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Everyone loves a great turnaround story.

But it’s natural to love it just that little bit more if you saw it coming and bought ASX shares in the company before everyone else woke up to it.

Wilson Asset Management analysts have a couple of examples that they rate as a buy right now:

New boss set to turn this ship around

Boral Limited (ASX: BLD) has been around for almost 80 years, so the brand is pretty well known in Australia for its construction materials.

But Wilson senior equity analyst Sam Koch pointed out it’s struggled in recent times.

“It’s been plagued with a lot of operational inefficiencies over the last couple of years,” he said in a Wilson video.

Indeed the share price performance reflects this crisis, having halved since July 2021.

Koch would buy the stock now, as Boral is ready to put that period behind it.

“Their new CEO Vik Bansal, we think, is a great fit. He has the operational capability to deliver a turnaround plan.”

He added that the revival strategy should involve “decentralising accountability, decision-making, focusing on revitalising the network, and realising the inherent value within the property [assets]”.

“If you back out over a $1 billion in property from the valuation, it’s actually trading in line with the sector average.

“We believe there’s a materially better outlook for this business versus its peers.”

The investor day in May will provide more information about Bansal’s turnaround plans, which Koch believes could prove to be a stock price catalyst.

Former cash-burning tech company could be profitable very soon

Family security software Life360 Inc (ASX: 360) saw its share price shockingly freefall 81% in just seven months to June last year.

It was a prototypical victim of the market’s move away from cash-burning growth businesses as interest rates rose.

The Californian company acknowledged that message and embarked on a cost-cutting program, which the market has rewarded with a 97% rocket in its share price since 17 June.

Wilson senior equity analyst Shaun Weick rates it as a buy, noting the communications Life360 has sent to investors.

“They’ve issued very strong calendar year 2023 guidance,” he said.

“They’ve brought forward the point of profitability to the second quarter of this year, and that’s often a key catalyst for technology stocks driving a re-rating — particularly in this environment.”

Goldman Sachs analysts agree with Weick on Life360, this week setting a share price target of $7.85. This implies a more than 58% upside to the current levels.

The post Wilson reckons these 2 ASX 200 shares look ready for a massive 2023 appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX 200 shares for 50%+ returns: Goldman Sachs
• Here are the top 10 ASX 200 shares today
• Goldman Sachs names 5 of the best ASX tech shares to buy now
• Leading brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Tony Yoo has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished a volatile week on a subdued note. The benchmark index edged 0.2% lower to 6,955.2 points.

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

ASX 200 expected to edge lower

The Australian share market looks set to start the week slightly in the red despite a solid finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day a modest 3 points lower this morning. On Wall Street, the Dow Jones was up 0.4%, the S&P 500 rose 0.55%, and the NASDAQ climbed 0.3%.

Oil prices fall

Energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a subdued start to the week after oil prices fell on Friday. According to Bloomberg, the WTI crude oil price was down 1% to US$69.26 a barrel and the Brent crude oil price fell 1.2% to US$74.99 a barrel. Concerns over the health of the banking sector were to blame.

Aristocrat Leisure shares are a buy

Aristocrat Leisure Limited (ASX: ALL) shares could be heading higher from here according to analysts at Morgans. A note reveals that its analysts have retained their add rating and $43.00 price target on the gaming technology company’s shares. It commented: “We’re optimistic about ALL’s long-term growth potential, given its superior capitalisation and strong ability to invest in the development of its land-based and digital gaming businesses.”

Gold price pulls back

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price pulled back on Friday night. According to CNBC, the spot gold price fell 0.75% to $1,981.0 per ounce. The gold price continues to hover around the US$2,000 an ounce mark amid the banking crisis.

