Tag: Motley Fool

I have to say, the events of the last 8 or so days weren’t exactly on my bingo card for March 2023…

Trouble for a bunch of bankers

Three US bank failures last Friday, followed by Credit Suisse on life support by yesterday, and news overnight that another $50 billion was being guaranteed for yet another US bank, this time First Republic.

(Now, a quick plug: this afternoon, around 4.30pm AEDT, the latest episode of our podcast, Motley Fool Money, comes out. We dedicate the whole episode to the collapse of Silicon Valley Bank, but in the context of the overall system. And not in a boring way! So, if you’re keen, make sure you subscribe, now, so the episode drops straight into your feed when it’s available!)

But I want to take a slightly different angle, which is to call for much more, and better, regulation for our nation’s (and the world’s!) banks. It is clear that the regulators – correctly – have decided that they need to backstop a potential bank run at almost any bank, given the catastrophic contagion that would follow, plunging the world into what would likely be a deep and long recession.

I have sympathy for the ‘moral hazard’ argument, but we’re looking for ‘least worst’ outcomes here, societally-speaking, and that means ensuring confidence in the financial system.

Which means?

Which means if you’re essentially going to make the government (and the taxpayer) the last line of defence for almost every bank, you’re morally obliged to make sure that defence is very, very rarely needed.

You don’t have to be Einstein to know that if there were 5 banks – this week alone! – needing support, the regulations aren’t working.

Here’s a quick list of what I’d change:

– Back in 1933 the ‘Glass Steagall’ act in the US separated ‘commercial’ banking (the borrowing and lending stuff) from ‘investment’ banking. It was repealed in 1999. It should be re-enacted. And the same distinction should be enacted/retained in all other countries.

– If banks are ‘systemically too big to fail’ – and they are – their activities should be both curtailed and overseen more significantly. These should be ultra-low-risk entities, whose balance sheets should reflect that fact, and whose regulators should ensure that basic risk management processes are in place and functioning properly. And yes, it’d mean lower returns for shareholders. But that’s better than being wiped out… just as SVB shareholders.

– We learned during the GFC that banks were taking silly positions with ‘derivatives’ – essentially making complex financial bets that, as we know, went very, very badly. Banks’ derivatives contracts should be limited to managing the inherent risks of commercial banking – ensuring their lending and borrowing is matched off. If you want to do more than that, give up your banking licence and become a hedge fund.

– And the last one is one that I don’t want to be true. But I can’t escape it. It’s time to break up the largest banks. Globally, but here in Australia, too. Competition itself would be improved, but that’s not why (in this case) I think it should happen. We know that no bank can be truly ring-fenced in an inherently interconnected financial world. But the exposure of – and cost of fixing – a bank failure would be meaningfully reduced if the entities themselves were smaller. They’d also be infinitely easier to manage and oversee.

The vested interests will hate every single one of those ideas. Which is a sign that I’m on the right track.

The idealists will hate it because they don’t think that’s how the world should work. But it does.

We live in a world of picking ‘least worst’ outcomes, in terms of the impact on the economy and our society. I think my suggestions go part of the way to delivering that.

A tough call for the RBA

What does the RBA do now? Until this week, it had to balance inflation and economic growth on either end of the seesaw. But this week has changed the game. Increasing rates to bring down inflation has also worsened the pressure on potential bank collapses. So now the international calculus is ‘inflation versus bank collapses’.

How hard can the world’s central banks afford to go to curb inflation, when they risk damaging (freezing up?) the financial system?

And on the other hand, unemployment fell again this week, suggesting the economy is still very strong.

They find themselves in a very tough spot.

Everyone has a view, but the consequences of getting this wrong will be significant.

The other C word

The word of the week, this week, has been Confidence. It’s essential for the functioning of the financial system, and it’s what regulators have been working overtime to retain and restore.

But I hope all this news has also prompted many people to think about another C-word: Concentration.

How many Australians have 20%, 40% or 60% of their portfolios in the Big 4 banks?

Add in the regionals, and how exposed are some investors to the financial sector, writ-large?

To be clear, I am not expecting any trouble for Australian banks. But then, who expected trouble for US banks at the beginning of last week.

