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One of the most popular options for income investors on the Australian share market is the BHP Group Ltd (ASX: BHP) dividend.

And it really isn’t hard to see why.

Every year, the Big Australian shares a decent portion of its free cash flow with its lucky shareholders. This has led to tens of billions of dollars being paid to them in recent years.

The good news is that this looks set to be the case again in the future, with plenty more dividends expected to line the pockets of BHP shareholders in the coming years.

And while big dividends are nice, bigger dividends are better. So, will the BHP dividend be increasing in the future?

Where next for the BHP dividend?

First things first, it should be noted that it is already widely accepted that the BHP dividend will almost certainly be lower year on year in FY 2023.

After all, during the first half of the financial year, the mining giant’s interim dividend was cut by 40% to 90 US cents due to lower commodity prices and inflationary pressures.

Pleasingly, though, investors can look forward to a bigger final dividend for FY 2023 thanks to recent improvements in the price of its commodities.

For example, Goldman Sachs is forecasting a fully franked US$1.20 per share final dividend in August. This will bring BHP’s full-year dividend to US$2.11 per share, which equates to A$3.11 per share at current exchange rates. It also represents an attractive 6.5% dividend yield based on the current BHP share price.

Unfortunately, Goldman isn’t expecting the BHP dividend to increase from here. It is forecasting fully franked payouts of US$1.70 (A$2.50) per share in FY 2024 and US$1.21 (A$1.78) per share in FY 2025. This will mean yields of 5.4% and 3.9%, respectively, for investors.

This is based on its expectation that BHP’s free cash will soften over the next couple of years and put pressure on its payouts.

Though, it is worth remembering that commodity prices are notoriously hard to predict. Any surprises (positive and negative) to the iron ore price, for example, could have a major impact on Goldman’s earnings and dividends estimates.

The post Is the BHP dividend going to increase in the future? appeared first on The Motley Fool Australia.

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More reading

• BHP share price lower despite OZ Minerals’ shareholders approving takeover
• 5 things to watch on the ASX 200 on Thursday
• Buy Rio Tinto shares ahead of BHP: Goldman Sachs
• If I buy BHP shares now, what could my return be in a year’s time?
• The BHP share price is taking off today. Could this be why?

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 Scott Phillips.

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Lake Resources (ASX: LKE) shares are up 0.5% in Friday morning trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium company closed yesterday trading for 44.5 cents. Shares are currently changing hands for 45 cents apiece.

That’s today’s price action for you.

Now, if I’d invested $500 in Lake Resources shares back on the miner’s first day of trading, how much would I have now?

How much would $500 at launch be worth today?

As you can see on the one-year price chart below, the past 12 months haven’t been exactly rewarding for Lake Resources shareholders.

Among other headwinds, the ASX 200 lithium stock has come under pressure as some analysts expressed doubts over the commercial viability of the company’s Direct Lithium Extraction (DLE) technology. DLE is meant to produce high-purity lithium with far less waste.

Lake Resources shares were trading at all-time highs last April, closing at $2.31 per share on 1 April.

Shares are down a painful 81% since those highs.

But as I didn’t have the benefit of hindsight in April, I held onto my stock for the ride down as well as for the steep gains posted in 2021 and early 2022.

Lake Resources shares listed on the ASX on 29 August 2001. I could have bought shares early on that day for 34 cents apiece.

That means my $500 would have gotten me 1,470 shares, and I would have had a little loose change left in my pocket.

At the current price of 45 cents a share, my allotment would be worth $661.50 today. Or a gain of 32%.

As Lake Resources shares don’t pay any dividends, that’s the total I would have pocketed if I opted to sell today.

Oh, and if I did have a working crystal ball (or had darn fortunate timing) and had opted to sell my stock on 1 April last year for $2.31 per share, that $500 would have turned into $3,395.70.

The post <strong>If I’d invested $500 in Lake Resources shares at launch, here’s how much I’d have now!</strong> appeared first on The Motley Fool Australia.