Dividends being paid

A couple of ASX 200 shares will be paying their latest dividends on Monday. These are appliance manufacturer Breville Group Ltd (ASX: BRG) and gold miner Gold Road Resources Ltd (ASX: GOR). The former is rewarding its shareholders with a fully franked 15 cents per share interim 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

• For $1,000 in monthly passive income, buy 18,462 shares of this ASX 200 stock
• Here are the top 10 ASX 200 shares today
• Is the AFIC share price a standout investment right now?
• Brokers name 3 ASX shares to buy now
• Passive income hack: 3 simple steps to help you get rich and 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

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

CSL Limited (ASX: CSL)

According to a note out of Macquarie, its analysts have retained their outperform rating and $340.00 price target on this biotherapeutics company’s shares. Macquarie is feeling positive about CSL’s outlook thanks to improving plasma collection yields. It expects this to boost its margins in the coming years. In addition, it highlights that CSL’s research and development pipeline should also be supportive. The CSL share price ended the week at $288.49.

New Hope Corporation Limited (ASX: NHC)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $6.00 price target on this coal miner’s shares. While New Hope’s half-year results and dividend fell short of expectations, the broker remains positive. Particularly given the strength of the Bengalla operation, its organic growth opportunities, and potential M&A activities. The New Hope share price was fetching $5.49 at the end of the week.

Nextdc Ltd (ASX: NXT)

Analysts at Citi have retained their buy rating on this data centre operator’s shares with an improved price target of $12.70. This follows a post-earnings season review of the tech sector by the broker. The good news is that Citi remains positive following the review. The broker revealed that it likes NextDC due to its strong revenue growth outlook, which is being supported by a combination of strong demand and inflation-linked contracts. The NextDC share price ended the week at $10.06.

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

• Want to boost your portfolio with ASX blue chips? Analysts say buy these shares
• Why is the New Hope share price up 9% this week?
• Do New Hope shares really pay a 17.6% dividend yield?
• Here’s how much I’d need to invest in New Hope shares to generate a $250 monthly income
• Here are the top 10 ASX 200 shares today

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 Whitehaven Coal Ltd (ASX: WHC) share price has crumpled by almost 27% since ticking over into 2023. Unfortunately, the disappointing showing puts the coal producer among some of the worst-performing ASX 200 shares on a year-to-date basis.

Shares in the Australian coal miner are still up 45% from where they were a year ago. However, shareholders have been taking their money and running amid a declining coal price.

Remarkably, the skyrocketing earnings and the falling share price have resulted in a price-to-earnings (P/E) ratio of 1.9 times. For context, the industry average for energy shares hovers around 6.6 times earnings.

So, could it be time to back the dump truck up and shovel this ASX 200 share into the portfolio?

Coal is the maker or the breaker

Mining and selling a commodity is a tough business. When it’s good, it’s great, and when it rains, it pours — that’s the cyclical nature of the industry. This is because the going price of the commodity — which is driven by supply and demand — largely determines the company’s profits.

It’s a dynamic that has worked in the favour of Whitehaven shareholders over the past year. The energy-dense commodity’s price leapt from around US$150 per tonne to US$450 per tonne while costs held steady. As a result, the income margin ballooned from basically nothing to more than 45%.

But now comes the rain…

Coal prices have retreated abruptly this year, dropping back to within the pre-2022 range. Meanwhile, the ASX 200 share revealed increasing costs in its latest half-year results. Those two factors combined likely mean thinner margins are inbound.

To worsen matters, by the company’s own admission, thermal coal demand is expected to fall from 2025 onwards. Though, Whitehaven Coal’s management is banking on a shortfall in supply to heave prices higher.

It seems the market is now questioning whether prices will bounce back to drive sustained shareholder returns.

Would I buy this ASX 200 share?

I’m unconvinced that renewable energy will replace fossil fuels in this decade. In 2021, clean energy sources accounted for 32.5% of Australia’s total electricity generation, increasing from 27.7% the prior year.

However, at the current rate, we could potentially see 80% of our total electricity demand sourced from renewables in 10 years. I’d expect this will weigh on Whitehaven’s sales for thermal coal, but metallurgical coal — used for steelmaking — might be sustained.

The other issue the company could face is rising costs. As of 16 February 2023, Whitehaven is guiding for the cost of coal to be between A$95 per tonne to A$102 per tonne. If coal prices were to continue to fall, margins would obviously come under pressure.