But even without that example, it makes no sense to be over-exposed to any individual sector of the economy, or to have your portfolio so correlated to one specific set of risks.

It is taking an unnecessary risk with your own portfolio.

Maybe use this weekend to ask yourself how diversified your portfolio truly is. And maybe plan to make some changes if the answers are uncomfortable.

Quick takes

Overblown: Growth? Value? The idea that these are discrete categories is silly. And each relies on the other. And then there’s one more factor: price. People usually talk about ‘themes’ to dumb down the market… or because they’re trying to sell something.

Underappreciated: The long term. I’m regularly asked ‘What should investors do now?’. It suggests that we should do something different today, compared to last week or last month. My answer is usually a version of: The same thing investors should always do: buy shares of a business when the price undervalues the company’s long term potential.

Fascinating: The next version of ‘ChatGPT’ – the artificial intelligence program that’s taking the world by storm – was released this week. It apparently made a whole website based on a drawing, and passed, with flying colours, a whole stack of standardised tests. The pace of improvement is astronomical, and it’s going to continue.

Where I’ve been looking: There’s a lot of pressure on bank share prices at the moment. Which, as a sometime-contrarian, means I’ve been looking. ANZ Group Holdings Ltd (ASX: ANZ), with a P/E under 10, could be a bargain, particularly if margins continue to increase. Or not, if they don’t, and mortgage defaults rise meaningfully. But it’s a tempting idea.

Quote: “People calculate too much and think too little.” – Charlie Munger

Fool on!

The post Another day, another bank in trouble appeared first on The Motley Fool Australia.

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More reading

• The CBA share price is on a rollercoaster today. Is Credit Suisse to blame?
• ASX 200 oil stocks are tanking. Is now the time to buy?
• ASX 200 bank shares are deep in the red on Thursday. Here’s why
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week
• Is the Westpac share price a buy below $22?

SVB Financial provides credit and banking services to The Motley Fool. Motley Fool contributor Scott Phillips 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 SVB Financial. The Motley Fool Australia has recommended SVB Financial. 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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Wesfarmers Ltd (ASX: WES) shares typically pay investors a good dividend yield. With that in mind, could it be used as a key way to generate a monthly passive income of $150?

Wesfarmers may not be a household name for many Aussies, but the company does own a number of leading retailers including Bunnings, Kmart, Officeworks, Target and Priceline.

The company summarises its operations as being the following: home improvement and outdoor living, apparel and general merchandise, office supplies, health, beauty and wellbeing, chemicals, energy and fertilisers (WesCEF), and industrial and safety products.

Wesfarmers aims to provide long-term shareholder returns to investors. With that in mind, the company says:

With a focus on generating strong cash flows and maintaining balance sheet strength, the group aims to deliver satisfactory returns to shareholders through improving returns on invested capital. As well as share price appreciation, Wesfarmers seeks to grow dividends over time commensurate with performance in earnings and cash flow. Dependent on upon circumstances, capital management decisions may also be taken from time to time where this activity is in shareholders’ interests.

How to generate $150 of monthly income

Wesfarmers doesn’t pay a dividend every month, so it can’t technically produce ‘monthly income’. But, investors can think of the annual total as an amount that can be split up into 12 equal payments.

For a monthly income of $150, investors would need to receive $1,800 of annual dividends. That’s a fair amount of cash, but achievable.

According to Commsec, Wesfarmers is expected to pay an annual dividend per share of $1.87 in FY23 and $2.20 in FY25.

Using the FY23 payment level, investors would need 963 Wesfarmers shares to get the required level of monthly income. This would come at a cost of around $47,000.

But, if the goal is to receive $1,800 of annual income by 2025, meaning $150 of monthly income, then using the projected FY25 dividend per share of $2.20, investors would only need to buy 819 Wesfarmers shares. This would come at a cost of $40,000.

Of course, I would suggest that diversification is a useful strategy. If $40,000 represents an investor’s portfolio, then I’d suggest adding other (ASX) shares to lower concentration risk. An effective exchange-traded fund (ETF) could provide that diversification.

