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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a modest gain. The benchmark is currently up slightly to 7,311.3 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are zooming higher:

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura share price is up 6% to 60 cents. This is despite there being no news out of the rare earths developer. However, it is worth noting that Bell Potter has called recent share price weakness following comments out of Tesla an overreaction. It has retained its speculative buy rating and 72 cents price target.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is up 15% to $1.10. This has been driven by the release of the department store operator’s half-year results. It revealed a 24.2% increase in total sales to $1,884.9 million and the doubling of its net profit to $65 million. This allowed Myer to declare interim and special dividends of 4 cents per share each.

Volpara Health Technologies Ltd (ASX: VHT)

The Volpara share price is up almost 4% to 68 cents. Investors have been buying this health technology company’s shares following the release of a business update. Volpara revealed a new contract with Sutter Health for its Risk Pathways product. This represents an additional US$900,000 in Total Contract Value (TCV) over an initial three-year period.

Xero Limited (ASX: XRO)

The Xero share price is up 9% to $85.79. This morning, this cloud accounting platform provider announced a major cost cutting plan. This will involve reducing its workforce by 700-800 roles, which represents upwards of 16.3% of its 4,915 full time equivalent employees. Management expects this to reduce its operating expense to revenue ratio to approximately 75% in FY 2024. This ratio stood at 83.9% in the first half.

The post Why Arafura, Myer, Volpara, and Xero shares are zooming higher appeared first on The Motley Fool Australia.

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More reading

• Are Arafura shares still a buy if Tesla ditches rare earths?
• Why is the Xero share price racing 11% higher today?
• Myer share price rockets 17% on doubled profits and special dividend
• Xero share price on watch amid major cost cutting plans
• Top ASX growth shares to buy in March 2023

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Volpara Health Technologies and Xero. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies and Xero. 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 share market can be both a help and a hindrance when it comes to building wealth. But it’s only ever a hindrance when investors let it be. 

The market is a funny thing. We all love the liquidity that comes from having shares fluctuate in value on a daily basis. But having the quoted prices of our assets changing constantly can also be very unnerving. Particularly in a market crash or similar event.

Market crashes aren’t common. But they do come around sooner or later. And they can have an extremely negative impact on investors’ mindsets. Imagine if you had 80-90% of your net worth invested in the share market during the global financial crisis of 2007-2009. At one point, you would have seen the value of your portfolio decline by more than 50%.

So how can one hope to retire rich if the market falls like that? After all, it took several years for the ASX 200 to recover from the global financial crisis. That’s a lot of years to live off a reduced asset base.

Well, the answer is dividends.

Most investors are familiar with dividend payments. In fact, many would probably think the passive income you can get from a dividend share is one of the best things about investing in the stock market.

But what most investors might not realise is how much dividends contribute to investors’ overall returns here on the ASX.

Dividends are the key to retiring rich – especially in a stock market crash

To illustrate, let’s examine one of ASX’s oldest index funds. The SPDR S&P/ASX 200 Fund (ASX: STW) has been listed on the share market since 2001, As such, it has a very enlightening history we can look back on.

So according to this ETF’s provider, this ASX 200 index fund has returned an average performance of 7.86% per annum since it first listed in 2001, assuming dividends are reinvested.

But of that 7.86%, only 3.19% per annum comes from capital growth. The remaining 4.67% per annum hails from dividend income. That’s not even close to a 50-50 split.

During a market crash, it’s capital returns that get hit hard. But many ASX dividend shares keep their income taps open. During the COVID crash of 2020, the ASX 200 fell by roughly 32.5% top to bottom:

But many ASX dividend shares kept paying dividends.

BHP Group Ltd (ASX: BHP) supported investors with a solid $1.75 in dividends per share. Fortescue Metals Group Limited (ASX: FMG) did the same, paying out one of the larger annual dividend payments in its history at $1.76 per share.

It was a similar story with Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES) and Telstra Group Ltd (ASX: TLS).

During market downturns, the dividend payments from ASX shares can still keep you happily retired. You might not feel rich, with the value of shares fluctuating wildly. But the returns from dividends can certainly help you to stay afloat until the markets can recover.

The post How can I hope to retire rich when the share market is falling? appeared first on The Motley Fool Australia.

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More reading

• Will the Fortescue share price crash in 2023?
• Why is the BHP share price sinking today?
• Here’s how I’d invest $20,000 in ASX 200 shares for a supercharged second income
• 5 things to watch on the ASX 200 on Thursday
• Experts name 2 ASX 200 dividend shares for a passive income boost

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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, Telstra Group, and 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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ASX cannabis stocks provide a valuable service to the many thousands of Australians who benefit from the legal, medicinal benefits of their product.

All told, the cannabis shares have grown, cured, and prepared medicinal marijuana products for more than 250,000 Australians. That’s how many patients have received prescriptions over the past five years, according to data from the Lambert Initiative for Cannabinoid Therapeutics.

In Victoria alone, some 65,000 people currently have medicinal cannabis prescriptions.

And it’s ASX cannabis stocks like Incannex Healthcare Ltd (ASX: IHL), Creso Pharma Ltd (ASX: CPH), and Cann Group Ltd (ASX: CAN) that make it all possible.

