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The S&P/ASX 200 Index (ASX: XJO) dividend shares that I’m about to reveal could be two of the most underrated ideas for passive income for many years ahead.

The dividend income that many ASX bank shares and mining shares pay has been impressive over the past decade.

However, I think it’s useful to have diversification at the very least.

Over the long-term, I think there are a number of names that could be better dividend payers – whether that’s with more growth, possibly better reliability, or however else we want to judge a passive income-paying business.

With that in mind, I think the following two names are worth a spot in a dividend-focused portfolio.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a fast food business that has a goal of being the “world’s top restaurant operator”. At this stage, it operates KFC outlets in Australia and Europe, and also has a small but growing network of Taco Bell restaurants in Australia. It currently has around 15,000 KFC and Taco Bell employees.

According to Collins Foods, it has 270 KFCs in Australia, 16 KFCs in Germany, 48 KFCs in the Netherlands, and 26 Taco Bells in Australia.

I believe it’s possible that fast food businesses can provide defensive earnings during a recession, perhaps even growth, as people look to fast food as a treat during a downturn, perhaps as a cheaper alternative to other dining options.

Collins Foods has dropped 17% from 28 November 2022, making it considerably cheaper than it was before. It has grown its dividend each year since 2014, making it one of the most consistent ASX 200 dividend shares around.

While underlying net profit after tax (NPAT) fell in its most recent result, I don’t think the challenging environment with food inflation will continue forever. The business continues to grow its store numbers and same-store sales grew in both Australia and Europe in the first six months of the second half of FY23.

Commsec numbers suggest the business could pay a grossed-up dividend yield of 4.8%, with a 3.7% increase projected for passive income in FY23 to 28 cents per share.

Charter Hall Long WALE REIT (ASX: CLW)

This is an Australian real estate investment trust (REIT). It aims to invest in “high quality Australasian real estate assets that are predominately leased to corporate and government tenants on long-term leases”. The current weighted average lease expiry (WALE) is around 12 years.

It’s invested in a number of different sectors including office, industrial, logistics, retail, and social infrastructure.

Some of its tenants include the Australian government, Telstra Group Ltd (ASX: TLS), BP, and Endeavour Group Ltd (ASX: EDV).

Higher interest rates can have a negative impact on REITs with both a higher interest cost and an impact on property values. Charter Hall Long WALE REIT isn’t experiencing large hits to its valuations (yet). But, the ASX 200 has already fallen 22% over the last 12 months, which I think is a fair reflection of how much lower it should be priced in this environment.

But, with the strong inflation, some of the rental income is getting a boost because the growth rate is linked to inflation. That could be helpful for the passive income from the ASX 200 dividend share.

The REIT has guided that it’s going to pay a distribution of 28 cents per unit for FY23, which is a distribution yield of 6.7%.

The post 2 leading ASX 200 dividend shares I’d buy for long-term passive income appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Analysts say buy these high yield ASX dividend shares for a passive income
• Want passive income? Analysts say you can get 6%+ yields with these ASX dividend shares
• I think retirees will love these 2 ASX 200 dividend shares for passive income
• Investing as little as $25 a week could help me retire with $104,000 a year in passive income!

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Collins Foods. 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 Telstra Group Ltd (ASX: TLS) share price managed to beat the return of the S&P/ASX 200 Index (ASX: XJO) in March 2023, despite the telco going ex-dividend during the month.

During March, Telstra shares climbed by 1.4% while the ASX 200 dropped by 1.1%. An outperformance of 2.5% in just one month is solid outperformance for an ASX blue-chip share.

Telstra shares went ex-dividend

Telstra started the month’s performance at a disadvantage after going ex-dividend on 1 March 2023.

That means investors who buy shares on that date (and from then on) are not entitled to the upcoming dividend.

Telstra’s half-year dividend was 8.5 cents per share, which represented an increase of 6.25%. Grossed-up for franking credits, the total payment was around 12 cents per share. So, it was perhaps not a surprise that the Telstra share price dropped by 12 cents on the ex-dividend date of 1 March.