Foolish takeaway

Wesfarmers is a very effective ASX dividend share in my opinion, I think it’s one of the best choices for dividends out of the large ASX blue-chip shares.

The post Here’s how much I’d need to invest in Wesfarmers shares to generate a $150 monthly income appeared first on The Motley Fool Australia.

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More reading

• Morgans names the best ASX dividend shares to buy now
• How much would I need to invest in ASX income shares to earn $500 a month?
• 2 ASX passive income stocks for the next 10 years and beyond
• Is right now the time to buy Wesfarmers shares for passive income?
• How can I hope to retire rich when the share market is falling?

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Pro Medicus Limited (ASX: PME) shares have been pushing higher this week.

This means that since this time last week, the ASX 200 health imaging technology company’s shares have risen 3.5%.

That’s despite the market selloff and news that insiders have been selling a large number of shares.

Insiders sell $125 million of this ASX 200 stock

Yesterday, Pro Medicus revealed that its co-founders Dr Sam Hupert and Anthony Hall have each sold 1 million shares during the current trading window.

Dr Hupert, who is also the CEO of the ASX 200 healthcare stock, received an average of $62.22 per share. This represents a total consideration of $62.22 million.

Anthony Hall, who is an executive director, received the same price and consideration for his parcel of shares.

The good news is that the two co-founders still have a considerable shareholding leftover. In fact, these sales accounted for less than 4% of their individual holdings.

Furthermore, their remaining shareholdings combined equate to over 50% of Pro Medicus’ shares on issue. Clearly, their interests remain firmly aligned with shareholders.

It is a similar story for the ASX 200 stock’s chairman, Peter Kempen AM, who earlier this week revealed the sale of 50,000 shares. He has been left with 629,082 shares.

Why are they selling?

No explanation was given for the co-founders’ sales. The company merely stated:

The sale, to local institutions, was done at market (0% discount), reflecting strong demand by institutional investors. Dr Hupert and Mr Hall are actively engaged in the company as executives and board members and are committed to its future. They remain the two key stake holders in the company with their combined holding post this recent sale in excess of 50%.

The ASX 200 stock also revealed that “Dr Hupert and Mr Hall re-affirmed that they do not intend to sell any further shares in PME in the foreseeable future.”

Pro Medicus’ chair did explain the reason for his sale. He advised:

The sale was part of a rebalancing of the superannuation fund’s portfolio interests. No further sales by interests associated with Mr. Kempen are contemplated in the foreseeable future.

Should you be concerned?

While insider selling is often something to be concerned about, this doesn’t appear to be the case this time.

Given how large their shareholdings remain and how institutional investors were more than happy to snap up shares at market prices, it could be argued that this is a net positive outcome.

The post Founders sell off $125 million worth of this ASX 200 company’s stock. What’s going on? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• 2 ASX 300 directors who’ve each sold over $3 million of their company shares in a week
• Investing as little as $25 a week could help me retire with $104,000 a year in passive income!
• 2 ASX 200 healthcare shares just upgraded by Citi analysts

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 Pro Medicus. The Motley Fool Australia has positions in and has recommended Pro Medicus. 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Discovery Fund portfolio manager Chris Bainbridge and Mark Devcich name the ASX share they’d back for years, and why PE ratios are not as important as you think.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Chris Bainbridge: Our answer here is we won’t take you literally that the market was going to close, because if the market was going to close, it wouldn’t be great news for the stock. 

So the company that we believe is a great hold for the next four years is Hub24 Ltd (ASX: HUB), but appreciate that if the market truly closed down, it really wouldn’t get business.

MF: I totally know what you mean. The scenario itself would be bad for the company, but if the question wasn’t meant to be taken literally, that would be your pick.

CB: Yeah, absolutely. So what does Hub do? It’s an investment and superannuation platform. What does that actually mean? As everyone’s probably aware, Hub allows its advisors to manage their clients’ interests, whether that’s onboarding a client, buying and selling shares on a platform, or doing back-end reporting, whatever you like.

Hub was 30 cents back in 2015 and $28 today. We still believe it’s a buy for a number of reasons. One, the platform industry is over $1 trillion. Hub only has a 5% market share of that industry, but is actually taking 11% of all gross flows and along with their key competitor, Netwealth Group Ltd (ASX: NWL), we believe that flows will continue to move towards the independent platform providers.