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More reading

• Why are ASX lithium shares leaping ahead today?
• The Lake Resources share price plunged 29% in March. Here’s what happened with the ASX 200 lithium share
• ASX 200 lithium stocks sink again following Albemarle downgrade
• Why EOS, Lake Resources, Tyro, and Woodside shares are racing higher today
• Why is the Lake Resources share price rocketing 19% on Monday?

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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There are plenty of dividend shares out there on the Australian share market. But if you only want the crème de la crème, then you might want to check out the two ASX 50 dividend shares named below.

Here’s what analysts are saying about them and what sort of dividend yields you could expect to receive if you bought them today:

Telstra Group Ltd (ASX: TLS)

The first ASX 50 share for income investors to look at is telco giant, Telstra.

After years of falling earnings and dividend cuts, the company is back on form and has sustainable earnings growth back on the agenda.

A recent note out of Morgans reveals that its analysts are expecting this to underpin 17 cents per share fully franked dividends in FY 2023 and FY 2024. Based on the current Telstra share price of $4.25, this will mean yields of 4% for investors.

Morgans also sees decent upside for the company’s shares over the next 12 months with its add rating and $4.70 price target.

Westpac Banking Corp (ASX: WBC)

Another ASX 50 share that has been named as a buy is Westpac. It is of course one of the big four banks and the owner of several banking brands such as Bank SA, Bank of Melbourne, St George, and the eponymous Westpac brand.

According to a note out of Goldman Sachs, its analysts have a conviction buy rating and $27.74 price target of the banking giant’s shares. Based on the latest Westpac share price of $22.00, this suggests potential upside of 26% for investors over the next 12 months.

But it gets better. Due to recent weakness, this ASX 50 share is forecast to provide investors with some very big dividend yields.

For example, Goldman Sachs expects fully franked dividends of 147 cents per share in FY 2023 and then 156 cents per share in FY 2024. This equates to yields of 6.7% and 7.1%, respectively.

The post Passive income alert! Buy these ASX 50 dividend shares now: analysts appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’d aim for $50 a week in passive income from ASX 200 shares
• Investor or depositor? Warren Buffett sounds off on banking crisis
• I’m buying ASX 200 dividend stocks ahead of the next bull market
• Could Westpac shares have ‘the greatest potential’ of all the ASX 200 bank stocks?
• It’s official, the ASX 200 big four banks are the world’s most capitalised. Should you buy?

Motley Fool contributor James Mickleboro has positions in 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 positions in and has recommended Telstra Group. 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 Fortescue Metals Group Limited (ASX: FMG) share price could come under growing scrutiny as the ASX mining share becomes increasingly focused on its green energy efforts with Fortescue Future Industries (FFI).

Fortescue has been an ASX iron ore share from the start, but the founder and leader Dr Andrew Forrest has got the business focused on becoming a major player in a decarbonised world.

There are a few key areas of focus with these green energy endeavours – green hydrogen, green ammonia and high-performance electric batteries.

Of course, funding these growth areas needs cash. A few years ago, Fortescue committed to allocating 10% of its net profit after tax (NPAT) towards FFI. So, as an example, Fortescue generated $2.37 billion of NPAT in the first half of FY23 so it could allocate $237 million towards FFI.

FFI is expected to spend between $730 million to $830 million in FY23. In its half-year presentation, Fortescue revealed that $1 billion of allocated money hadn’t been spent.

But, eventually, FFI may need to spend more than its allocation so that it can progress with the green hydrogen projects it’s planning to build.

Where will FFI’s funding come from?

In an Australian Financial Review article, FFI boss Mark Hutchinson said that the green business is looking to invest in at least five green energy projects.

The article stated that Hutchinson expects funding support from selling project equity stakes to third parties, such as sovereign wealth funds. But, FFI could also ask for more than the 10% profit allocation from the board. This spending could benefit Fortescue shares if it unlocks a large new earnings stream.

