ yield: analysts appeared first on The Motley Fool Australia.

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More reading

• Should I buy ASX 200 property shares following the RBA rate pause?
• Brokers say Telstra and this ASX 200 dividend shares are buys

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

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If you’re wanting to invest but aren’t sure which shares to buy, then exchange traded funds (ETFs) could be a good option.

This is because ETFs allow you to buy a large number of shares through a single investment.

But which ETFs could be top options right now? Here are two that could be worth considering:

iShares S&P 500 ETF (ASX: IVV)

The first ETF for investors to consider buying is the iShares S&P 500 ETF. This ETF aims to provide investors with the performance of Wall Street’s famous S&P 500 Index before fees and expenses.

This has been a great index to have exposure to historically. According to the most recent Berkshire Hathaway (NYSE: BRK.B), the S&P 500 Index has generated an average annual return of 9.8% since 1965. This would have turned a single $10,000 investment into approximately $2.2 million today.

Among the 500 companies included in the fund are some absolute giants. These include Amazon, Apple, Berkshire Hathaway, Facebook, JP Morgan, Johnson & Johnson, Microsoft, and Tesla.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

If you’re investing for income then the Vanguard Australian Shares High Yield ETF could be the one for you.

This ETF provides income investors with exposure to companies listed on the Australian stock exchange that have higher forecast dividends relative to other ASX-listed companies based on broker research.

It also has diversification in mind so you don’t end up with a portfolio filled to the brim with coal and iron ore miners. The ETF limits the proportion invested in any one industry to 40% and 10% for any one company. In addition, Australian Real Estate Investment Trusts (A-REITS) are excluded from the index.

Among the 70~ shares included in the portfolio you’ll find the likes of BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS), and Wesfarmers Ltd (ASX: WES).

The Vanguard Australian Shares High Yield ETF is currently trading with an estimated forward dividend yield of 5.4%.

The post 2 fantastic ETFs for ASX investors to buy next week appeared first on The Motley Fool Australia.

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More reading

• 5 steps to bring in $1,000 per month in passive income
• The cheapest index fund on the ASX revealed
• How I’d invest $20,000 to earn reliable passive income today
• One possible investing route to earning $1,000 monthly passive income
• Want $1,000 of passive income? Check out these ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended iShares S&p 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lynas Rare Earths Ltd (ASX: LYC) share price has been dragged from pillar to post during the last 12 months.

Under the pressure of tumbling rare earth element prices, Lynas shares have cascaded a stomach-turning 30% in the space of a single year, as shown below. The rocky road hasn’t smoothed this year either, as prices of neodymium and praseodymium have been squashed by another 27% and 22% respectively.

I purchased my first parcel of Lynas shares nearly four years ago and doubled down soon thereafter following a 17% fall in the price.

Still up 135%, could it be time to take my gains and run for the hills? After all, a falling commodity price means reduced profits; and Tesla Inc (NASDAQ: TSLA) is planning to do away with rare earth elements (REE) altogether — right?

The original growth story for Lynas shares

Admittedly, as a massive supporter of electric vehicle (EV) adoption, my interest in Lynas originally stemmed from discovering the demand for REE created by the electrification movement.

Not long after doing some digging, it quickly became clear that more of this peculiar magnetic material would be needed if the planet were to shift to cleaner energy technologies and their electric-powered counterparts — a lot more.

According to data from the International Energy Agency, the amount of REE required for clean energy technologies could increase by between three to seven times by 2040 compared to 2020, pictured below. A boom in wind power and EVs having being earmarked as potential lead drivers of this drastic increase.

At the same time, tears in the geopolitical fabric connecting China and the Western world were already beginning to form back in 2019. The trade war between the United States and the People’s Republic was in full swing by midyear, bringing attention to an uncomfortable reliance on China-produced and refined rare earths.

Back then, China was responsible for 60% of all rare earths produced and a staggering 87% of all refined REE, as depicted below.

Those figures may have changed slightly since then, but our dependence on an increasingly doubtful trade partner for a material growing in importance has spurred forth a demand for sources outside of China.

What made Lynas shares appealing to me was its position as the world’s largest rare earths supplier outside of China. In addition to this, supplying a critical material that is projected to enjoy a structural tailwind for a decade or more sounded like a recipe for success at the right price.