But, from that date, Telstra shares climbed by around 4.5% to the end of the month.

What went wrong for the ASX 200?

The ASX 200 didn’t drop by much. Certainly, 1.1% is not like some of the declines we saw in 2020 and 2022.

But, last month we saw a lot of pain for the global banking sector after difficulties for Silicon Valley Bank (SVB) and Credit Suisse.

While the ASX bank sector aims to be ‘unquestionably strong’, investors still went negative on banking shares in Australia. In turn, the performance of the banking sector had a significant influence on the negative direction of the ASX 200.

Over the month, the Commonwealth Bank of Australia (ASX: CBA) share price fell 2.3%, the National Australia Bank Ltd (ASX: NAB) share price declined 7.6%, the ANZ Group Holdings Ltd (ASX: ANZ) share price declined 7%, and the Westpac Banking Corp (ASX: WBC) share price dropped 3.9%.

Together, those bank movements caused a negative hit for the ASX 200.

Did anything important happen for Telstra shares?

Reporting season was in February 2023, so it wasn’t as though investors were reacting to the Telstra result during March.

But, the result did show a number of pleasing things, including a 6.4% rise in total income to $11.6 billion and a 27.1% rise in earnings per share (EPS) to 7.5 cents.

The company also said it’s making progress on its T25 strategy with the business focusing on a number of things, including improving the customer experience, having a strong 5G network, growing margins, and increasing the dividend.

Interestingly, we did see that Telstra director Ming Long decided to buy some Telstra shares on the market, buying a total of 25,589 for a cost of $105,123.39. That’s an average price of around $4.11.

Coincidence or not, the Telstra share price steadily climbed over the rest of the month after news of the director’s investment. Investors may have gained confidence from the director deciding it was a good time to buy.

The post Why did the Telstra share price beat the ASX 200 in March? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• For $400 in monthly passive income, buy 28,236 shares of this ASX 200 stock
• These were the best performing ASX 200 shares in March
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Although interest rates on offer with saving accounts and term deposits are improving, they still can’t compete with the dividend yields on offer with these ASX 200 shares.

Here’s what analysts are forecasting from these high yield ASX dividend shares:

Mineral Resources Ltd (ASX: MIN)

The first ASX 200 dividend share to look at is Mineral Resources.

It is a mining and mining services company with exposure to iron ore and lithium. The latter operations are expected to support bumper earnings growth and big dividends in the coming years.

This certainly was the case during the first half, with Bell Potter noting that “MIN reported that lithium contributed 80% of group EBITDA.”

In respect to dividends, the broker is expecting fully franked dividends per share of $3.73 in FY 2023 $9.41 in FY 2024, and $9.60 in FY 2025. Based on the current Mineral Resources share price of $80.59, this will mean 4.3%, 10.8%, and 11% dividend yields, respectively.

Bell Potter has put a buy rating and $110.00 price target on its shares.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that could be a buy is Westpac. It is Australia’s oldest bank and one of the big four players.

Thanks to a combination of rising interest rates and cost reductions, Morgans believes the bank has “the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful.”

It believes this should support some big dividend payments and notes that the “yield including franking is attractive for income-oriented investors.”

Morgans is forecasting fully franked dividends per share of 153 cents in FY 2023, 159 cents in FY 2024, and 161 cents in FY 2025. Based on the current Westpac share price of $21.66, this will mean yields of 7%, 7.3%, and 7.4%, respectively.

The currently has an add rating and $25.80 price target on its shares.

The post Buy these ASX 200 shares for massive dividends: analysts appeared first on The Motley Fool Australia.

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More reading

• Why was the Westpac share price sold off in March?
• These ASX 200 lithium shares could be takeover targets: Morgans
• Does the Westpac share price fall make it a no-brainer buy?
• Buy these high yield ASX 300 shares for big dividends: brokers
• ASX shares are paying out $19 billion in dividends this week. Are you getting a piece?

