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The S&P/ASX 200 Energy Index (ASX: XEJ) is leaping 0.82% today but this ASX oil and gas share is soaring far higher.

The Omega Oil & Gas Ltd (ASX: OMA) share price soared 53.8% from 19.5 cents to 30 cents today before slightly pulling back. At the time of writing, Omega’s shares are soaring 41% to 27.5 cents.

Let’s take a look at why this ASX oil and gas share is having such a top run.

What’s going on?

Omega shares are rising today after the company reported “outstanding exploration success” in the Bowen Basin, Queensland.

Drilling at the canyon-2 well intersected with 293 metres of gas and liquid hydrocarbon shows within the Kianga formation and upper Back Creek Group.

The well has reached a total depth of 3807 metres. Gas covered the entire length of the 221 thick Kianga Formation. The Kianga formation is the primary target of exploration, while the Back Creek Group is the secondary target.

Omega said the results are “extremely positive” and “exceeded expectations”.

Commenting on the news, managing director Lauren Bennett said:

We are very excited with these results, and they are an excellent start to our Basin-centered gas drilling campaign.

Given the forecast gas supply shortages, finding and developing new sources of unencumbered gas is critical.

The company said drilling at Canyon-2 is ahead of schedule.

Omega first listed on the ASX in October 2022. Drilling of the canyon-2 well started on 19 March 2023.

Share price snapshot

The Omega share price has risen 37.5% in the last year and nearly 62% in the last month.

For perspective, the ASX 200 Energy Index has returned nearly 7% in the last year.

This ASX oil and gas share has a market cap of about $42 million based on the current share price.

The post Why did this ASX oil and gas share just explode 50%? appeared first on The Motley Fool Australia.

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More reading

• Which ASX 200 retail share is performing best during high inflation?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• The Novonix share price has crashed 23% this year! Should I buy?
• Investor or depositor? Warren Buffett sounds off on banking crisis
• 2 ASX dividend shares I’ve bought to capture long-term passive income

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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Investors in ASX 200 retail shares have been bracing themselves over the past 12 months as rising inflation and interest rates force Australian consumers to tighten their belts.

These macroeconomics aren’t good for retail shares, especially those in the discretionary sector.

In 2022, we saw a 23% decline in the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) as investors sold out of retail shares because they expected falling sales, revenues, and dividends.

Annual inflation in Australia peaked at 8.4% over the 12 months to December. It has since come down a bit to 6.8% over the 12 months to February, according to the latest figures from the Bureau of Statistics.

This was one of the reasons the Reserve Bank decided to pause interest rate hikes this month.

This has brought new confidence to the consumer discretionary sector, with the index up 12.3% in the year to date.

It seems ASX 200 retail shares are back on investors’ radars in 2023, despite inflation remaining very high historically.

So, which ASX 200 retail shares are performing best in this challenging environment?

Using data from S & P Global Market Intelligence, we can reveal the top share for price growth over the past 12 months.

Livin’ la Vida Lovisa

The ASX 200 retail share with the highest share price growth over the past 12 months is Lovisa Holdings Ltd (ASX: LOV).

Shares in the fashion jewellery and accessories retailer have increased by 46% over the past year.

That’s pretty gob-smacking growth during a period of such high inflation.

Ranking behind Lovisa — by a long way — are these four other ASX 200 retail shares rounding out the top five performers over the past 12 months.

• The Super Retail Group Ltd (ASX: SUL) share price is up 25.1%
• The Wesfarmers Ltd (ASX: WES) share price is up 8.6%
• The Eagers Automotive Ltd (ASX: APE) share price is up 4.1%
• The Bapcor Ltd (ASX: BAP) share price is up 4.1%

Why is the Lovisa share price rising so fast?

The company’s global expansion plans look very promising, and its vertically-integrated business model may be protecting it from inflation somewhat. You see, Lovisa designs and manufactures all of its products in-house, which means it has greater relative control over its costs.

As my Fool colleague James reported last week, Morgans has Lovisa shares on its best ideas list.

