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One of the most popular exchange traded funds (ETFs) on the Australian share market is the Vanguard Australian Shares Index ETF (ASX: VAS).

This ETF aims to track the return of the S&P/ASX 300 Index before taking into account fees, expenses, and tax.

This means that when you buy this ETF, you will be buying a slice of a diverse group of ASX shares including giants like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woolworths Group Ltd (ASX: WOW), as well as smaller names such as Dicker Data Ltd (ASX: DDR) and Myer Holdings Ltd (ASX: MYR).

Earning income from the Vanguard Australian Shares Index ETF

The Australian share market is one of the more generous markets, with a high proportion of companies sharing their profits with investors.

The good news is that there are plenty of dividend payers in the Vanguard Australian Shares Index ETF, which explains why it is a popular option for income investors.

In fact, according to Vanguard, at present the ETF provides investors with a 4.4% dividend yield.

This means it would be possible for investors to generate a monthly income of $300 per month from its units.

The only issue, though, is that it pays its dividends in quarterly instalments. So, investors would have to be disciplined and distribute their dividends evenly each month.

With that in mind, if you wanted to generate $300 of passive income from the Vanguard Australian Shares Index ETF, you would need to receive total dividends of $3,600 a year.

Based on its current yield, investors would need to own approximately $82,000 worth of units. This equates to 937 units at current prices.

The post How to generate $300 of monthly income from the Vanguard Australian Shares Index ETF appeared first on The Motley Fool Australia.

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More reading

• 3 reasons the Vanguard Australian Shares Index ETF (VAS) could be worth buying today
• Here’s how I would secure monthly dividends in the 2024 financial year with these ASX stocks
• Does the Vanguard Australian Shares Index ETF (VAS) hold the ticket to building long-term wealth?
• Top ASX ETFs to buy in March 2023
• Dividend dessert: Which ASX ETFs are the sweetest for a passive income?

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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APA Group (ASX: APA) is an S&P/ASX 200 Index (ASX: XJO) stock that can deliver strong monthly passive income to investors.

APA is an energy infrastructure player that owns very large gas pipelines around Australia. It also owns or has stakes in a number of gas assets, including gas storage and gas-powered energy generation.

The company is also expanding its electricity transmission and renewable energy portfolio. It’s involved in solar panel farms and recently acquired the Basslink – an electricity cable that connects Tasmania with the mainland.

How much dividend income will ASX 200 stock pay?

APA has been steadily growing its dividend payments each year for more than a decade and a half. It has funded these increases with growing cash flow from its asset portfolio.

In FY23, the company expects to pay a full-year distribution of 55 cents per security, which would represent an increase of 3.8% compared to FY22.

Receiving $400 per month would equate to $4,800 per year. Keep in mind that APA doesn’t pay every month, it’s just that investors need to translate that annual figure into 12 equal parts.

To gain $4,800 per year, we’d need 8,728 APA shares.

To buy 8,728 APA shares, we’re currently talking about a total cost of around $89,000 after the 6% fall of the APA share price over the last month.

The ASX 200 stock is expected to pay an annual distribution per security of 62 cents in FY25, according to Commsec. With that payment, we’d only need 7,742 APA shares for the passive income target.

What is the yield of APA shares?

Thanks to the ongoing dividend growth and the reduction of the APA share price, the FY23 dividend yield is expected to be 5.4%. That’s solid passive income.

If the distribution does grow to 62 cents per security by FY25, then this would translate into a dividend yield of 6.1%.

This is a stronger yield from the ASX 200 stock than what people can get from savings accounts or term deposits while also offering growth.

APA continues to invest in new pipelines, as well as renewable projects, that could unlock further cash flow for the business. It’s also exploring the possibility of using its pipelines for hydrogen, which could lead to a greener future.

APA share price snapshot

Since the start of 2023, the APA share price has fallen by 3%.

The post $400 in monthly passive income, buy 8,728 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• 2 ASX 200 directors buying up their company shares this week
• 5 things to watch on the ASX 200 on Friday
• What’s with the Qantas share price on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 Apa 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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Looking for a passive income boost? Then these ASX dividend shares could be worth considering.

Here’s why analysts rate them as buys right now:

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

The first ASX dividend share that has been named as a buy is Dalrymple Bay Infrastructure.

It is an infrastructure company that operates the Dalrymple Bay Coal Terminal (DBCT) on a long term agreement.