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 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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Some of the biggest dangers retail investors fall victim to are psychological traps.

That’s because investing is not just about number crunching, according to ECP Asset management investment partner Sam Byrnes.

“Investing involves both art and science. The science aspect includes analysing a company’s strategy, industry position, competitive advantage, future opportunities, and risks,” Byrnes wrote on the ECP blog.

“However, investing also involves the less tangible aspect of mitigating behavioural biases, such as confirmation bias.”

Don’t just look at opinions that agree with you

We’ve all been there. 

You are convinced that a stock is going for cheap considering its favourable thematics and outlook.

Then you see one bullish expert say the same — buy the stock now before it’s too late.

Then you see another analyst, and another, and they also talk about how great these shares are.

Well, surely you have to buy it now!

According to Byrnes, this is when investors can easily fall prey to confirmation bias.

“Confirmation bias refers to the tendency to seek out and interpret information that confirms one’s preexisting beliefs, while disregarding information that contradicts it,” he said.

“This bias can manifest as ‘falling in love’ with a particular stock, leading to over-investment without adequately assessing the risks. This can ultimately lead to significant losses.”

As well as doing proper research, it’s imperative to seek out views about the stock that are opposite to how one might be feeling.

Only listening to experts who have the same view as you can “lead to an echo chamber of ideas” and “a lack of diversity of thought”.

“To truly gain a comprehensive understanding of a company, it is beneficial to speak with individuals who hold opposing views,” said Byrne.

“Even if you do not agree with them, you will gain new insights and a greater understanding of the risks involved. This can help you to make more informed and well-rounded investment decisions.”

Stocks are not your children

Confirmation bias can also pop up for ASX shares already held in one’s portfolio.

Say a stock you bought for cheap has now climbed like you always knew it would — and now it’s a handsome three-bagger, five-bagger or ten-bagger.

You now have an emotional connection to the stock and barrack for it to go further.

But shares have no memory. The only thing that matters is the potential of the business from now onwards.

When issues arise with the business, investors that have “fallen in love” can easily ignore danger signs that may mean the original investment thesis is broken.

In such situations, what the ECP team does is to try to determine whether the problems are short-term or systemic.

“When risks are deemed to be short-term, and not a threat to long-term fundamentals, then we accumulate as the expected return increases,” said Byrne.

“However, if the risks are unknown or longer term, we exit our position or limit the weight in the portfolio until we have evidence that the thesis remains intact.”

The post How ‘falling in love’ can destroy your ASX shares portfolio appeared first on The Motley Fool Australia.

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More reading

• Why did the Telstra share price beat the ASX 200 in March?
• Buy these ASX 200 shares for massive dividends: analysts
• Are AFIC shares a smart investment for beginner investors?
• Bargain hunting: 3 retailer ASX shares that shouldn’t be this cheap
• 5 things to watch on the ASX 200 on Monday

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 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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Australian Foundation Investment Co Ltd (ASX: AFI) (AFIC) shares could be an easy first choice for beginner investors looking for a simple starting investment.

It’s not a business you’d find in the S&P/ASX 200 Index (ASX: XJO). That’s because it’s a listed investment company (LIC), one of the oldest on the ASX.

The job of an LIC is to invest in other shares and assets on behalf of shareholders who perhaps don’t want to do any investing themselves. For beginners, it could be a good introduction to the ASX share market.

What does it try to do with its investments?

AFIC says that it wants to provide shareholders with “attractive investment returns through access to a growing stream of fully franked dividends and enhancement of capital invested over the medium to long term”.

It measures itself against the S&P/ASX 200 Accumulation Index (ASX: XJOA), which is a group of 200 of the ASX’s blue chips.

AFIC’s holdings are somewhat similar to the ASX 200, but it has made a number of tactical changes.