As shown above, analysts’ estimates (depicted as dots) suggest earnings declines could be on the horizon. By FY2025, net profits after tax (NPAT) could be $1,429 million, compared to $3,393 million for the 12 months ending 31 December 2022.

For the reasons above, I personally wouldn’t be a buyer of this ASX 200 share.

The post One of the most beaten-up ASX 200 shares of 2023 so far. Is it time to buy? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• 2 ASX 200 mining shares to buy with huge upside potential: analysts
• Expert tips 10% dividend yield and booming share price for this ASX 200 stock
• Why Atlantic Lithium, Life360, Neuren, and Whitehaven Coal shares are charging higher
• Analysts warn of future earnings downgrades for ASX 200 coal shares

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

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When you’re trying to build a strong portfolio, having a few blue chips in there can be a good thing.

That’s because blue chips are typically large companies that have been operating for many years. They tend to have stable cash flows, strong business models, and experienced management teams.

Combined, this can make them lower risk options and a good foundation to build a portfolio around.

But which blue chip ASX 200 shares could be in the buy zone right now? Here are three that are rated as buys:

Cochlear Limited (ASX: COH)

The first ASX 200 blue chip share that could be a buy is Cochlear. It is one of the world’s leading hearing solutions companies. It has a portfolio of world class products, which have been developed through its significant annual investment in research and development. Thanks to this and its very strong position in a market benefiting from ageing populations, Cochlear has been tipped to continue its solid growth long into the future.

Goldman Sachs is bullish on Cochlear and has a buy rating and $265.00 price target on its shares.

CSL Limited (ASX: CSL)

Another ASX 200 blue chip share that has been rated as a buy is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses. It has been tipped for solid growth over the long term thanks to its world class product portfolio, strong demand for immunoglobulins, and its lucrative research and development pipeline.

Citi is a fan of the company and has a buy rating and $350.00 price target on its shares.

South32 Ltd (ASX: S32)

A final ASX 200 blue chip share to consider is South32. It is a mining company producing a diverse range of metals. This includes alumina, aluminium, bauxite, copper, energy and metallurgical coal, manganese, nickel, silver, and zinc. Thanks largely to its exposure to commodities that are vital to the clean energy transition, it has been tipped to generate significant free cash flow in the coming years.

Morgans is bullish on the miner and has an add rating and $5.60 price target on its shares.

The post Want to boost your portfolio with ASX blue chips? Analysts say buy these shares appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Does the CSL share price really offer 22% upside right now?
• ‘Increasing demand’: Expert picks 2 ASX 200 mining shares to buy (not BHP)
• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• Analysts say these ultra high quality blue chip ASX 200 shares are buys

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 CSL and Cochlear. The Motley Fool Australia has recommended Cochlear. 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 shares for passive income?

You may want to run your slide rule over the Betashares Australian Dividend Harvester Fund (ASX: HVST).

Here’s why.

High-yielding ASX share with instant diversification

As with most exchange-traded funds (ETFs), HVST provides investors diverse exposure with a single investment.

The ETF holds 40 to 60 different ASX shares at any given time.

Betashares Australian Dividend Harvester Fund’s top holdings by sector are in the financials sector (30%), the materials sector (24%) and healthcare (10%).

As at 28 February, its two biggest ASX shareholdings were BHP Group Ltd (ASX: BHP) at 12.5% and CSL Ltd (ASX: CSL) at 7.2%.

The ETF’s stated goal is to offer investors mostly franked, passive income that beats the net income yield of the broader ASX.

The portfolio is rebalanced every three months, aiming to provide the highest gross yield outcome. That’s part of what investors get for the 0.73% management fee.

And while most ASX dividend shares only make one or two payouts per year, HSVT makes its distributions every month.

That’s a welcome feature for investors looking to secure a regular monthly passive income stream.

As are the bank-busting yields.

The ETF’s 12-month distribution yield works out to 6.9%. The fund’s gross distribution yield over the 12 months was 9.6%, at an average franking level of 91.6%.