The broker has an add rating on Lovisa and a $28.50 price target on the shares.

In a note, the broker said:

LOV is a global fast fashion jewellery brand with more than 700 stores in more than 30 countries. We think it may prove to be one of the biggest success stories in Australian retail.

With ambitious and well-incentivised new leadership in place, we think now is the time LOV steps up to become a global force. LOV has accelerated its organic rollout in the US and entered into a number of new markets, including Hong Kong, Mexico, Italy, Columbia and Peru.

Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.

As another colleague Tristan points out, Commsec values the Lovisa share price at just 20 times FY25 estimated earnings, with a possible FY25 grossed-up dividend yield of 5.6%.

The Lovisa share price is up 0.3% today to $25.68.

The post Which ASX 200 retail share is performing best during high inflation? appeared first on The Motley Fool Australia.

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More reading

• Invest like Warren Buffett and buy and hold these ASX shares: experts
• My top 5 ASX shares to buy and hold forever in anticipation of the bull market
• Morgans names the best ASX 200 growth shares to buy in April
• Top ASX growth shares to buy in April 2023
• 2 excellent ASX 200 shares I’d buy in April (and hold until at least 2030)

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 positions in and has recommended Lovisa and Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group and Wesfarmers. The Motley Fool Australia has recommended Bapcor and Lovisa. 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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What a year it was for the S&P/ASX All Ordinaries Index (ASX: XAO). Talk about a whipsaw.

The ASX All Ords was going so well for the first half of FY22. It rose from 7,585 points at the close on 30 June 2021 to 7,926.8 points at the closing bell on the first day of trading for 2022 on 4 January.

That’s a pretty encouraging 4.5% rise over a six-month period. Then, the turnaround. The ASX All Ords went down from there, falling to 6,746.5 points at the close on 30 June 2022.

So, the benchmark index finished FY22 in the red. Down 11.05%. Eek. But it was a vastly different story for these ASX mining shares.

These ASX mining shares had a rip-roaring year

The ASX All Ords covers the 500 biggest companies on the ASX by market capitalisation. Mining shares, as part of the basic materials segment, make up about 22.5% of the All Ords index.

Here are the five best-performing ASX All Ords mining shares in FY22, according to Capital IQ figures:

• Core Lithium Ltd (ASX: CXO) up 306.4%
• Argosy Minerals Limited (ASX: AGY) up 260%
• Yancoal Australia Ltd (ASX: YAL) up 172.4%
• Whitehaven Coal Ltd (ASX: WHC) up 148.2%
• Tigers Realm Coal Ltd (ASX: TIG) up 137.5%.

Why these miners soared in FY22

Of course, these five ASX mining companies had their own milestones in FY22 that helped push their share prices higher.

But they all had one thing in common.

The commodities boom pushed up the value of the stuff they dig out of the ground and sell.

According to Trading Economics commodities data, lithium carbonate has had a year on year gain of 434%. Yep, crazy good. And that obviously benefitted Core Lithium and Argosy Minerals.

The coal price also went up big time. By 182% to be exact. It ain’t lithium-level growth, but it’s still impressive. Of course, Yancoal, Whitehaven, and Tigers Realm were beneficiaries.

Both commodities are trading at historically high levels, providing an ongoing boon for these ASX mining shares.

Today, the lithium carbonate price is A$104,026 per tonne. The coal price is A$585 per tonne.

The post 5 best ASX All Ords mining shares in FY22 appeared first on The Motley Fool Australia.

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More reading

• Why Corporate Travel, Leo Lithium, Regis Resources, and Whitehaven Coal are charging higher
• Goldman Sachs names the ASX 200 lithium shares to buy (and avoid)
• This ASX 200 share could pay an 11% dividend yield in 2024
• Why Future Generation, Pilbara Minerals, Platinum, and Whitehaven Coal shares are dropping
• 3 things that could tank the Core Lithium share price even further

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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The S&P/ASX 200 Index (ASX: XJO) has finally turned into negative territory after what has been an exceptionally positive week so far for ASX shares. After gaining an impressive 1.73% over the past two trading days, the ASX 200 has taken a turn for the worse this Thursday.