Let’s have a look at the top ten positions in the portfolio as at 28 February 2023:

Commonwealth Bank of Australia (ASX: CBA) – 9% of the portfolio

BHP Group Ltd (ASX: BHP) – 8.5% of the portfolio

CSL Limited (ASX: CSL) – 8.1% of the portfolio

Macquarie Group Ltd (ASX: MQG) – 4.9% of the portfolio

Transurban Group (ASX: TCL) – 4.7% of the portfolio

Wesfarmers Ltd (ASX: WES) – 4.1% of the portfolio

Westpac Banking Corp (ASX: WBC) – 3.9% of the portfolio

National Australia Bank Ltd (ASX: NAB) – 3.8% of the portfolio

Woolworths Group Ltd (ASX: WOW) – 3.1% of the portfolio

Rio Tinto Limited (ASX: RIO) – 2.5% of the portfolio

Its portfolio is nicely diversified across sectors, though it does have the largest weightings to ASX bank shares and ASX mining shares, just like the ASX 200.

Can AFIC shares work for beginners?

AFIC can be a very simple, passive way for investors to get exposure to the ASX share market.

I think two of the best reasons to consider this LIC for a beginning investment, or an investment for any time, are its low annual management fee of just 0.16% and its consistent dividend.

Low costs mean that almost all of the returns generated stay in the hands of investors, rather than a relatively large portion going to the fund manager. In turn, this means that compounding is stronger than it otherwise may have been.

AFIC also seems committed to paying a consistent dividend to investors. While there hasn’t been a lot of growth, it can give people stability and confidence — although dividends aren’t guaranteed payments.

The last two declared dividends from AFIC shares amount to 25 cents per share, which is a grossed-up dividend yield of 4.9%. This dividend can be re-invested using the dividend reinvestment plan (DRP), allowing investors to build up their AFIC position brokerage-free.

Ultimately, I think AFIC can work well as a beginner investment. However, there are a few reasons why I don’t think it might be one of the best choices out there for beginners.

For starters, the AFIC share price is trading at a higher price than the underlying value of the portfolio of shares – the $1 basket of shares is priced at more than $1.

Its investments are focused on huge ASX shares that may not have a lot of growth ahead of them, and it largely misses out on the global share market, which may have more growth potential over time.

With that in mind, an exchange-traded fund (ETF) like Vanguard MSCI Index International Shares ETF (ASX: VGS) could provide more of what beginner investors are hoping for with decades of investing ahead of them.

The post Are AFIC shares a smart investment for beginner investors? appeared first on The Motley Fool Australia.

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More reading

• Is the AFIC share price a standout investment right now?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Most ASX shares in the discretionary retail sector have understandably plunged over in recent months, due to the ever-increasing interest rates.

With Australians facing increased mortgage repayments for ten consecutive months, it’s logical that consumers have less money to spend on products that are considered non-essential.

After all, that’s what the Reserve Bank ultimately wants, to bring inflation down.

So it is that the S&P/ASX 200 Cons Disc (ASX: XDJ) is more than 4.8% lower than it was 12 months ago. It’s a whopping 17.7% dive if you go back to November 2021.

Let’s sift through the bargain bin

However, putting all businesses in the same sector into one basket is a fool’s game when choosing stocks to buy.

The team at Morgans therefore undertook an analysis of consumer discretionary ASX shares to pick out the best buy candidates.

The analysts did this in two steps. First was to identify the most heavily discounted.

“We identify 11 consumer discretionary stocks that are currently trading within 10% of their 12-month lows,” Morgans senior analyst Alexander Mees said in a blog post.

“History suggests many of these stocks could rebound.”

Mees cited how the same cohort picked out 12 months ago would have seen 67% of them outperform the benchmark over the past year.

But of course, just because a stock has plummeted doesn’t make it a good investment.

That’s where the second filter comes in.

Not surprisingly, most of the 11 stocks reported a deterioration in sales in last month’s half-yearly updates.

“Others are undergoing strategic shifts that don’t yet appear to have broad investor support,” said Mees.

“A few of them have recently parted ways with their CEO, adding more uncertainty to what is already an uncertain outlook.”

So what’s left? Are there any that aren’t suffering from any of these problems? They must be the genuine bargains that have a great chance of rebounding this year.