Morgans is a fan of the company and believes it is well-placed to pay big dividends in the near term. This is thanks to the strong demand for coal and its position as the cheapest export route-to-market for users within the Bowen Basin catchment region. It said:

DBCT offers the cheapest export route-to-market for users within its Bowen Basin catchment region. DBCT is fully contracted from 2023 to 2028. Following the successful outcome to its customer tariff negotiations, DBI should be able to deliver resilient, inflation-linked, and very high margin revenues and has provided distribution guidance that implies c.8% cash yield growing at 3-7% pa.

The broker currently has an add rating and $2.63 price target on its shares.

As for dividends, its analysts are forecasting dividends per share of approximately 21 cents in FY 2023 and 22 cents in FY 2024. Based on the latest Dalrymple Bay Infrastructure share price of $2.63, this will mean very generous yields of 8% and 8.35%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share for investors to consider buying next week is Transurban.

It manages and develops urban toll road networks in Australia and the United States of America. In its portfolio are Citylink, Cross city tunnel, the Eastern Distributor, and AirportlinkM7.

Citi is feeling positive about the company. Its analysts highlight the company’s positive exposure to inflation. The broker commented:

We believe TCLs’ 7.5% FY23 DPS guidance beat was driven by a range of one-off factors, along with improved traffic recovery. While this is positive for near term, longer term estimates remain largely unchanged. However, CPI-linked increases come through with a delay indicating a strong growth path ahead and we forecast c.6% p.a. DPS CAGR from FY23-FY26.

Citi has a buy rating and $16.00 price target on its shares.

In respect to dividends, the broker is forecasting dividends per share of 58 cents in FY 2023 and then 60 cents in FY 2024. Based on the current Transurban share price of $14.17, this will mean yields of 4.1% and 4.2%, respectively.

The post Buy these ASX dividend shares next week: analysts appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 300 shares cracking record highs on Friday
• These are the best ASX dividend shares to own: Morgans
• Why you need defensive ASX shares in your portfolio right now: WAM
• Give yourself a passive income boost with these ASX dividend shares: experts
• Morgans names 2 ASX dividend shares to buy with big yields

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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Sometimes it can be hard to decide which ASX shares to buy. Especially if you’re wanting to make long-term buy and hold investments.

The good news is that exchange traded funds (ETFs) are here to the rescue. These are financial instruments that allow investors to put their money into diverse groups of shares through a single investment.

But which ETFs would be good buy and hold options? Two to consider are listed below:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

It’s hard to look past the BetaShares NASDAQ 100 ETF when you’re talking about buy and hold investing.

That’s because this ETF gives investors easy access to the 100 largest non-financial stocks on the NASDAQ stock exchange.

These are many of the highest quality companies in the world that look likely to dominate the business world long into the future. This includes names such as Alphabet (Google) Amazon, Apple, ASML, Meta (Facebook), Microsoft, Netflix, Starbucks, Nvidia, and Tesla.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

If your focus is more on income, then you might want to consider the Vanguard Australian Shares High Yield ETF.

As you might have guessed from its name, this ETF aims to provide investors with big dividends year in, year out.

Rather than focusing on the dividends that have been and gone, this ETF leverages broker research to identify the ASX shares that are forecast to provide the biggest dividend yields over the next 12 months. It then brings these together into a diverse portfolio designed to offer a higher than average yield.

Among its holdings at present are Rio Tinto Ltd (ASX: RIO), Telstra Corporation Ltd (ASX: TLS), and Westpac Banking Corp (ASX: WBC). Combined with other holdings, they are collectively expected to provide a forward dividend yield of 5.4%.

The post These ETFs could be top options for buy and hold investors appeared first on The Motley Fool Australia.

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More reading

• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• 2 ASX 200 bank shares to buy after the selloff: experts
• Here are the 3 most heavily traded ASX 200 shares on Friday
• ASX 200 bank stocks lift after Credit Suisse share price soars 19%
• How to generate $500 of monthly income from Rio Tinto shares

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Telstra Group. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield 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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Warren Buffett is one of the richest people in the world. He started at a young age and has built a huge amount of wealth by being frugal and investing for the long term in businesses that can compound over many years.

While there is plenty to worry investors about, I think now can prove to be a great time to invest despite the inflation, banking concerns in the United States and Europe, and so on. Share prices don’t fall heavily for no reason – it’s only when there are real concerns that the market goes noticeably backwards.

Indeed, Warren Buffett said one of the world’s often-quoted pieces of advice about investing:

Be fearful when others are greedy, and greedy when others are fearful.

As individual investors, we can’t control what management teams will do in their businesses. However, we can control when we invest and the price we pay. It’s times like this that can open up much-cheaper prices for some of the best investments out there.

Invest like Warren Buffett

Warren Buffett hasn’t precisely told investors what his formula is for investing. But, he has revealed a number of factors that he keeps in mind.