He pointed to two potential projects in the US which have been “fast-tracked” – one in Phoenix and one in Texas. On those projects, Hutchinson said:

We have off-takers, we have power, we have water, we have land, so they’re ready to go. Again, it’s really important to show the world we can do this. What we have realised is that no one is really doing this at the scale we are thinking about.

There’s a potential project in Norway for a 300MW green hydrogen/green ammonia plant thanks to its relatively cheap hydropower.

The green ammonia export project in Queensland on Gibson Island involving the existing Incitec Pivot Ltd (ASX: IPL) ammonia plant is also expected to go ahead, however, there are “high energy costs” with this one.

Another option that could go ahead in the future is “in Kenya and involved using geothermal power to make green ammonia for use in agriculture in a country that relies on Russia for fertiliser imports and food security.”

Discussing the potential involvement of sovereign funds, Hutchinson said:

They are going to absolutely require that we stay in the equity and have a big chunk. Most of the investors we think will be in here will be like the sovereign funds.

The sovereigns love the idea of a pipeline [of projects] and they have enormous capital to deploy in this space. They’re waiting for someone to kind of show them that it’s not just one project or two projects. The unique thing about us is we can go in and say, ‘Here’s your 10, you pick’.

Will this help the Fortescue share price?

If Fortescue can execute these planned projects well, then spending $1 could unlock a lot more value than $1 for the business. Once FFI starts generating green hydrogen and green ammonia, seeing the cash flow coming in could help investors’ thoughts about the situation.

At the moment, some investors are only focusing on the cost of the green initiatives, rather than the potential benefits.

In the future, FFI could be one of the biggest green energy players in the world, which could make it a very valuable business in the future. FFI may already be worth US$20 billion, according to Dr Forrest’s meetings with investment banks.

The post Could more FFI spending be a saviour or stumbling block for Fortescue shares? appeared first on The Motley Fool Australia.

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More reading

• Here’s how much I would need to invest in Fortescue shares to generate a $150 monthly income
• Which is the best ASX 200 iron ore stock now: BHP, Fortescue, or Mineral Resources?
• Why did the Fortescue share price smash the ASX 200 in March?
• 2 ASX 200 mining directors buying up their company shares in the past week
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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 Bank of Queensland Ltd (ASX: BOQ) share price is struggling on Friday. It comes after the bank revealed it expects to post a $4 million profit for the first half, including a $260 million hit.

The S&P/ASX 200 Index (ASX: XJO) bank flagged a $60 million provision for an integrated risk program and a non-cash write-down of $200 million of goodwill.

The Bank of Queensland share price is currently trading 3.24% lower at $6.28 on the back of the news.

Let’s take a closer look at what investors might expect to hear when the bank reports next week.

Bank of Queensland share price plunges on $260m hit

Bank of Queensland shares are tumbling on news impairments and adjustments are expected to see the bank’s statutory net profit after tax (NPAT) slump to $4 million for the first half of financial year 2023.

For comparison, it posted a $212 million statutory NPAT for the prior comparable period.

The bank will release its earnings for the six months ended 28 February on Thursday.

A $60 million ($42 million post-tax) provision set to dent its statutory profit has been set aside to cover the cost of a three-year integrated risk program.

Bank of Queensland managing director and CEO Patrick Allaway commented on the program’s intent, saying:

The investment in our integrated risk program will further strengthen our operational resilience. Our shifted focus on strength and simplification whilst digitising BOQ is designed to deliver a low-cost bank with strong foundations.

Meanwhile, most of the goodwill held on its balance sheet relates to the 2007 acquisition of Home Building Society.

Finally, in another announcement released today, it revealed it intends to redeem $200 million of tier two notes, due 2028, following approval from the Australian Prudential Regulation Authority (APRA).

Sneak peek into first-half earnings

The ASX 200 share might also be being impacted by a sneak peek at the Bank of Queensland’s first-half results.

In addition to revealing an expected $4 million statutory NPAT, it also forecast $256 million of unaudited cash earnings and declared its intent to pay a 20 cent per share interim dividend.