Here are three ASX shares that the Morgans report identified:

The 3 standout ASX retailer shares right now

Lighting retailer Beacon Lighting Group Ltd (ASX: BLX) is the first “anomaly” in the bargain bin.

“The business reported record sales in 1H23 and indicated sales were ‘holding up well’ so far in 2H23,” said Mees.

“Investors are almost certainly concerned about the risk of a cyclical downturn in the months ahead, but we believe the strategy to expand into the $2 billion trade market will allow it to offset the effect of weaker consumer demand.”

The Beacon share price has plunged more than 38% over the past year. The stock does pay out a handy 5.4% dividend yield.

Adore Beauty Group Ltd (ASX: ABY) and Baby Bunting Group Ltd (ASX: BBN) have both provided bright forecasts.

“We note that Adore Beauty, which has seen its growth stall post-COVID (along with most pure play e-commerce companies), has guided to a recovery in both sales and margins in FY24.”

“Similarly, Baby Bunting expects, and has guided to, an improving trend over the balance of 2H23, but has seen its share price continue to trend down.”

Adore Beauty and Baby Bunting shares are both heavily discounted, each falling around 60% over the past 12 months.

Baby Bunting does pay out a 5.8% dividend yield though.

The post Bargain hunting: 3 retailer ASX shares that shouldn’t be this cheap appeared first on The Motley Fool Australia.

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More reading

• I think these 2 ASX growth shares have been heavily oversold. I’d buy them in April
• Bargain buys? 3 ASX All Ords shares trading at 52-week lows right now
• Morgans warns that these ASX shares could disappoint in FY23

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 Baby Bunting Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group. The Motley Fool Australia has recommended Adore Beauty Group and Baby Bunting 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished a solid week on a positive note. The benchmark index rose 0.8% to 7,177.8 points.

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

ASX 200 expected to climb

The Australian share market looks set to continue its positive run on Monday thanks to a strong finish on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 45 points or 0.6% higher this morning. On Wall Street, the Dow Jones was up 1.25%, the S&P 500 rose 1.45%, and the NASDAQ climbed 1.75%.

Oil prices rise

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good start to the week after oil prices rose on Friday. According to Bloomberg, the WTI crude oil price was up 1.75% to US$75.67 a barrel and the Brent crude oil price rose 1.6% to US$79.89 a barrel. The announcement of surprise production cuts from OPEC has given oil prices a boost.

ALS named as a buy

The ALS Ltd (ASX: ALQ) share price could be great value according to analysts at Goldman Sachs. This morning, the broker has initiated coverage on the testing services company’s shares with a buy rating and $14.60 price target. This implies potential upside of 21%. It said: “ALQ is positioned to benefit from short-term mining exploration and long-term green metals trends.”

Gold price pulls back

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price pulled back on Friday night. According to CNBC, the spot gold price fell 0.6% to $1,986.20 per ounce. Improving investor sentiment reduced the appeal of the safe haven asset.

Dividends being paid

A few ASX 200 shares will be paying their latest dividends on Monday. This includes financial services companies AMP Ltd (ASX: AMP) and  Insignia Financial Ltd (ASX: IFL), as well as private health insurer NIB Holdings Limited (ASX: NHF). The former is rewarding its shareholders with its first dividend in years today, It will be paying a fully franked 2.5 cents per share final dividend.

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

• These were the best performing ASX 200 shares in March
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• AMP share price slips amid expected first strike on remuneration
• Don’t stress! The stock market is ‘a long way from a crisis’

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One of the great things about ASX dividend shares is that, even during stock market downturns, it’s still possible to grow your wealth.

Whilst your portfolio might not be increasing in value from share price rises, it may still be growing from dividend payments or reinvestment allocations.

In fact, many young investors who once viewed ASX dividend shares as the exclusive domain of boomers or those approaching retirement are now eyeing these types of stocks in a completely new light.

So, if you’re looking to pounce on some new passive-income investments this month, read on!  Because we asked our Foolish writers which ASX dividend stocks they reckon could be worth ‘paw-ring’ over in April.