He typically stays within his ‘circle of competence’. What that means is that he only invests in businesses and industries that he understands. I think it keeps things simpler, it makes it easier to understand if things are going well, and it may mean it’s easier to know when to sell.

Buffett also likes to find value, he says it’s best to invest in great businesses at fair prices rather than trying to invest in fair businesses at cheap prices. He also likes those businesses to have a strong economic moat, or a strong competitive advantage. That means they’re more resilient to competitors trying to ‘invade’ and hopefully strong enough to get through times like this unscathed.

When there is widespread fear in the market, it gives investors the chance to buy almost every investment at a cheaper price. As the investment environment recovers, as it always has in the past, share prices can then rise.

How to build a $1 million portfolio starting at 40

Between 1965 to 2022, Warren Buffett’s company Berkshire Hathaway has returned an average of around 20% per year. However, the last five years haven’t been as solid as that because it becomes increasingly difficult to perform strongly as the portfolio becomes bigger.

It wouldn’t be easy for you and me to try to achieve gains like that. So, just achieving a return of 10% per annum could turn out very well for wealth-building at the starting age of 40. Or any age for that matter.

Investing $500 a month, returning an average of 10% per annum, would turn into $590,000 after 25 years – taking the investor to 65 years old.

If we bump that up to investing $1,000 per month, it would become $1.18 million after 25 years if it returned an average of 10% per annum.

That’s not quite the same wealth as Warren Buffett, but it’d achieve an adequate lifestyle for investors.

However, remember that investing in great businesses can still mean volatility. Just look at what has happened to the Wesfarmers Ltd (ASX: WES) share price in recent times.

But, just because a share price moves down in the short term doesn’t mean that the company has turned rubbish. There will likely be market declines over a 25-year period, but those could be the best times to buy.

The post No savings at 40? Use the Warren Buffett method in 2023 to target financial freedom appeared first on The Motley Fool Australia.

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More reading

• How to generate $10,000 of passive income from Fortescue shares
• Which real estate ASX shares should you buy now as interest rates top out?
• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• Buy Macquarie and this high yield ASX dividend share: brokers
• 2 ASX 200 bank shares to buy after the selloff: experts

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 Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Berkshire Hathaway. 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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Fortescue Metals Group Ltd (ASX: FMG) shares are a popular option for income investors.

This is because the mining giant returns a good portion of its earnings to shareholders in the form of dividends each year.

The good news is that another big dividend yield is expected from the miner this year based on its current share price.

So, what would it take to get $10,000 of passive income from Fortescue shares?

Passive income from Fortescue shares

According to a recent note out of Goldman Sachs, its analysts are forecasting a US$1.18 (A$1.76) per share fully franked dividend in FY 2023.

Based on the current Fortescue share price of $21.42, this will mean a yield of 8.2%. This is more than double the Australian share market’s typical average dividend yield.

With that in mind, in order to generate $10,000 of passive income, you would need to buy approximately 5,682 Fortescue shares. This equates to a sizeable investment of almost $122,000.

A word of warning

It is worth noting that this level of income may not last. This is due to Fortescue’s huge decarbonisation spend, which is expected to consume a significant portion of its free cash flow and weigh on its dividends.

For example, Goldman is forecasting dividends of only 62 US cents (A$0.92) per share in FY 2024 and then 40 US cents (A$0.595) per share in FY 2025.

This means that for those two financial years investors would receive paychecks of approximately $5,230 and $3,380, respectively.

It’s partly for this reason that Goldman has a sell rating and $15.50 price target on Fortescue shares. Which, incidentally, suggests that your $122,000 original investment could reduce to just over $88,000.

Lower income and capital losses are not a great mix even if the current yield is attractive.

The post How to generate $10,000 of passive income from Fortescue shares appeared first on The Motley Fool Australia.

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More reading

• Is it time to buy ASX 200 iron ore shares right now?
• Fortescue share price marching higher as green hydrogen plans heat up
• Are Fortescue shares back on the menu amid job cuts?
• Could buying Fortescue shares at under $22 make me rich?
• How can I hope to retire rich when the share market is falling?

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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Many experts are thinking that the Reserve Bank of Australia (RBA) might put a stop to interest rate hikes in the near future.

After ten consecutive months of torture for consumers and businesses alike, a Finder survey earlier this month showed 55% of economists thought the RBA would hold its cash rate next month.

“We are likely nearing the end of this rate rise cycle,” said Mortgage Choice economist Anthony Waldron.

Over the last few days, with banks in the US failing and Credit Suisse Group AG (SWX: CSGN) in Europe looking wobbly, the odds of interest rates topping out have firmed even more.