That’s a long way ahead of the higher end term deposit rates of around 4.5% currently. Though, investing in any ASX share, even a diversified ETF, does come with significantly more risk than putting your money in a term deposit.

HSVT’s most recent monthly dividend of 7.1 cents per share was paid on 16 March, franked at 78%.

When the time comes to sell the ETF, investors may gain or lose money on the share price moves, just as with any ASX shares.

As you can see in the chart below, the HSVT share price is down 1% in 2023, roughly in line with the S&P/ASX 200 Index (ASX: XJO).

The post Looking for monthly passive income from ASX shares? This ETF offers bank-busting yields appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares that will pay you dividends every single month
• Here’s how I would secure monthly dividends in the 2024 financial year with these ASX stocks
• Guess which ASX ETF pays dividends every month?
• Top ASX ETFs to buy in March 2023

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 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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At its core, deep value takes value investing to the extreme. The goal is to find investments — such as those among ASX shares — that are priced significantly below their intrinsic value.

Locating these diamonds in the rough is what helped the late Ben Graham (Warren Buffett’s mentor) achieve 17% annualised returns over more than 20 years.

In order to discover these deep-value companies, Graham would search for businesses trading at valuation multiples that were considered low. For example, companies with a price-to-earnings (P/E) ratio below 10 or a price-to-book (P/B) ratio below 1.

Curious to find some deep value on the local boards, I dug up three ASX shares that I’d consider extremely cheap right now.

Deeply discounted dividend-paying ASX shares

Adairs Ltd (ASX: ADH)

At a P/E of 7.1 times earnings, Adairs is a homewares and furnishings retailer that I believe is trading far below its intrinsic value.

At present, much of the retail sector is being cheaply valued due to the expected impacts on discretionary spending amid higher interest rates. However, it is unlikely that these suppressed multiples will last forever.

Adairs posted a 34% increase in sales for the first half of FY23. I believe Adairs can grow its sales at a 5% per annum clip over the next five years (at minimum) and maintain a net income margin of roughly 7% — which seems like little to ask.

Based on these figures and an improved P/E ratio of 12 times earnings, I estimate the market capitalisation to be in the ballpark of $690 million. That would be approximately double today’s market valuation.

Nick Scali Limited (ASX: NCK)

Much like Adairs, Nick Scali is another furniture retailer that is trading on a lower earnings multiple than its peers. This might lead investors to think that Nick Scali is a lesser company than others, but the numbers definitely don’t paint that picture.

In the first half, the sofa seller posted sales growth of 57.4% compared to the prior corresponding period. Furthermore, the group’s gross margins improved slightly to a magnificent 62%. It’s hard to think of Nick Scali as anything other than one of the best ASX retail shares on the market at the moment.

Going forward, I’m expecting sales growth to temper as the property market cools off. Though, if similar earnings can be sustained over the next five years, I’d personally estimate Nick Scali’s intrinsic value to be around $14.80 per share — 69% above its current valuation.

Macmahon Holdings Ltd (ASX: MAH)

Trading on a P/E ratio of 6 times earnings and a P/B of 0.5, this ASX share is possibly the deepest value on this list. Macmahon Holdings provides mining services to a diverse pool of clients across the world, including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM).

The steep discount could be attributed to the cyclic nature of the mining industry. No one wants to be an investor when the boom is over. Though, Macmahon is involved in several mining contracts for copper and lithium — which are expected to enjoy prolonged demand due to the electrification trend.

As of 31 December 2022, the company had an order book of $5.6 billion and guided for $1.85 billion to $1.95 billion in revenue for FY23.

My conservative estimate for Macmahon’s valuation in five years would be around $540 million if it were to trade more in line with the industry average P/E ratio of 9 times. This would represent a 90% increase from the current valuation.

The post In search of deep value? I think these 3 ASX dividend shares could be a downright steal appeared first on The Motley Fool Australia.