Here is what the team came up with:

7 best ASX dividend shares for April 2023 (smallest to largest)

• Nick Scali Limited (ASX: NCK), $757.35 million
• Rural Funds Group (ASX: RFF), $768.50 million
• National Storage REIT (ASX: NSR), $3.36 billion
• Domino’s Pizza Enterprises Ltd (ASX: DMP), $4.44 billion
• Harvey Norman Holdings Limited (ASX: HVN), $4.46 billion
• Rio Tinto Ltd (ASX: RIO), $44.60 billion
• Commonwealth Bank of Australia (ASX: CBA) $166.00 billion

(Market capitalisations as of 31 March 2023).

Why our Foolish writers love these ASX passive-income stocks

Nick Scali Limited

What it does: Quality furniture in Australia has almost become synonymous with the Nick Scali brand, I believe. Founded in 1962, the furniture retailer has grown to 107 stores (including Plush), making it one of the largest operators in the sector within the country.

By Mitchell Lawler: Looking at how this ASX 300 dividend share has been performing lately, you’d almost think business for Nick Scali was heading the way of the dinosaurs. 

Between November 2021 and today, the Nick Scali share price has tumbled by around 42%. Yet, the latest numbers from the retailer paint a different story. Revenue surged 57% year on year to $283.9 million, and net after-tax earnings leapt 70%. 

The disconnect has culminated in a current dividend yield of 8.5% on a payout ratio of 60%. It’s probable the market is expecting weakness in sales from here as consumer spending slows – which might be the case. 

But even still, at an earnings multiple of 7.3 times, I think there is a fair bit of wiggle room there for Nick Scali to surprise the market.

Motley Fool contributor Mitchell Lawler does not own shares in Nick Scali Limited.

Rural Funds Group

What it does: Rural Funds is a real estate investment trust (REIT) that owns a variety of different types of farms, including those producing almonds, macadamias, sugar, cotton, wine, and cattle.

By Tristan Harrison: The Rural Funds share price has dropped by around 37% since the start of 2022. That has opened up the opportunity to buy a piece of these quality farms for a much cheaper price and, at the same time, get a much higher distribution yield.

The forecast total FY23 distribution yield is now more than 6%. If Rural Funds can keep growing its distribution by 4% or more per annum – which it has done since FY16 thanks to organic rental income growth and productivity investments – then I think the business can deliver a good total return from here.

Farmland has been a valuable asset for many centuries, and I think this will continue to be the case for a long time to come as the global population grows.

Motley Fool contributor Tristan Harrison owns shares in Rural Funds Group.

National Storage REIT

What it does: Another REIT, National Storage does pretty much what it says on the tin: It operates self-storage centres and garages, as well as providing other related services.

By Sebastian Bowen: I think this ASX 200 REIT is well worth a look for income investors right now.

I like companies that provide goods and services customers will utilise in all economic seasons, not just when times are good. National Storage fits this mould well, in my view. 

Self-storage is a highly fragmented industry, but National Storage has proven it is adept at acquiring market share and expanding further and further. In February, the REIT announced a capital-raising program to continue this expansion. 

National Storage’s dividend distributions have kept up though, with the REIT paying out a total of 10.9 cents per unit in 2022, a good 11.2% above what it paid out in 2019.

Considering this REIT’s dividend yield of more than 4% right now, I think National Storage could be a great addition to a diversified ASX income portfolio this April. 

Motley Fool contributor Sebastian Bowen does not own units of National Storage REIT.

Domino’s Pizza Enterprises Ltd

What it does: Domino’s operates a chain of fast-food pizza outlets. The company controls the Domino’s network in Australia, New Zealand, Japan, Taiwan, Germany, France, Denmark, Belgium, Luxembourg, and the Netherlands. It also has a growing footprint in Southeast Asia.

By Bernd Struben: The Domino’s share price is down 41% over the past 12 months. The company has struggled with the effects of inflation, particularly in Europe. In its half-year results, Domino’s reported rising costs drove a 21.5% decline in underlying net profit after tax (NPAT) to $71.7 million.