At the time of writing, the ASX 200 has lost a meaningful 0.36%. That leaves the Index at just over 7,317 points.

But rather than dwelling on all of that, let’s instead check out the ASX 200 shares that are presently topping the share market’s trading volume charts at this point of the day, according to investing.com. 

The 3 most traded ASX 200 shares by volume this Thursday

Sayona Mining Ltd (ASX: SYA)

First up this Thursday is the ASX 200 lithium stock Sayona Mining. So far today, a decent 11.61 million Sayona shares have swapped hands. There’s been no news or announcements out of Sayona today.

So this volume probably boils down to the movements of the company’s shares themselves. Sayona has indeed had a bit of a bouncy day, with time spent in both positive and negative territory. This lithium share has ricocheted between 19 and 20 cents per share today and is currently up 1% at 19.7 cents a share.

Pilbara Minerals Ltd (ASX: PLS)

Another ASX 200 lithium stock is our second share worth a look at this session. Pilbara Minerals has had a hefty 18.4 million of its shares bought and sold so far today. We haven’t had much in the way of meaningful news out of Pilbara this Thursday either.

So again, let’s turn to the Pilbara share price itself for an explanation. Pilbara has had a very different day to Sayona. Pilbara did have a dip in red ink this morning, going as low as $3.495 a share.

But investors seem to have built up some sentiment steam, with Pilbara currently up a healthy 1.41% at $3.59 a share after going as high as $3.61. This bouncing around has probably elicited the high volumes we are seeing.

Tabcorp Holdings Ltd (ASX: TAH)

Last, but certainly not least in terms of trading volume, we have ASX 200 gaming company Tabcorp, with a sizeable 25.61 million shares trading on the markets so far.

Once more, there hasn’t been much news out of Tabcrop this Thursday. But this is another ASX 200 share that has seen some significant indecisiveness from ASX investors today. Taborp shares opened at $1.07 this morning but bounced around 1% to $1.08 a share around midday.

But investors have taken a second guess and, right now, the shares are trading at $1.065, down 0.47% for the day thus far. It’s this bouncy performance that is our most likely catalyst for these elevated trading volumes.

The post Here are the 3 most heavily traded ASX 200 shares on Thursday appeared first on The Motley Fool Australia.

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More reading

• Want to quit your job and live off dividend income? Here’s how
• ASX 200 dips as Aussie unemployment remains near historic lows
• Starting from scratch: How ASX investors can grow a $50k passive income in just 11 years
• Goldman Sachs names the ASX 200 lithium shares to buy (and avoid)
• Does the Pilbara Minerals share price fall finally make it a no-brainer buy?

Motley Fool contributor Sebastian Bowen 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 All Ordinaries Index (ASX: XAO) has had a pretty decent year so far in 2023, all things considered. Despite a bevvy of interest rate rises, not to mention other issues in the global financial system, the All Ords is sitting on a healthy 5.3% year-to-date gain as it currently stands. But we can’t say the same for the Novonix Ltd (AS:X NVX) share price.

Novonix shares started 2023 on a decent footing. The battery technology company began the year at $1.41 a share, before rising as high as $1.94. But today, the Novonix share price is languishing at a new 52-week low. The company opened at $1.10 a share this morning, before falling to $1.075.

That’s the lowest price Novonix has traded at since late 2020. This puts this All Ords share’s 2023 performance at a nasty 23% loss:

But these new lows for the Novonix share price might be piquing some value investors‘ attention out there. After all, Warren Buffett’s words ‘be greedy when others are fearful’ could fit this situation well.

So are Novonix shares a screaming buy right now?

Is the Novonix share price a buy today?

Well, sorry to disappoint any bullish investors out there right now, but I am not interested in buying Novonix. Not today, not tomorrow, and probably never. When looking for my next ASX share, I like to see a few things.

For one, a strong business with a strong moat. But also a business that is robustly profitable, and will be resilient to anything the wide world throws at it. Novonix fits none of these criteria in my opinion.