The bank also noted its “strong financial position”, with its CET1 ratio at 10.71% and its liquidity coverage ratio at 143%. That’s up from 9.57% and 139% respectively at the end of last financial year.

Bank of Queensland share price snapshot

The Bank of Queensland share price has struggled in recent months.

The stock has tumbled 7% year to date. It’s also 21% lower than it was this time last year.

For comparison, the ASX 200 has gained 6% so far this year and has fallen 3% over the last 12 months.

The post Bank of Queensland share price plummets on $260m earnings impact appeared first on The Motley Fool Australia.

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More reading

• Banking and energy: The ASX 200 dividend shares to buy now according to analysts
• What’s the forecast for the Bank of Queensland share price?
• 7 ASX dividend shares you can buy for under $10
• Guess which ASX 200 bank stock UBS says is the most over-priced right now
• ASX 200 bank stocks: ‘No different’ or ‘extremely strong’?

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

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Earlier this month, we looked at a couple of ASX 200 dividend shares that Morgans has on its best ideas list right now. You can read about them here.

Moving on, let’s take a look at a couple more dividend shares that the broker rates highly in the current environment. They are as follows:

HomeCo Daily Needs REIT (ASX: HDN)

This daily needs focused property company is on Morgans’ best ideas list again this month. The broker likes the ASX 200 company due to its high occupancy rate, high quality customer base, and attractive dividend yield. It also sees plenty of growth opportunities through developments. It commented:

HDN’s portfolio is valued at around $4.7bn across +50 assets with exposure to Large Format Retail; Neighbourhood; and Health & Services properties. Over the medium term it expects to reweight towards Neighbourhood. Portfolio metrics are solid: weighted average cap rate 5.3% (stable with the recent result); weighted average lease expiry +4 years and occupancy >99%. Top 3 tenants are Bunnings, Coles and Woolworths. HDN offers investors an attractive distribution yield which is underpinned by contracted rental income. Sites are also in strategic locations with strong population growth. The portfolio has exposure to ‘last mile’ logistics, as well as a significant land bank with future development potential (38% site coverage with a ~$600m development pipeline).

In respect to dividends, Morgans is forecasting dividends per share of 8.3 cents in FY 2023 and 8.4 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.18, this will mean dividend yields of 7% and 7.1%, respectively.

Morgans has an add rating and $1.50 price target on its shares.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share that Morgans rates highly is Wesfarmers. It is the conglomerate behind a range of businesses include Bunnings and Kmart. Morgans believes the company is well-placed in the current economic environment thanks to its focus on value. It explained:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. We believe WES’s businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

As for dividends, its analysts are forecasting fully franked dividends per share of $1.79 in FY 2023 and $1.92 in FY 2023. Based on the current Wesfarmers share price of $51.64, this will mean yields of 3.5% and 3.7%, respectively.

Morgans has an add rating and $55.60 price target on Wesfarmers’ shares.

The post Morgans names more of the best ASX 200 dividend shares to buy in April appeared first on The Motley Fool Australia.

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More reading

• Blue chip beat-down: 5 huge ASX 200 shares cementing new 52-week highs today
• Is Wesfarmers a good defensive ASX 200 stock to buy in the current climate?
• How much do you need to invest to give up work and live only off dividend income?
• 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 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 Wesfarmers. 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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Did you invest in CSL Limited (ASX: CSL) shares five years ago? If so, you’re likely pretty happy with your decision. The biotechnology giant’s stock has roared 89% higher in that time.

An investor buying $6,000 worth of CSL shares in April 2018 likely would have walked away with 37 stocks ­– paying $159.88 apiece – and approximately $85 change.

Today, those 37 shares would be worth a total of $11,180.66. The CSL share price last traded at $302.18.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted just 25% in that time.

Meanwhile, the healthcare staple has been paying out consistent dividends. Let’s take a look at how much passive income the figurative holding might have yielded over its life.