The second tailwind is the right[s] to managed accounts. So advisors, post the Royal Commission, have been [seeking] efficiency from their business, and one of the ways of doing that is utilising managed accounts. Now Hub’s the leading provider of managed accounts and again, it’s another strong tailwind for their business. 

Hub’s revenue is reasonably predictable. They pop an administration fee on, that’s 3,700 advisors who use the platform. People are absolutely key in terms of the process… We look at key management at Hub, whether it’s [chair] Bruce Higgins or [chief executive] Andrew Alcock or financial CO called Jason Entwistle, they all have long tenure and they all have, certainly, skin in the game — so gives you confidence. That’s what we like to see.

Finally, it’s just the earnings they’ve reached. Hub was moving $4.4 million in 2015 and in the most recent half, the platform business for Hub made over $80 million of annualised EBITDA and still growing strongly, so it’s trading sub-20 times FY24, growing over 20%. Highly sticky recurring revenues and there’s upsides from transitions, so we believe that Hub will continue to take share and continue to compound.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

Mark Devcich: I guess the biggest missed opportunity is probably not starting Discovery 10 years ago! 

There has been this massive tailwind from equity for the last decade of compressing interest rate, and it has made sense to be fully invested in great stock over that time, and that if I was to probably put the biggest mistake I’ve made is not adhering to that kind of positioning and thinking about timing markets in the short term, which is very difficult to do.

MF: Anything regrets for you, Chris?

CB: The biggest mistake probably that I’ve made is not buying Premier Investments Limited (ASX: PMV) at 50 cents because the P/E multiple was too high.

[Editor’s note: Premier shares are trading around $26 now.]

There were definitely no issues with the company at the time, ticked a lot of the boxes we had, founder-led management team, high market leader, high growth in international markets, operating leverage, and we purely got hung up on the multiple. I guess we have learned that lesson. 

A lot of people in the past have pointed out companies like Hub are expensive, but obviously you can see they’ve continued to compound for good reason. So just about being able to take a bit of a longer-term view rather than getting hung up on a one-year of good P/E.

The post The one ASX share we’re holding onto for dear life: experts appeared first on The Motley Fool Australia.

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More reading

• How I’d aim to replace an entire salary with passive income from ASX dividend shares
• For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock
• We still hold this ASX 8-bagger because there’s more to come: QVG
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season
• Wake up! Buy 5 ASX shares that are reporting season gems: Morgans

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 Hub24 and Netwealth Group. The Motley Fool Australia has positions in and has recommended Hub24 and Netwealth Group. 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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When it comes to dividends, Rio Tinto Ltd (ASX: RIO) shares are a popular option for investors.

And it isn’t hard to see why.

Every year, the mining giant shares a decent portion of its earnings with shareholders in the form of dividends. This has led to tens of billions of dollars being returned shareholders in recent years.

The good news for investors is that Goldman Sachs is forecasting some big dividend payments in the years to come.

It expects fully franked dividends per share of US$4.23 (A$6.35) in FY 2023 and then US$5.46 (A$8.20) in FY 2024. Based on the latest Rio Tinto share price of $114.73, this will mean yields of 5.5% and 7.15%, respectively.

In light of the above, investors may be wondering what it would take to generate monthly passive income of $500 from Rio Tinto’s shares. Let’s take a look.

How to make $500 of monthly income from Rio Tinto shares

Firstly, like most ASX shares, Rio Tinto shares don’t pay monthly dividends to shareholders.

Instead, the miner pays an interim dividend in September and a final dividend in April. So, investors are going to have to be disciplined and take their bi-annual dividends and redistribute them into monthly instalments.

Let’s get started. $500 of monthly income is the equivalent of $6,000 per year.

Based on Goldman Sachs’ estimates above, in order to generate $6,000 in dividends, you would need to own approximately 945 Rio Tinto shares. This is the equivalent of an investment of $108,420.

What about future income?

The good news is that if Goldman is on the money with its estimates, your pay check would rise to approximately $646 per month or $7750 per year in FY 2024 thanks to a dividend increase.