When reporting its FY2022 full-year earnings last August, it revealed its most pleasing metric: a 61% increase in revenue to $8.4 million. While that is positive, Novonix currently has a market capitalisation of just over $540 million, so I wouldn’t say that makes the company look especially cheap right now.

We could use other, more accurate methods of valuation here, if only Novonix was profitable.

Instead, the company reported a total loss of $71.4 million for the year or -15.4 cents per share on an earnings per share (EPS) basis. That was up from the loss of $18 million the previous year.

So on a conceptual basis, the markets are asking us to pay $540 million for a company that turned over $8.4 million and lost $71.4 million last financial year. That’s not a deal I’m taking home.

Novonix is operating in an exciting area and could well one day become a profitable player in the new world of battery-centred energy. But that’s not a gamble I’m prepared to bet on today.

 

The post The Novonix share price has crashed 23% this year! Should I buy? appeared first on The Motley Fool Australia.

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More reading

• Here’s why the Novonix share price crashed 19% in March
• Why is the Novonix share price diving 7% on Thursday?
• Why Deep Yellow, Frontier Digital, Magellan, and Novonix shares are dropping today
• Chair says Novonix share price ‘will respond appropriately over time’
• Why Block, Novonix, Piedmont Lithium, and Syrah shares are racing higher

Motley Fool contributor Sebastian Bowen 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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Warren Buffett has waded into the ongoing banking crisis that hit the United States and Europe last month.

Silicon Valley Bank was the first of several regional US banks to topple. The contagion quickly spread across the Atlantic to engulf Credit Suisse. The bank was reported to be a day from collapse itself when the Swiss government engineered a takeover by rival Swiss bank UBS.

And the turmoil continues in the US, with shares in First Republic Bank (NYSE: FRC) down a precipitous 90% since early March.

However, Warren Buffett stressed that depositors shouldn’t be worried about losing their savings.

Investors in failing banks, on the other hand, could lose their shirts.

Warren Buffett warns of further bank failures

The CEO of Berkshire Hathaway addressed the banking crisis in an interview with CNBC yesterday (overnight Aussie time).

“We are not through with bank failures,” he said (courtesy of Bloomberg).

The Oracle of Omaha said bank managers have made “dumb decisions”. But he said that was no reason for depositors to panic “about something they don’t need to be panicked about.”

“Banks go bust, but depositors aren’t going to be hurt,” Warren Buffett noted.

As for shareholders?

“They’re not going to save the stockholders,” he said in regard to whether shares in troubled banks like First Republic are now a bargain.

Much as with the Australian Government Deposit Guarantee, US depositors are protected by the Federal Deposit Insurance Corp (FDIC).

And Buffett wanted to dispel some common misperceptions about the FDIC’s funding base:

The public has the impression the FDIC is the US government. But the cost of the FDIC, including the cost of their employees and everything, are borne by the banks. So banks have never cost the federal government a dime.

Berkshire has divested most of its bank holdings in recent years, with the notable exception of Bank of America Corp (NYSE: BAC) thanks to the strength of the bank’s CEO, Brian Moynihan.

“I like Brian Moynihan enormously. I just don’t want to sell it,” the Berkshire CEO said.

As for Berkshire’s investing philosophy going forward, that will remain vintage Warren Buffett, turning a largely blind eye to macroeconomic developments.

“We haven’t changed our course in 58 years,” he said. “We want to buy good businesses that are run by people we like and trust at a decent price, and we’ll keep doing that. And we’ll keep buying Treasury bills every Monday.”

How about our own big four banks?

Warren Buffet may well be right about more bank failures ahead for some troubled US institutions.

But here in Australia, the big four S&P/ASX 200 Index (ASX: XJO) banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) – are in the best shape of any banks in the world.

That’s going by their Common Equity Tier 1 (CET1) ratio, which measures the core equity capital of a bank in comparison to its risk-weighted assets.

The Australian Prudential Regulation Authority (APRA) requires the banks to have a minimum 10.25% CET1 ratio.