This also saw a 23.8% cut in Domino’s partially franked interim dividend, which dipped to 67.4 cents per share.

But I believe the medium-term outlook is better. On the back of a $165 million capital-raising announced in December, Domino’s is well-positioned for growth. It plans to use those funds to help acquire the portion of its German joint venture partner it doesn’t already own.

Based on the Domino’s share price of $49.84 at Friday’s close, the company pays a partly-franked trailing yield of 2.7%.

Broker Morgans has an add rating on Domino’s shares with a target price of $70. That’s around 40% above the current share price.

Motley Fool contributor Bernd Struben does not own shares in Domino’s Pizza Enterprises Ltd.

Harvey Norman Holdings Limited

What it does: Harvey Norman operates its namesake furniture and technology retail franchise and also boasts a notable property portfolio.

By Brooke Cooper: The Harvey Norman share price has tumbled 9% year to date. I think the selloff might represent a buying opportunity for ASX dividend investors.

The company currently boasts a $4.5 billion market capitalisation. However, its property portfolio carries a $3.9 billion valuation, while its retail business brought in $4.98 billion of sales in the first half.

That – as well as the stock’s price-to-earnings (P/E) ratio of 8.15  – suggests the company might be a value buy. And Goldman Sachs appears to agree, slapping Harvey Norman shares with a buy rating and a $4.70 price target.

Did I mention Harvey Norman shares currently offer an 8.5% dividend yield?

Motley Fool contributor Brooke Cooper does not own shares in Harvey Norman Holdings Limited.

Rio Tinto Ltd

What it does: Rio Tinto is one of the world’s largest miners, with a diverse collection of world-class operations across many locations and commodities.

By James Mickleboro: I think Rio Tinto shares could be a great option for ASX dividend investors in April.

I believe the mining giant is well-placed to generate strong free cash flow for the foreseeable future thanks to strong, ongoing demand for its commodities.

The company highlights that its aluminium is used in lightweight cars, its copper ends up in renewables, and its lithium will power electric vehicles and battery storage.

In addition, Rio’s high-grade iron ore looks likely to be in demand as China recovers from the pandemic, and its borates will be used to help crops grow and feed the world’s growing population.

Goldman Sachs is positive on Rio Tinto shares and has a buy rating and $140.40 price target on the company. The broker also forecasts fully-franked dividend yields of approximately 6.6% in FY2023 and 7.4% in FY2024.

Motley Fool contributor James Mickleboro does not own shares in Rio Tinto Ltd.

Commonwealth Bank of Australia

What it does: Commonwealth Bank is Australia’s largest bank, offering a variety of services to business and retail customers. It’s also the second-largest company in the S&P/ASX 200 Index (ASX: XJO) by market cap.

By Bronwyn Allen: All the drama with banks in the United States and Europe led to share price dips of 5% to 10% for the big four ASX bank shares during March.

But, arguably, there was no reason for it.

Australia has one of the strongest banking systems in the world, so I believe the collapse of a tech lender and a crypto lender in the US and a Swiss bank plagued with problems is no reason to sell your ASX bank stocks.

I say buy the dip and buy the best: Commonwealth Bank.

CBA has just paid out its biggest interim dividend on record at $2.10 per share, and Goldman Sachs is tipping a bigger final dividend to follow at $2.58 per share. All up, that will be $4.68 per share in total.

Based on today’s CBA share price of just over $98, that’s a 4.8% fully-franked dividend yield, which is very good for an ASX blue chip company of this size. Especially one like CBA, which is typically bought for its long-term growth potential, not necessarily its dividends. 

Motley Fool contributor Bronwyn Allen owns shares in Commonwealth Bank of Australia.