Another positive is that the broker believes that Rio Tinto shares are undervalued at the current level. It has a buy rating and $131.70 price target on them.

If it were to rise to that level, your 945 shares would have a market value of almost $125,000. That’s over $16,000 greater than your original investment.

All in all, this mining giant could be a top option for income investors to consider thanks to the combination of big dividends and bigger potential capital gains.

The post How to generate $500 of monthly income from Rio Tinto 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?
• Why is the Rio Tinto share price diving 5% on Thursday?
• Brokers name 2 high yield ASX 200 dividend shares to buy now
• Rio Tinto share price dips despite copper mega-mine milestone
• Top brokers name 3 ASX shares to buy next week

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 fortunes of ASX shares of iron ore producers very much correlate to the prospects for the global economy.

Although western economies are looking pretty sick (or at least uncertain) at the moment, China’s post-COVID reopening since late last year has many experts thinking demand could soar for iron ore.

One keen-eyed investor noted that last week the Chinese Communist Party set, by its historical standards, a modest 5% economic growth target for this year.

He, therefore, wondered whether iron ore miners are still attractive to buy at the moment.

Shaw and Partners portfolio manager James Gerrish set out to answer this conundrum:

Not hitting the panic button yet

The short answer is that Gerrish’s team would still buy into iron ore producers.

“The economic news flow hasn’t been kind over the last week, but we aren’t hitting the panic buttons yet!” Gerrish said in a Market Matters Q&A.

However, he would look to buy them at the best short-term price.

“We still like iron ore miners into dips,” he said.

“BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO), for example, are still trading well above last week’s low even after trading ex-dividend 90c and $3.26 fully franked.”

The wild volatility in the current market should not detract from the long-term bullishness, he added.

Since Gerrish made those comments, BHP, Rio Tinto and Fortescue Metals Group Limited (ASX: FMG) shares have all fallen, to perhaps open up a buying opportunity.

Goldman Sachs is rating Rio Tinto shares as a buy, predicting a juicy 5.35% and 6.9% dividend yield in each of the coming two financial years.

“Goldman Sachs has a buy rating and price target of $131.70 on the miner’s shares,” reported The Motley Fool’s James Mickleboro.

“This is due to their ‘compelling valuation’ and the company’s ‘return to production growth in 2023.’”

The Rio Tinto share price is up 7.6% over the past 12 months.

BHP, which is 3.3% lower than where it was a year ago, is currently rated as a buy by just seven out of 25 analysts surveyed on CMC Markets.

But that’s not as bad as Fortescue, which is currently recommended as a sell by 13 out of 17 analysts.

The Fortescue share price is now actually 21% higher than it was a year ago.

The post Is it time to buy ASX 200 iron ore shares right now? appeared first on The Motley Fool Australia.

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More reading

• Why Bendigo and Adelaide Bank, BHP, IPH, and Woodside shares are dropping
• Why is the BHP share price tumbling 4% today?
• Why is the Rio Tinto share price diving 5% on Thursday?
• Brokers name 2 high yield ASX 200 dividend shares to buy now
• Fortescue share price marching higher as green hydrogen plans heat up

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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The good news for income investors is that there are a large number of quality ASX dividend shares to choose from on the Australian share market.

Two that have been tipped as best buys by analysts at Morgans are listed below. Here’s what the broker is saying about them:

GQG Partners Inc (ASX: GQG)

Morgans believes this fund manager’s shares could be great value right now. And with the potential yield on offer with its shares looking very attractive, it appears to see it as a dividend share to buy. It has an add rating and $1.93 price target. The broker commented:

GQG’s strong relative investment outperformance through the current market weakness should solidify the near-term flows outflow. GQG has diversified earnings (by strategy and clients); solid performance track-record; and ongoing growth prospects. In our view, the current ~12x PE (versus a sector med-term average of ~16x) is attractive.

As for dividends, Morgans is expecting dividends per share of 11.3 cents in FY 2023 and then 12.5 cents in FY 2024. Based on the current GQG share price of $1.40, this will mean 8.1% and 8.9% yields, respectively.