Naturally, when interest rates stop rising, the real estate market breathes a sigh of relief.

Shaw and Partners portfolio manager James Gerrish recently took a look at three popular real estate sector ASX shares to determine whether he would buy into them.

‘Long and bullish’

Goodman Group (ASX: GMG), as an industrial property group, was a huge COVID-19 beneficiary as e-commerce clients sought warehousing space to fulfil higher demand.

However, the share price has cooled off to the tune of 27.6% since the end of 2021. Goodman Group closed Friday at $18.98.

Gerrish noted in a Market Matters Q&A that the stock has an estimated forward price-to-earnings ratio of 21.2 and dividend yield of 1.4%.

“We remain long and bullish Goodman Group in our flagship growth portfolio, with an initial target ~$22, over 10% higher.”

Shares for commercial property outfit Charter Hall Group (ASX: CHC), after falling 22% over the past year, finished Friday at $11.77.

Ths stock has an estimate of 13.75 PE ratio and 3.1% dividend yield, according to Gerrish.

“We like Charter Hall under $13 as an ‘accumulate into weakness’.”

Dexus Property Group (ASX: DXS) is best known for its office real estate holdings, which suffered during the pandemic as workers worked from home. The share price is down almost 40% from its pre-COVID high.

The end of lockdowns doesn’t seem to have helped either, with the stock plunging more than 25% over the last 12 months.

Dexus shares closed Friday at $7.84.

“We remain long and bullish in the Market Matters active income portfolio with February’s strong report reinforcing this outlook,” said Gerrish.

“Our initial target is ~$9.50, around 10% higher.”

According to Gerrish’s team, Dexus is forecast to hit a PE ratio of 13.1 and pay out a tidy dividend yield of 6.1%.

Gerrish reckons that the RBA is “too positive in its assumptions around the health of the Australian economy” and thus “too hawkish”.

“Rates, in our view, will not reach the height that markets are currently pricing in, so the headwind on valuations from sharply higher yields may ease.”

The post Which real estate ASX shares should you buy now as interest rates top out? appeared first on The Motley Fool Australia.

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More reading

• Analysts say these ultra high quality blue chip ASX 200 shares are buys
• Why now is a golden opportunity to earn passive income from Aussie real estate
• Experts say these fantastic blue chip ASX 200 shares are buys
• Why you need defensive ASX shares in your portfolio right now: WAM
• Boost your portfolio with these blue chip ASX 200 shares in March: experts

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

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If you want to retire rich, you have a few options at your disposal. You can save, you can invest, or you can try and win the lottery.

While the latter would be nice, the odds are stacked firmly against you. So, it would probably be advisable to not bet your whole retirement on winning the Powerball at some point between now and then.

Of the two remaining options, investing has historically provided investors with much stronger returns.

For example, ASX shares have provided investors with an average total return of 9.6% per annum over the last 30 years. This is vastly superior to the average interest rate you would have received from a savings account over the same period.

Retire rich with ASX dividend shares

If I wanted to retire rich, I would focus on making long-term investments in ASX shares that pay dividends.

And while you could cash out your dividends when they are paid, I think it would be better to reinvest them each year in order to take full advantage of compounding.

Moving on. There’s no guarantee that ASX shares will continue to generate 9.6% annual returns over the next 30 years, but we’re going to assume this will be the case and base our calculations on this historical return.

If you were able to invest $20,000 each year into a high-quality group of ASX shares, such as CSL Limited (ASX: CSL) or TechnologyOne Ltd (ASX: TNE), and earned the market return, your portfolio would grow to be worth $1 million at the end of the third decade.

Alternatively, if you don’t have as much capital to invest but have time on your side, you could invest $10,000 per year for 43 years to arrive at the same figure.

Turn your portfolio into a passive income machine

Now we have a million-dollar portfolio, it’s time to start thinking about generating an income.

At present, there are plenty of ASX dividend shares that offer potential yields of 6% or above. This includes Rio Tinto Ltd (ASX: RIO) and Westpac Banking Corp (ASX: WBC) in FY 2024, according to Goldman Sachs.

If this continues to be the case in 30 years (or 43 years) then you could aim to build a balanced income portfolio filled with ASX dividend shares offering 6% yields.

Doing so would result in an annual paycheck of $60,000, with the potential to grow each year thereafter. That’s a good retirement if you ask me!

The post How I’d aim to retire rich enough to live on passive income from my ASX dividend shares appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 bank shares to buy after the selloff: experts
• Analysts say these ultra high quality blue chip ASX 200 shares are buys
• ASX 200 bank stocks lift after Credit Suisse share price soars 19%
• How to generate $500 of monthly income from Rio Tinto shares
• Is it time to buy ASX 200 iron ore shares right now?