It was fun while it lasted

On 1 March, Tesla held an investor day and pitched its big plan to remove all rare earths from its next generation of electric motors.

In true reactionary fashion, Lynas shares have fallen roughly 21% since the announcement.

The fear of the world’s largest EV maker stripping away its need for Lynas’ product has clearly taken its toll on sentiment. However, there are three key reasons why I don’t think this move is the nail in the coffin that many are making it out to be.

Firstly, part of the reasoning behind this decision is due to the unpredictable supply of REE. Tesla doesn’t want to get caught in the crossfire of another trade war — or any form of war — where its reliance on rare earth supply would act as a bottleneck to future EV deliveries.

However, as Lynas pushes forward with constructing a processing facility in Texas — and another locally in Kalgoorlie — the risk of supply should begin to reduce. Potentially, this could put rare earths back on the table for Tesla given the material’s superior characteristics.

Secondly, there’s a large and growing market for REE away from EVs. Even if Tesla were to permanently shift away from using rare earths, the softened prices are more likely to attract greater application elsewhere.

Lastly, there are simply no alternatives to rare earths when efficiency, e.g. power to weight ratio, is the priority. These materials emit the strongest magnetic field on a pound-for-pound comparison to other solutions.

Will I be selling?

In my opinion, the need to diversify rare earths sources remains a key issue. Fortunately, Lynas is undertaking this mission by developing processing facilities in Australia and the United States.

I believe the return on capital on these facilities will be substantial over the years to come, proving to be worthwhile investments.

Furthermore, Lynas shares are trading on a price-to-earnings (P/E) ratio of approximately 11 times. Indeed, suppressed REE prices in the near term could push the P/E temporarily higher. Though looking at the opportunity over the next decade, I’d consider it borderline inexpensive.

As a result, I won’t be selling my Lynas shares anytime soon.

The post Is it time to sell my Lynas shares after crashing 30% in a year appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Just how low could the Lynas share price go?
• 50% fall: Are ASX 200 lithium shares a bargain buy right now?
• Top brokers name 3 ASX shares to buy next week
• Here’s why the Novonix share price crashed 19% in March

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

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If you’re looking for options in the tech sector, then look no further.

Listed below are two ASX 200 tech shares that have been tipped as buys by brokers. Here’s why they could be top options for investors:

Altium Limited (ASX: ALU)

Altium is a multinational software company that focuses on electronics design systems for 3D printed circuit board (PCB) design and embedded system development. PCBs are the boards you find in almost all electronic devices. They are integral to their operation and come in all shapes and sizes, which is why specialist software is required for their design.

Thanks to its leadership position in the industry and favourable tailwinds such as the Internet of Things and artificial intelligence, management is aiming to grow its revenue to US$500 million by 2026 with an EBITDA margin of 38% to 40%.

As a comparison, this will be more than double Altium’s FY 2022 revenue of US$220.8 million. It will also be an improvement on FY 2023’s EBITDA margin guidance of 35% to 37%. This bodes well for its profit growth over the coming years.

It’s no wonder then that analysts are Morgan Stanley are bullish on Altium. They currently have an overweight rating and $43.50 price target on its shares.

Life360 Inc (ASX: 360)

Life360 is the technology company behind the eponymous Life360 freemium mobile app, which boasts over 50 million monthly active users. It offers families features that range from communications to driver safety and location sharing.

The company has also made a couple of acquisitions to bolster its offering with services such as item tracking.

Its shares were caught up in the unprofitable tech-selloff over the last 12 months. This means investors can pick them up now at a fraction of what they would have paid last year. Which could be a very good thing given that management expects the company to become profitable in the very near future. If and when this happens, it could cause a rerating of its shares in line with fellow profitable tech stocks.

It is partly for this reason that Goldman Sachs is recommending its shares as a buy. It currently has a buy rating and $7.85 price target on them.

The post Analysts say buy these ASX 200 tech shares before it’s too late appeared first on The Motley Fool Australia.