Wesfarmers Ltd (ASX: WES)

The broker is also a fan of this conglomerate and sees it as one of the best ASX dividend shares to buy now. Morgans is positive on the Bunnings owner due to the quality of its retail portfolio and its highly regarded leadership team. Its analysts also believe Wesfarmers is well-placed in the current environment due to its value-offering. In light of this, the broker has put an add rating and $55.50 price target on its shares. It explained:

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

In respect to dividends, its analysts are forecasting fully franked dividends per share of $1.79 in FY 2023 and $1.91 in FY 2024. Based on the latest Wesfarmers share price of $48.83, this will mean yields of 3.7% and 3.9%, respectively.

The post Morgans names the best ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• How much would I need to invest in ASX income shares to earn $500 a month?
• 2 ASX passive income stocks for the next 10 years and beyond
• Is right now the time to buy Wesfarmers shares for passive income?
• How can I hope to retire rich when the share market is falling?
• Experts name 2 ASX 200 dividend shares for a passive income boost

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

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Warren Buffett.

Just drop that name around any group of ASX dividend investors and you’re likely to get their attention.

And for good reason.

As the long-running CEO of multinational conglomerate Berkshire Hathaway, Warren Buffett has delivered returns that most fund managers can only dream of.

The Oracle of Omaha isn’t shy about revealing the secrets to his investing success, either.

His many decades of success stem from what, at least on the surface, appear to be some very simple investing rules.

Among those, Warren Buffett looks for high-quality companies with great management and brands. Companies that have the ability to control prices and that are fairly valued or, better yet, trading at a bargain.

Importantly, he has a very long-term investment horizon, ignoring the ups and downs along the way.

While some of the outsized gains he’s reaped come from capital appreciation, a large portion stems from dividends.

In fact, it’s reported that Buffett will rake in some US$6 billion (approximately AU$9 billion) in dividend income this year.

If it works for Warren Buffett, should I buy ASX dividend shares right now?

ASX dividend shares offer an excellent path towards garnering a reliable passive income stream. And the Aussie market is rather unique in that it offers franking credits, which can offer some handy tax benefits at the end of the financial year.

Now I don’t reckon you or I will ratchet up $9 billion in annual payouts like Warren Buffett. Though one can dream!

But there are a large number of high-quality ASX dividend shares to choose from to begin building that passive income.

Retail giant Harvey Norman Holdings Ltd (ASX: HVN), for example, has paid out a total of 30.5 cents in fully franked dividends over the past 12 months.

At the current share price of $3.76, that works out to a trailing yield of 8.1%.

If you’d like to receive the company’s interim dividend of 13 cents per share, you’ll need to own the stock at the close on 31 March, when Harvey Norman trades ex-dividend.

Another ASX dividend share investors may want to run their slide rules over to build a passive income stream like Warren Buffett’s is Domino’s Pizza Enterprises Ltd (ASX: DMP).

The global pizza chain has struggled lately in the face of higher inflation and a return to dining out over home delivery during the pandemic times.

Still, Domino’s declared a partially franked interim dividend of 67.4 cents per share atop the earlier 68.1 cent per share final dividend. At the current share price, the stock offers a trailing yield of 3%, franked at just over 60%.

The post Warren Buffett rakes in $9 billion in annual dividend income. Should I buy ASX dividend shares right now? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX growth stocks down 40%-65% to buy now and hold
• These 3 ASX shares just halved. I would buy one of them: experts
• Why did the Domino’s share price just hit a multi-year low?
• These 3 ASX 300 shares are dividend dynamos!
• Gerry Harvey just bought $8 million worth of Harvey Norman shares. Should you buy?

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 Berkshire Hathaway, Domino’s Pizza Enterprises, and Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended Berkshire Hathaway and 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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) tumbled deep into the red. The benchmark index fell 1.45% to 6,965.5 points.

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

ASX 200 expected to rebound

The Australian share market looks set to end the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open 15 points or 0.2% higher this morning. In late trade in the United States, the Dow Jones is up 1%, the S&P 500 is up 1.6%, and the NASDAQ index is up 2.3%.