All dividends paid to those holding CSL shares since 2018

Here are all the dividends paid to those invested in CSL stock over the last five years, rounded to the nearest cent:

CSL dividends’ pay date	Type	Dividend amount
April 2023	Interim	$1.62
October 2022	Final	$1.76
April 2022	Interim	$1.42
September 2021	Final	$1.59
April 2021	Interim	$1.35
October 2020	Final	$1.47
April 2020	Interim	$1.47
October 2019	Final	$1.45
April 2019	Interim	$1.20
October 2018	Final	$1.28
Total:		$14.61

As readers can see, each CSL share has yielded $14.61 in dividends over the last five years.

That means our figurative parcel has likely provided $540.57 of passive income over its lifetime – bringing our total return on investment (ROI) to an impressive 98%.

And that’s before considering the compounding returns that could have been realised if one had reinvested their dividends.

Not to mention, some of the ASX 200 biotech’s dividends in that time were partially franked. Thus, they may have brought additional benefits come tax time.

Right now, CSL shares offer a 1.1% dividend yield.

The post Invested $6,000 in CSL shares 5 years ago? Here’s how much dividend income you’ve earned appeared first on The Motley Fool Australia.

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More reading

• Morgans says these are among the best blue chip ASX 200 shares you can buy
• If I’d invested $1,000 in CSL shares 24 years ago, here’s how much I’d have now!
• Why did the CSL share price lag the ASX 200 in the first quarter of 2023?
• Build your portfolio around these ASX 200 blue chip shares: brokers
• Top defensive ASX shares to buy in April 2023

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 CSL. 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 Vanguard Australian Shares Index ETF (ASX: VAS) is the biggest exchange-traded fund (ETF) on the ASX. But is it a great opportunity?

It’s probably the best way to get exposure to the S&P/ASX 300 Index (ASX: XKO), which represents 300 of the biggest businesses on the ASX.

Investors that have a regular investment plan to automatically invest in the ETF every month probably don’t need to worry about what the latest price is – it might be best to keep things automatic and keep investing.

It’s understandable why some investors have an automatic investment plan with this option because of the diversified portfolio with 300 ASX blue chip positions, and the low management fee of 0.10%.

Is this a good time to buy the Vanguard Australian Shares Index ETF?

The ETF has risen by 6% since the start of 2023, so it’s not as cheap as it used to be. But, it’s down by around 5% over the last 12 months.

Within the portfolio, ASX financial shares and materials make up just over 52% of the overall portfolio. So, the valuation of ASX mining shares and ASX bank shares can have a major impact.

I think that the valuations of BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) aren’t cheap as the miners are making good profit at the moment thanks to solid iron ore prices.

ASX bank shares like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) have dropped compared to earlier this year, though I wouldn’t exactly call them cheap with higher profitability after higher interest rates.

I’m not going to judge whether each individual business is cheap within the Vanguard Australian Shares Index ETF, but overall I’d say that it isn’t dirt cheap right now. Last year it was priced at around $80 when it did seem very appealing.

It can perform well

An investment doesn’t need to be incredibly cheap to count as a good investment.

Since the ETF’s inception in May 2009 to February 2023, it has delivered an average return per annum of around 9%. That’s decent, in my opinion. However, 4.6% per annum of that return was distributions, so there hasn’t been a lot of capital growth.

If I were looking for long-term capital growth, there are other ETFs I’d pick over Vanguard Australian Shares Index ETF.

The post Is the Vanguard Australian Shares Index ETF (VAS) still a dirt-cheap buy in April? appeared first on The Motley Fool Australia.

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More reading

• Sunk $10,000 in the Vanguard Australian Shares ETF 3 years ago? Here’s how much passive income you’ve earned
• 3 reasons to start buying ASX shares this week
• How I’m building more passive income to retire early
• Why is the Vanguard Australian Shares Index ETF (VAS) tumbling on Monday?
• Here are the ASX shares I was buying and selling in March

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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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Investing in ASX 200 dividend shares can be a good way of earning passive income for extra cash.

National Australia Bank Ltd (ASX: NAB) has a long history of paying dividends to investors.

And the big four bank’s dividend increased in 2022 compared to 2020 and 2021.