And in good news for Aussie investors, all of the big four banks currently are well ahead of that 10.25% ratio.

The post Investor or depositor? Warren Buffett sounds off on banking crisis appeared first on The Motley Fool Australia.

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More reading

• Forget term deposits and buy ANZ and this ASX dividend share for income: experts
• I’m buying ASX 200 dividend stocks ahead of the next bull market
• How reliable are the dividends from CBA shares?
• Could Westpac shares have ‘the greatest potential’ of all the ASX 200 bank stocks?
• Buy NAB and this ASX dividend share now: analysts

Bank of America is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Bank of America. 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 ASX share market is a great place to find ASX dividend shares that can pay strong long-term passive income, in my opinion.

I love receiving dividends because we don’t have to do anything once we own the shares. Those businesses can send money to our bank accounts every six months (or every three months). We don’t have to worry about tenants, fixing a toilet, or searching for the best term deposit rate.

I’m building a portfolio that is focused on businesses that can grow their profit over time, which can lead to growing dividends and, hopefully, share price growth as well.

These are two of the biggest positions in my ASX dividend share portfolio.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is an investment conglomerate that has been operating for 120 years. It’s invested in a wide range of industries including telecommunications, resources, building materials, property, farmland, financial services, swimming pools, luxury retirement living, and more.

The business receives divided, distribution, and interest income from its defensive, cash flow-focused investment portfolio. It pays for its expenses, pays a majority of the net cash flow to investors as growing passive dividend income, and then re-invests the rest in more opportunities.

It has grown its dividend every year since 2000, which is the longest-running dividend growth streak on the ASX. Of course, it’s not guaranteed to grow the dividend, but it’s a core aim for the business.

I like that the company is improving its diversification. It has recently invested in more farmland.

As long as the business continues to invest with the future in mind, I think it will be capable of good long-term returns.

The ASX dividend share’s dividend growth has accelerated over the past year, with the FY23 interim dividend being boosted by 24% to 36 cents per share.

Brickworks Limited (ASX: BKW)

Brickworks is best known as a building products business. It is the biggest brickmaker in Australia and the northeast of the US. The company also has exposure to roofing, paving, masonry, and other building materials in Australia.

To me, one of the most interesting things about the business is that it owns a large chunk of Soul Pattinson shares. Brickworks owns 26.1% of Soul Pattinson. This can provide Brickworks with a growing stream of passive dividend income and, hopefully, capital growth as well.

Brickworks also owns half of a compelling industrial property trust which owns prime logistics and industrial properties across Sydney and Brisbane, tenanted by third-party customers. The industrial trust owns development land which provides “significant further growth.” Brickworks’ net asset value of its property trust holdings is worth more than $2.2 billion, according to Brickworks. The properties are paying Brickworks growing rental income.

On top of that, Brickworks also has significant additional land that can be developed, including at Horsley Park in New South Wales and Craigieburn in Victoria.

The ASX dividend share hasn’t cut its dividend for 47 years, which is a very impressive long-term dividend record in my opinion. In the FY23 half-year result, Brickworks grew its interim dividend by 5%.

The post 2 ASX dividend shares I’ve bought to capture long-term passive income appeared first on The Motley Fool Australia.

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More reading

• 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 much do you need to invest to give up work and live only off dividend income?
• Why Brickworks, Energy Resources, Magellan, and Pilbara Minerals shares are dropping today
• How I’d invest $5,000 today for long-term passive income

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 and Washington H. Soul Pattinson and Company Limited. 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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While term deposits are improving, they still don’t come close to some of the dividend yields you will find on the Australian share market.

For example, the two ASX dividend shares listed below have been tipped to provide very generous yields in the coming years.

In addition, with price targets notably higher than where they currently trade, there’s potential capital gains on offer for investors as well. Something term deposits won’t give you.

Here’s why these dividend shares could be great options for income investors right now:

ANZ Group Holdings Ltd (ASX: ANZ)

Rather than putting money into this big four bank’s term deposits, income investors could potentially get a materially better return from its shares.