Oil prices recover

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a decent finish to the week after oil prices snapped their losing streak overnight. According to Bloomberg, the WTI crude oil price is up 0.95% to US$68.26 a barrel and the Brent crude oil price is up 1.3% to US$74.61 a barrel. This follows news that Saudi Arabia and Russia met to discuss ways to improve market stability.

Buy Lifestyle Communities shares

The Lifestyle Communities Ltd (ASX: LIC) share price could be great value according to analysts at Goldman Sachs. This morning, the broker reiterated its buy rating with an improved price target of $27.15. It commented: “We believe this is a highly valuable business model” and “the recent sell off offers a compelling entry level.”

Gold price softens

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a subdued finish to the week after the gold price eased overnight. According to CNBC, the spot gold price is down 0.4% to US$1,923.9 an ounce. Improving investor sentiment put pressure on the safe haven asset.

Dividend payday

A number of ASX 200 shares will be paying their latest dividends on Friday. This includes auto parts retailer Bapcor Ltd (ASX: BAP), fintech company Iress Ltd (ASX: IRE), investment company Pinnacle Investment Management Group Ltd (ASX: PNI), and casino operator SKYCITY Entertainment Group Limited (ASX: SKC).

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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More reading

• What’s with the Qantas share price on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Sayona Mining share price lifts on first saleable lithium production
• ASX 200 trims losses amid employment data and Credit Suisse $80b central bank loan
• ASX 200 oil stocks are tanking. Is now the time to buy?

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 Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Bapcor. 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 Betashares Nasdaq 100 ETF (ASX: NDQ) has performed admirably in the first few months of 2023. It has gone up by around 16%, whereas the S&P/ASX 200 Index (ASX: XJO) is almost flat for the year to date.

The movements of the unit price of the exchange-traded fund (ETF) are interesting considering everything that has been going on.

I think it’s important to keep in mind that when the new year began, the share prices of technology businesses had hit a fairly low point by the end of 2022.

So, some of the fund’s increase may simply have been a recovery of investor sentiment from last year’s low.

And here is an interesting thought regarding the current banking problems in the US and Switzerland. The uncertainty could lead to central banks being less draconian with interest rates, therefore, reducing their impact on asset prices.

A number of tech shares within the Betashares Nasdaq 100 ETF suffered a sell-off amid the rapid surge in interest rates. But, lower-than-expected interest rates could have a positive impact on the share prices of those tech names. That may already be playing out.

Is now a good time to buy the Betashares Nasdaq 100 ETF?

Investors can invest in units of the ETF whenever they like, so there’s no need to fear missing out on ever owning it.

Of course, if we could choose, we’d go for a unit price that’s below $25 rather than the higher price it is today. The fund closed Thursday trading at $28.72 per unit.

But, the underlying businesses like Microsoft, Apple, Alphabet, and Amazon.com have a long-term track record of delivering business growth, which will hopefully translate into unit price growth over time as well.

The Betashares Nasdaq 100 ETF unit price is down 20% from its December 2021 peak, but it’s still up by around 80% over the past five years, showing the growth of the businesses involved.

Don’t forget, there is a wide array of 100 businesses within this ETF — it’s not just a few of the biggest tech businesses in the world. To that end, it offers pretty good diversification.

At the end of February 2023, the ETF had a forward price/earnings (P/E) ratio of 23x. I wouldn’t describe that as cheap.

A number of the biggest businesses in the ETF’s portfolio have made job cuts recently, which may increase ongoing profitability, but it also shows that the management of those companies thought they were necessary moves to boost profit, save cash, or whatever else was a key factor in the decisions.

There could be a better price to come in 2023 but I think at the current level, investors can do well over the long term by investing in this portfolio of quality names.

The post The Betashares Nasdaq 100 ETF has soared 15% so far in 2023. Is it too late to buy? appeared first on The Motley Fool Australia.

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More reading

• 3 excellent ETFs for ASX investors to buy for the long term
• 3 ETFs for investors to buy and hold for a decade
• How I’d aim to replace an entire salary with passive income from ASX dividend shares
• Top ASX ETFs to buy in March 2023
• 3 excellent ETFs for ASX investors to sink their money into this month

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, and Apple. 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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