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More reading

• Dividend yields over 10%! Cheap ASX shares I’d buy for passive income
• This ASX dividend share is projected to pay a yield of over 9% by 2025
• I hope to retire rich. That’s why I’m buying cheap ASX dividend shares right now
• I’d target just a handful of ASX shares to aim for a million!
• Why Adairs, Liontown, Qantas, and Synlait shares are dropping today

Motley Fool contributor Mitchell Lawler 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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for a passive income boost, then you may want to check out the ASX dividend shares listed below.

Analysts have named these ASX shares as buys and tipped them to pay their shareholders bigger than average dividends in the near term. Here’s what you need to know:

Charter Hall Long WALE REIT (ASX: CLW)

The first high yield ASX dividend share to consider is the Charter Hall Long Wale REIT.

This property company has a focus on assets with long weighted average lease expiries (WALE). In fact, at the last count, it had a WALE of approximately 12 years. Combined with its 99.9% occupancy rate, this bodes well for the future.

Citi is a fan of the company due to its low risk income stream, long leases, high occupancy rate, and inflation-linked rental increases.

The broker expects this to support dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT share price of $4.22, this will mean yields of 6.6% and 6.7%, respectively.

Citi has a buy rating and $5.00 price target on its shares.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Another high yield ASX dividend share for passive income seekers to look at is the Healthco Healthcare and Wellness REIT.

As you might have guessed from its name, it is a real estate investment trust (REIT) with a focus on health and wellness properties. This includes properties such as hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties.

Morgans is positive on the company and is forecasting big returns and attractive dividend yields from its shares.

For example, the broker is expecting dividends per share of 7.5 cents in FY 2023 and 7.8 cents FY 2024. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.43, this will mean yields of 5.2% and 5.45% for investors.

Morgans has an add rating and $2.06 price target on its shares.

The post Analysts say buy these high yield ASX dividend shares for a passive income appeared first on The Motley Fool Australia.

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More reading

• 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
• Buy these ASX dividend shares with 5%+ yields: analysts
• Investing as little as $25 a week could help me retire with $104,000 a year in passive income!
• Buy these ASX dividend shares with big yields today: experts

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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Buying the S&P/ASX 200 Index (ASX: XJO) stock Coles Group Ltd (ASX: COL) could be one of the most effective ways to unlock $1,000 of monthly passive income in the form of dividends.

Now don’t get me wrong – this would take a sizeable investment to achieve. Reaching annual income of $12,000 from one ASX 200 stock would be a notable achievement.

But, it’s easier to achieve that with an investment of the quality of Coles shares, partly thanks to its appealing dividend yield.

Coles is the operator of Coles supermarkets around Australia, as well as a number of different liquor retailers including Liquorland.

$1,000 of monthly passive income from Coles

Coles has been one of the limited few ASX 200 stocks that have increased the dividend each year since COVID-19 in 2020, 2021, 2022, and the latest half-year announcement.

I think that’s a solid record, but perhaps not too surprising consider the defensive nature of supermarket retailing. We all need to eat food.

The recent inflation situation has meant that Coles has been able to increase its gross profit margin as well as its net profit after tax (NPAT) margin. This has enabled the business to increase its dividend at a pleasing pace.

Using the estimate on Commsec, the company is expected to pay an annual dividend per share of 65 cents.

At the current Coles share price, that represents a grossed-up dividend yield of 5.2%.

Let’s crunch the numbers

To generate $1,000 of monthly passive dividend income, we’re talking about $12,000 of annual dividends and then splitting that equally between 12 months.

To make $12,000 of annual income, an investor would need to own 18,462 Coles shares. The current cost of that would come at around $330,000.

But, Coles is expected to grow its dividend in both FY24 and FY25.

By FY25, the supermarket ASX 200 stock could pay an annual dividend per share of 76 cents. That would represent growth of around 17% compared to FY23.

An annual dividend payment of 76 cents per share would be a grossed-up dividend yield of 6.1% for FY25.

If investors used the FY25 payout, investors would need to buy 15,790 shares.

What could drive the earnings higher?

If earnings go higher, then it could help drive the Coles share price and the passive dividend income higher.

Coles has a number of positive tailwinds. Inflation is enabling the business to earn higher revenue and then generate higher profit, with its margins being maintained (and increased).