For example, Citi recently put a buy rating and $29.25 price target on its shares. This implies potential upside of 23% from current levels.

In addition, the broker is forecasting fully franked dividends of 166 cents per share in FY 2023 and then 176 cents per share in FY 2024. Based on the current ANZ share price of $23.77, this will mean yields of 7% and 7.4%, respectively.

Dexus Industria REIT (ASX: DXI)

Another ASX dividend share that has been tipped as a buy is Dexus Industria. It is a leading industrial and office property company.

Morgans is bullish on the company and has it on its best ideas list with an add rating and $3.25 price target. This suggests potential upside of 18% for investors from where it trades today.

As for dividends, the broker is forecasting dividends per share of 16.4 cents in FY 2023 and then 16.9 cents in FY 2024. Based on the current Dexus Industria share price of $2.75, this will mean yields of 6% and 6.15%, respectively.

The post Forget term deposits and buy ANZ and this ASX dividend share for income: experts appeared first on The Motley Fool Australia.

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More reading

• 3 good reasons I’m avoiding ANZ shares at all costs!
• It’s official, the ASX 200 big four banks are the world’s most capitalised. Should you buy?
• Could right now be a great time to buy ASX 200 bank stocks for passive income?
• How I would build a Warren Buffett-style portfolio with ASX 200 shares
• Could ANZ shares cash in on the recent international bank collapses?

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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The Block Inc (ASX: SQ2) share price is having a tough run on the market today.

Block shares are tumbling 6.13% to $93.975. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.15% in the red today.

Let’s take a look at what is going on with the Block share price.

What’s happening to Block?

Block is not the only ASX buy now pay later (BNPL) share sliding today. Zip Co Ltd (ASX: ZIP) shares are 1.85% in the red, while the Sezzle Inc (ASX: SZL) share price is falling 3.65%.

BNPL shares including Block appear to be following in the footsteps of their US counterparts overnight.

Block’s New York Stock Exchange listing Block Inc (NYSE: SQ) fell 5.54% overnight. Similarly, the shares of Affirm Holdings Inc (NASDAQ: AFRM) plunged 6.5% overnight.

Block is being targeted by well-known short seller Hindenburg Research, as my Foolish colleague James reported today.

Further, speculation on future rate rises in the USA could also be weighing on BNPL shares.

The Consumer Price Index lifted 0.1% month on month in March 2023, data from the US Bureau of Labor Statistics released overnight shows. However, this was less than the 0.4% rise in CPI in February.

Since March last year, CPI has lifted 5%. However, this was the “smallest 12-month increase since the period ending May 2021”.

Commenting on this data, US President Joe Biden noted “inflation is still too high”. He said:

While inflation is still too high, this progress means more breathing room for hard-working Americans – with wages now higher than they were 9 months ago, after accounting for inflation.

Given inflation is still rising, multiple economists are tipping the USA Federal Reserve to raise rates further. In a research note today, ANZ economist John Bromhead said:

Equity markets softened after US inflation data confirmed expectations that the Fed is likely to lift rates 25bp in May.

Markets are aligned in the view that will be the peak of the cycle, but views differ as to when rates will start to fall.

Oxford economics chief US economist Ryan Sweet also tipped the Fed would lift rates by 25 basis points in May and June before pausing for the rest of the year.

Block share price snapshot

The Block share price has fallen 43% in the last year and 14% in the past month.

Block has a market capitalisation of about $2.7 billion based on the current share price.

The post Why is the Block share price tumbling 6% today? appeared first on The Motley Fool Australia.

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More reading

• Why 29Metals, Block, Champion Iron, and Zip shares are dropping today
• How I would build a Warren Buffett-style portfolio with ASX 200 shares
• ‘Strong demand’: The 2 ASX 200 shares to pounce on right now
• Here are the top 10 ASX 200 shares today
• Why Block, Novonix, Piedmont Lithium, and Syrah shares are racing higher

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 positions in and has recommended Affirm, Block, and Zip Co. The Motley Fool Australia has positions in and has recommended Block. 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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Tapping into the incredible power of compounding can deliver life-changing results to a person’s wealth. Yet, some investors tend to only focus on one component of the exponential wealth creation equation when investing in ASX shares, ignoring dividend income.