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More reading

• Analysts say these 3 blockbuster ASX 200 growth shares are buys
• Which ‘high conviction’ ASX 200 shares is this fundie backing to beat the market?
• Goldman Sachs says these ASX growth shares are market-thumping buys
• Buy Pilbara Minerals and these ASX growth shares in April: experts
• My top 5 ASX shares to buy and hold forever in anticipation of the bull market

Motley Fool contributor James Mickleboro has positions in Altium and Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and Life360. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Goldman Sachs, its analysts have retained their buy rating on this gaming technology company’s shares with an improved price target of $45.70. Goldman has been looking at Aristocrat’s digital portfolio and Anaxi iGaming business and is very positive on their long-term outlooks. In respect to the latter, the broker sees Anaxi as a key growth opportunity and feels the potential upside is being underestimated by the market. The Aristocrat share price ended the week at $37.16.

IGO Ltd (ASX: IGO)

Another note out of Goldman Sachs reveals that its analysts have upgraded this battery materials miner’s shares to a buy rating with a $13.90 price target. Although the broker still sees near term earnings downside as lithium price declines flow into realised pricing and capex increases likely flow through consensus estimates, it still sees emerging fundamental value based on its lithium price forecasts. The IGO share price was fetching $13.43 at the end of the week.

NextDC Ltd (ASX: NXT)

Analysts at Morgans have retained their add rating on this data centre operator’s shares with an improved price target of $13.50. This follows news of a major increase to its contracted utilisation. Morgans was impressed with the news and appears to believe that Microsoft could be its big new customer. It highlights that the tech giant recently canned plans to develop its own data centre and needs capacity to support the exponential demand for ChatGPT, which runs on its Azure Cloud Infrastructure. The NextDC share price was trading at $12.15 at Friday’s close.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Brokers are raving about this ASX 200 tech share benefiting from ChatGPT’s rise
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy now
• Why Allkem, IGO, Northern Star, and Race Oncology shares are racing higher
• Why is the IGO share price busting the benchmark on Friday?

Motley Fool contributor James Mickleboro has positions in Nextdc. 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 S&P/ASX 200 Index (ASX: XJO) stock Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be a very useful pick for passive income. I think it’s one of the leading ASX dividend shares out there.

This investment house has been operating for over 120 years – it has built a good reputation for resilience.

It’s invested in a number of ASX shares like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Macquarie Group Ltd (ASX: MQG) and Brickworks Limited (ASX: BKW).

Soul Pattinson receives dividends from its portfolio and passes on a lot of that passive income to investors in the form of a growing dividend.

The ASX 200 stock has grown its dividend every year since 2000, which is the longest growth streak on the ASX.

While it may not have the biggest dividend yield out there, it has a defensive portfolio of assets that Soul Pattinson believes can be a good source of dividend income. It’s one of the biggest positions in my portfolio and I hope that it can continue to grow.

$20,000 of annual passive dividend income

In the FY23 half-year result, it grew its interim dividend by 24% to 36 cents per share. Its final ordinary dividend from FY22 was 43 cents per share. The current dividends amount to a total dividend of 79 cents per share.

At the current Soul Pattinson share price, it would be a grossed-up dividend yield of 3.6%.

To receive $20,000 of annual passive dividend income, I’d need to own 25,317 Soul Pattinson shares. Don’t get me wrong, that’s a large investment.

But, I think it’s the type of investment where it could be a large position in someone’s portfolio because it’s very diversified. The ASX 200 stock is invested in blue chip ASX shares, small cap ASX shares, private businesses, structured loans, and property. Expanding its farmland investments has been a key focus over the past year or two.

According to Commsec, by FY25 it could pay an annual dividend per share of 91 cents. That would be a grossed-up dividend yield of 4.1%.

If investors focus on that potential FY25 payout, investors would ‘only’ need to own 21,978 Soul Pattinson shares.

Is the ASX 200 stock a good choice?

I think Soul Pattinson can provide investors with a very effective investment that delivers decent, but growing, dividends and hopefully achieves capital growth as it builds its investment portfolio.

In my opinion, I think Soul Pattinson shares are one of the easiest ways to generate passive income without having to worry about what it’s doing.

If I had to put a large amount of money into one ASX 200 stock, Soul Pattinson would probably be at the top of my own shortlist because of its diversified portfolio and long-term track record.

The post For $20,000 in yearly passive income, buy 25,317 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares I’ve bought to capture long-term passive income
• Warren Buffett is doubling down on these Japanese stocks. How can ASX investors do the same?
• Blue chip beat-down: 5 huge ASX 200 shares cementing new 52-week highs today
• How I’d invest $5,000 today for long-term passive income
• How I’m building more passive income to retire early

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Tpg Telecom. 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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