But, it continues to open new stores, which boosts its overall earnings potential. It’s also benefiting from the steadily-rising population of Australia (which means more customers).

The company is working on its ‘smarter selling’ strategy, which involves being more efficient, cutting costs and being more sustainable.

Coles is also working on new, large, automated warehouses, which could make the business much more efficient in those regions, save costs and improve stock flow.

Coles share price snapshot

Over the past six months, the ASX 200 stock has lifted more than 7%.

The post For $1,000 in monthly passive income, buy 18,462 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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

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The three ASX dividend shares I’m going to cover look like passive income beasts to me.

When I think about the types of investments I’d want to own in retirement, I would choose ones with strong dividend track records that could keep paying good dividends even during a downturn.

Dividends are not guaranteed. Dividend payouts can be reduced or cut altogether.

But, I think the businesses that have built a track record of growth – and seem like they can keep increasing the payment – makes me more interested in those names.

APA Group (ASX: APA)

APA is an energy infrastructure business that owns thousands of kilometres of natural gas pipelines around Australia. It delivers half of the nation’s natural gas usage. The business also owns or has stakes in, gas storage, gas processing and a gas power plant.

This ASX dividend share is also getting involved with the renewable energy transition. It owns solar and wind-generating assets, as well as electricity transmission assets.

Why should it be considered a passive income beast? It has increased the distribution to investors each year for over a decade and a half. That’s one of the longest currently-running dividend growth streaks on the ASX.

I think energy will continue to be in demand for beyond the foreseeable future, and APA will be involved with that. It will be particularly useful if APA is successful at being able to start transporting hydrogen in its pipelines, which could lengthen the useful life of its assets and make it even greener-focused.

The estimated distribution for FY23 of 55 cents per security, translates into a forward yield of 5.5%.

Rural Funds Group (ASX: RFF)

Rural Funds is probably my favourite real estate investment trust (REIT) on the ASX.

This ASX dividend share owns a diversified portfolio of farming properties that it leases out to large, quality tenants like Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).

A lot of its rental income grows through either a fixed 2.5% annual increase, or it’s linked to CPI inflation, with some contracts having an occasional market review. This organic rental growth each year helps Rural Funds grow its distribution by the targeted 4% per year.

The farms are spread across different states and climate conditions to lower risks. But, the passive income beast does own a lot of water entitlements for tenants to use.

I like that the tenants take on the operational risk of the farms, and Rural Funds can benefit from the ultra-long-term growth in the value of farmland and rent.

The business is expected to pay a total distribution of 12.2 cents per share in FY23, which translates into a yield of 6%. However, higher interest rates are a shorter-term headwind for its profit and farm valuations.

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

For me, Soul Pattinson could be the best passive income beast in terms of its dividend growth – it has increased its annual ordinary dividend every year since 2000. That’s the longest growth streak on the ASX.

It operates as an investment conglomerate, which means its job is to invest in other businesses and assets. This includes ASX blue chips, ASX small-cap shares, private equity, and structured debt.

Some of its biggest investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Ltd (ASX: PCG) and Aeris Resources Ltd (ASX: AIS). It also has large stakes in names like Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL) and Wesfarmers Ltd (ASX: WES).

It continues to invest in agriculture. The latest investment includes $118 million spent on citrus farms. The private investment Ampcontrol (an electrical parts business) and swimming school business called Aquatic Achievers are assessing acquisition opportunities.

In the FY23 half-year result, it increased its dividend by 24% to 36 cents per share. That makes the current ordinary grossed-up dividend yield around 4%.

The post Passive income beasts: 3 ASX dividend shares I’d buy for retirement appeared first on The Motley Fool Australia.

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More reading

• Looking to bag the bolstered Soul Patts dividend? Here’s what you need to know
• Here is a pair of ASX 200 shares I would buy and never sell
• Soul Patts share price gains as first-half profit jumps 38%
• Soul Patts share price in focus as dividend hiked 24%
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, 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, CSL, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group, Brickworks, Macquarie Group, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Tpg Telecom and Treasury Wine Estates. 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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