The growth potential of a company’s share price usually attracts most of the limelight in a portfolio, for obvious reasons. However, there is a second compounding machine involving the dividend income that can also be switched on.

Once set up, a shareholder can sit back and watch their dividends go to work for them. So, what is this simple step to amplifying long-term portfolio returns? Follow along to find out and learn how to make use of its power with your own dividend income.

Growing your share of future earnings

In his 2021 annual letter to shareholders, Warren Buffett explained how Berkshire Hathaway investors effortlessly increased their stake in the company, stating:

The action [buyback] increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet.

By using the cash generated by the company’s operations, each shareholder was able to hold a larger share of the Berkshire pie, as the number of shares issued was reduced through a buyback program.

In a similar fashion — though not Buffett’s preferred option — is for a company to pay a dividend to return a share of the profits to its shareholders. However, this method can be sweetened when an ASX share offers a dividend reinvestment plan (DRP).

Instead of receiving cash, investors can elect to be provided with additional shares to the value of the dividend payment. This effectively increases the investor’s holding without needing to contribute additional funds… kind of magical, right?

Over time, the impact this simple act can make on total returns is significant. Take the example below, for instance, comparing an investment in the S&P/ASX 200 Index (ASX: XJO) with and without dividends reinvested between July 2012 and June 2022. 

In a decade, making use of a DRP would have resulted in a 246% total return. Meanwhile, taking the dividends as cash dragged the total return down to 163%. 

An entire 83% additional wealth was generated over 10 years, simply by switching on dividend reinvestments. In my view, that has to be one of the greatest increases in returns for minimal effort that I know of.

How to turn on that extra dividend income

If getting your DRP on sounds like a step you want to take, you’re probably wondering how exactly is it done. The procedure for unlocking the great compounding wizardry of dividend reinvestment is as follows: 

1. Find which share registry your shares use, usually Link Market Services, Computershare, or Boardroom – among others. This can be found in any company correspondence via emails or letters. 
2. Login to the share registry, navigate to the section usually dubbed ‘forms’, and select ‘Re-investment plans’.
3. Follow the prompts to create an instruction to nominate your holdings for full or partial participation in each company’s respective plan. 
4. Sit back and watch your dividends earn dividends…

It’s such a quick and painless process that I just switched on reinvestment for two of my own ASX shares just then, in less than a few minutes. 

Bonus benefit you may not have known

If DRPs were sweet enough already, this occasional bonus pours even more sugar on top of your dividend income.

In some cases, but not all, ASX-listed companies will offer a discount on the price paid for shares purchased through a DRP. That means getting more shares in your holdings for less than what you could purchase them for on the market.

Examples of ASX shares currently offering a discount on dividend reinvestments include:

• Premier Investments Limited (ASX: PMV): 5% discount
• ARB Corporation Ltd (ASX: ARB): 5% discount
• Jumbo Interactive Ltd (ASX: JIN): 10% discount

It may not seem like a lot right now. However, as the years tick by, the power of compounding can make these attractive reinvestments turn into a monstrous dividend income when you finally elect to receive it as cash.

The post Supercharge your portfolio: The easy step to unlock compound returns with dividend income appeared first on The Motley Fool Australia.

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More reading

• ’20-fold increase’: 3 ASX shares that’ll rocket sooner or later
• 5 ASX All Ords shares trading ex-dividend this week
• Top brokers name 3 ASX shares to buy next week
• Want wealth compounding? Here are my 3 favourite dividend shares inside the ASX 300
• Premier share price higher on record profit and special dividend

Motley Fool contributor Mitchell Lawler has positions in Jumbo Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ARB Corporation and Jumbo Interactive. The Motley Fool Australia has recommended ARB Corporation, Jumbo Interactive, and Premier Investments. 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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