So how much would I need to invest in NAB shares to generate a $150 monthly income?

Let’s crunch the numbers.

Firstly, a monthly income of $150 would generate an annual passive income of $1800.

National Australia Bank paid a final dividend of 78 cents a share in 2022 and an interim dividend of 73 cents a share.

In total, this means NAB paid $1.51 in total dividends in the 2022 financial year.

To have received $1800, or $150 a month, in passive income, you would need to have owned 1,192 NAB shares.

At Thursday’s closing price of $28.13, buying 1,192 NAB shares would cost you $33,530.96.

What next?

Goldman is tipping NAB to increase its dividend in FY23 and pay fully franked dividends of $1.73 in FY 2023.

If this is delivered, you would only need to own 1,040 of NAB shares to receive $1800 in passive income for the year.

This would set you back $29,255.20 — so less than what was required to generate this income in 2022.

NAB delivered an unaudited statutory net profit of $2.05 billion in the first quarter of FY23. Revenue lifted 15%, while the bank’s net interest margin jumped 12 basis points to 1.79%.

Share price snapshot

The National Australia Bank share price has risen nearly 15% in the last year.

The bank has a market capitalisation of about $88.3 billion based on the last closing price.

The post How much I would need to invest in NAB shares to earn $150 a month in passive income? appeared first on The Motley Fool Australia.

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• Buy NAB and this ASX dividend share now: analysts
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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Challenger telco Aussie Broadband Ltd (ASX: ABB) was an instant hit with investors after debuting on the ASX in October 2020.

In fact, the share price tripled from the closing price on that first day up until a year ago.

But in the last 12 months, the stock has definitely lost darling status, as the share price almost halved.

So what’s happening here? Is the decline terminal, or is it worth buying for another bull run?

Ignore the public face, the backroom is where it’s at

The QVG Capital analysts are one group that reckon better days are coming for Aussie Broadband shareholders.

But it’s not for reasons you might think.

Aussie Broadband is best known publicly as an NBN retailer, but this is a very low-margin cut-throat activity.

That unit is “not an attractive business”, according to a recent QVG memo to clients.

“The thing that attracts us to Aussie is that they have been investing in their own fibre backhaul and have been growing their business and government division,” read the memo.

“Business and government customers typically have lower churn and higher average revenues while on-net fibre margins can be 3x those of reselling NBN.”

The QVG analysts reckon when the market wakes up to this, Aussie Broadband shares could rocket upwards.

“As Aussie’s revenue and earnings mix moves more towards the higher quality business and government division, we believe a re-rating of the company is likely.”

So that’s a yes from QVG.

The big catalyst coming for Aussie Broadband shares

Last month, Discovery Fund portfolio manager Mark Devcich told The Motley Fool in an interview that he would also buy Aussie Broadband.

“The fall in share price hasn’t really been due to execution issues. It’s more just been a devaluation.”

Devcich likes that the economics of NBN are changing, with wholesale prices likely to come down for Aussie Broadband.

“You may have seen that the NBN wrote down the value of the network by $31 billion recently, and that was driven by changes to the prices they charge the retail service providers,” he said. 

“Once these changes come through in 1 July, [which] is the expected time frame, there should be substantial margin uplift.”

Although most NBN resellers will benefit, a premium-end provider like Aussie will reap more than the budget brands.

“Because Aussie Broadband gives higher speed plans, and higher usage customers, they’re actually going to benefit more than a regular telco,” said Devcich. 

“We don’t feel like consensus is properly factoring in the benefits that could come from this change in NBN pricing into the ’24 financial year.”

It seems Discovery Fund is also saying yes for another bull run.

The post Are Aussie Broadband shares capable of another bull run? appeared first on The Motley Fool Australia.

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More reading

• 2 fresh-faced ASX shares that could leave investors smiling 10 years from now
• ‘Rerating likely’: 2 ASX shares to buy before they take off
• These 3 ASX shares just halved. I would buy one of them: experts

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband. The Motley Fool Australia has recommended Aussie Broadband. 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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