Motley Fool contributor James Mickleboro has positions in CSL and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended Technology One 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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There are plenty of ASX 200 dividend shares to choose from on the Australian share market.

To narrow things down, I have picked out two that have been named as buys by brokers recently. Here’s what they are saying about them:

Harvey Norman Holdings Limited (ASX: HVN)

The first ASX 200 dividend share to consider buying is retail giant Harvey Norman.

Its shares have been hammered recently amid concerns over the impact of the cost of living crisis and housing market weakness on its sales.

One broker that believes the selling has been overdone is Goldman Sachs. In fact, the broker highlights that its shares look dirt cheap in comparison to rival JB Hi-Fi Limited (ASX: JBH) when you adjust for its property portfolio. It explained:

[P]roperty valuation of A$3.3 (avg. of book value and 6.0% cap-rate) represents ~70% of market cap. Ex-prop HVN trades at 6.0x FY24 P/E vs JBH at 14.5x, which faces similar consumer softening risk.

Goldman currently has a buy rating and $4.70 price target on the retailer’s shares.

As for dividends, the broker is expecting fully franked dividends per share of 36 cents in FY 2023 and then 30 cents in FY 2024. Based on the current Harvey Norman share price of $3.77, this will mean yields of 9.5% and 8%, respectively.

Macquarie Group Ltd (ASX: MQG)

Another ASX 200 dividend share that could be a buy next week is investment bank Macquarie.

Morgans is a fan of the company and believes it is well-placed to benefit from market volatility. It also sees structural growth opportunities for the bank. It commented:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while it continues to gain market share in Australian mortgages.

The broker has an add rating and $222.80 price target on the company’s shares.

In respect to dividends, Morgans is expecting partially franked dividends of $8.28 per share in FY 2023 and $7.64 per share in FY 2024. Based on the current Macquarie share price of $175.79, this will mean yields of 4.7% and 4.35%, respectively.

The post Buy Macquarie and this high yield ASX dividend share: brokers appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett rakes in $9 billion in annual dividend income. Should I buy ASX dividend shares right now?
• Macquarie share price slides amid banking rout, broker tips 24% upside
• Buy Macquarie and this ASX 200 passive income share: analysts
• 5 things to watch on the ASX 200 on Tuesday
• Experts say these fantastic blue chip ASX 200 shares are buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman and Macquarie 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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It certainly was a tough week for the banking sector. Due to the collapse of Silicon Valley Bank and the almost-collapse of Credit Suisse, investors were selling down ASX 200 bank shares.

While this is disappointing, if you have confidence in the state of the Australian banking sector, then this could be a great opportunity to pick up shares at a decent discount to recent prices.

Which ASX 200 bank shares should you buy?

There are two ASX 200 bank shares that brokers appear to rate higher than most at current prices. The first is ANZ Group Holdings Ltd (ASX: ANZ).

The team at Citi is particularly bullish on the investment opportunity here and have a buy rating and $29.25 price target on ANZ’s shares. Based on the current ANZ share price of $22.81, this suggests potential upside of 28% for investors over the next 12 months.

And with Citi forecasting a $1.66 per share fully franked dividend in FY 2023, this equates to a 7.3% dividend yield.

Why is it bullish?

Citi likes ANZ due to its exposure to institutional lending. It commented:

ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

The broker also highlights that ANZ’s first-quarter update appears to indicate that it is performing ahead of expectations in FY 2023. It adds:

ANZ’s 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings.

Another ASX 200 bank share to buy

The other ASX 200 bank share to buy could be Westpac Banking Corp (ASX: WBC).

Among the most bullish brokers is Goldman Sachs, which has a conviction buy rating and $27.74 price target on the shares of Australia’s oldest bank. Based on the current Westpac share price of $21.24, this implies potential upside of almost 31% for investors.

In addition, Goldman is expecting a $1.47 per share fully franked dividend in FY 2023. This equates to a 6.9% yield.

The broker explained that Westpac is its top pick in the banking sector. It said:

We are Buy-rated (on CL) and continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) despite WBC revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in costs expected over the next two years, iii) the business is still investing effectively in its franchise, and iv) we note the stock is trading at a notable discount to peers, versus the historical average discount of 2%.

The post 2 ASX 200 bank shares to buy after the selloff: experts appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank stocks lift after Credit Suisse share price soars 19%
• ASX 200 bank shares are deep in the red on Thursday. Here’s why
• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• Here’s how to value the Westpac share price
• Here’s why this top broker is tipping 27% upside for ANZ shares

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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