The post Top ASX dividend shares to buy in April 2023 appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today
• Why did the CBA share price tumble in March?
• Rio Tinto share price lifts on copper project news
• Why is the Harvey Norman share price diving on Friday?
• 7 ASX dividend shares you can buy for under $10

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises and Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman and Rural Funds Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to investing in ASX shares, you could do a lot worse than listen to the advice of the Oracle of Omaha, Warren Buffett.

Over almost six decades now, the legendary investor’s Berkshire Hathaway (NYSE: BRK.B) business has smashed the market with some mind-boggling returns.

In fact, Buffett’s most recent letter to shareholders reveals that the conglomerate’s book value per share has grown by an average of double the stock market return since 1965.

And that’s not because the stock market has delivered pitiful returns. Far from it! The S&P 500 index has generated an average return of 9.9% per annum since 1965. It’s just that Buffett has found a way to achieve a return of 19.8% per annum over the same period.

So, what’s the secret to Buffett’s success? Well, the good news is that there isn’t a secret and anyone can follow his investment style.

Investing like Buffett with ASX shares

While Buffett is well-known for loving a bargain, his focus is more on quality than how cheap something looks. He once explained:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

But what makes a company wonderful and how can we find ASX shares with these qualities?

Buffett believes sustainable competitive advantages, or moats, are of the utmost importance when investing. In his 2007 letter to shareholders, he explained:

A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.

Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with ‘roman candles’, companies whose moats proved illusory and were soon crossed.

Where to find moats on the ASX?

There are a number of ASX shares that have moats. These include toll road operator Transurban Group (ASX: TCL), realestate.com.au owner REA Group Limited (ASX: REA), and biotherapeutics giant CSL Limited (ASX: CSL).

There’s also the Buffett-inspired VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) to consider, which only invests in companies with moats.

And if you need any more proof that following Buffett’s advice could be the smart thing to do, you only need to look at this ETF’s returns. Over the last decade, the index it tracks has generated an average return of 18.64% per annum.

That would have turned a $10,000 investment into approximately $55,000 over the 10 years.

The post I’d listen to Warren Buffett to grow my wealth with ASX shares appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett attributes his investing success to these 2 things
• How to build a $100,000 ASX share portfolio in 6 years
• As stock markets dive, here’s Warren Buffett’s advice
• I’m listening to Warren Buffett and loading up on cheap ASX shares
• Forget day trading! I’d use Warren Buffett’s ‘secret sauce’ to build wealth

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway and CSL. The Motley Fool Australia has recommended Berkshire Hathaway, REA Group, and VanEck Morningstar Wide Moat 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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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 Morgans, its analysts have retained their add rating and $43.00 price target on this gaming technology company’s shares. The broker was pleased with the company’s investor round table event and came away from the event as bullish as ever. It highlights Aristocrat’s superior capitalisation and strong ability to invest in the development of its land-based and digital gaming businesses. The Aristocrat share price ended the week at $37.20.

Liontown Resources Ltd (ASX: LTR)

A note out of Bell Potter reveals that its analysts have retained their speculative buy rating on this lithium developer’s shares with an improved price target of $3.35. Its analysts believe that Albemarle’s takeover approach speaks to the quality of Kathleen Valley and the scarcity of growth opportunities in the sector. And while the broker feels the offer was reasonable, it doesn’t believe it was full. The Liontown share price was fetching $2.58 at Friday’s close.

Premier Investments Limited (ASX: PMV)

Analysts at Macquarie have retained their outperform rating on the retail conglomerate’s shares with an improved price target of $30.50. Macquarie was impressed with Premier Investments’ half-year results, noting that its earnings came in well-ahead of its expectations. In light of this strong performance, the broker has bumped its earnings estimates higher and lifted its valuation accordingly. The Premier Investments share price ended the week at $26.09.

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

• These ASX 200 lithium shares could be takeover targets: Morgans
• These were the best performing ASX 200 shares in March
• Liontown share price climbs as Albemarle continues loading up
• Attention lithium investors: This ASX 200 mining billionaire says Australia could become a battery chemical manufacturing powerhouse
• Best ASX lithium share to buy: Liontown Resources vs. Pilbara Minerals

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 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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