But using medicinal cannabis comes with an unexpected legal risk. One that Victoria’s lawmakers are working on rectifying.

Victoria’s road rules up for an overhaul

In what’s likely to be welcome news to shareholders in ASX cannabis stocks, and more welcome still to patients taking medicinal marijuana, Victoria is looking to amend its drug-driving laws to reflect the legality of medicinal cannabis.

As The Guardian reports, the Road Safety Amendment Bill was introduced by newly elected Legalise Cannabis MPs. The bill was said to have support from both major parties. Yesterday, Victoria’s government announced it would take up the issue within the next few months.

As it stands, it’s a crime for a driver to have any trace of THC (the active component in marijuana) in their system. The problem here stems from the fact that THC can often be detected for many weeks after use. This means drivers with a legal prescription can find themselves guilty of drugged driving even if they’re in no way impaired.

Under the Road Safety Amendment, the law would treat medicinal cannabis like other prescription medicines.

Labor MP Harriet Shing is a member of the medicinal cannabis and safe driving working group. She said it was a “significant priority” for the law to distinguish between the presence of THC in a person’s system “and impairment”.

According to Shing (quoted by The Guardian):

This work has been going on for a number of years now. The working group has actually discussed at length the complexities of this matter and the options and opportunities that might be available.

We need … to find a way through all of this so that all drivers are able to be safe on our roads and so that we can provide those medical supports that Victorians need and indeed deserve.

Legalise Cannabis MP Rachel Payne said, “We are hopeful a solution can be found fast, considering the negative impact the law currently has on Victorian patients every day.”

How have these ASX cannabis stocks been tracking?

The ASX cannabis stocks we listed above have all seen big falls in their share prices over the last year.

Over the past 12 months:

• Creso Pharma shares are down 76%
• Cann Group shares are down 31%
• Incannex Healthcare shares are down 70%

The post Buying ASX cannabis stocks? Here’s what the Victorian government is considering right now appeared first on The Motley Fool Australia.

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More reading

• Why did this ASX 300 cannabis share just rocket 12%?

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 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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A hellacious start to the year for lithium prices has failed to shake Macquarie’s conviction in a number of ASX lithium shares.

In the past month alone, the lithium carbonate price has experienced a swift 21% retreat — signifying an equalising in supply and demand. However, the team at Macquarie has published views today that paint a rosy picture ahead for a few companies in the industry.

Lithium forecasts divided

The investment bank is generally bullish on the lithium sector as a whole. Last month, the broker was across 13 companies in the lithium space, with only one failing to be awarded an outperform rating.

In January, Macquarie shared a note that explained what underpins the team’s positive outlook. The crux of it was an expectation for a prolonged shortfall in lithium supply due to development delays and additional capital being required.

In contrast, Matty Zhao of Bank of America recently provided a lithium critique during an interview on CNBC. During the interview, Zhao discussed the potential for electric vehicle (EV) sales to slow this year, putting pressure on lithium.

This year, globally, we are expecting EV growth of 41%. For China, specifically, we expect growth to slow down to 22% from 95% last year. With that, lithium demand we are expecting 20% [growth] globally, mainly driven by the EV demand growth.

At the same time, we are also seeing a lot of supply coming out from lithium mines — we are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.

Big expectations for these ASX lithium shares

Despite other analysts highlighting the potential for lithium surplus, it appears Macquarie’s perspective remains relatively unchanged.

Today, the broker initiated coverage on Piedmont Lithium Inc (ASX: PLL), Sayona Mining Ltd (ASX: SYA), and Leo Lithium Ltd (ASX: LLL) — all with outperform ratings. These three ASX lithium shares have outpaced the S&P/ASX 200 Index (ASX: XJO) so far this year, as shown above.

Furthermore, the broker’s price targets for each are as follows:

• Piedmont Lithium: $2.10 price target, 140% above the current share price
• Sayona Mining: No price target provided, currently trades at 24.8 cents a share
• Leo Lithium: $1.35 price target, 149% above the current share price

Coincidentally, Piedmont shares have entered a trading halt today after being hit with a short-seller report. Activist investment firm Blue Orca Capital has labelled the future profit plans of this ASX lithium share as “fantasy”.

The post Macquarie tips 3 ASX lithium shares to outperform, one with 150% upside appeared first on The Motley Fool Australia.

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More reading

• Piedmont Lithium share price frozen amid short-seller attack
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Sayona Mining share price dips despite first lithium production
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why InvoCare, Pentanet, Sayona Mining, and Weebit Nano shares are storming higher

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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The Fortescue Metals Group Ltd (ASX: FMG) share price has been a positive performer over the last 12 months.

As you can see below, the mining giant’s shares have risen almost 18% over the period.

Has the Fortescue share price peaked?

There are a couple of factors that will have a big say in whether the Fortescue share price rises further on comes crashing back down to earth. These are the price of iron ore and the Fortescue dividend.

The good news is that Goldman Sachs is feeling positive about the iron ore price. Last week, the broker commented:

The GS commodity team recently increased their iron ore price forecasts to US$120/t for 2023 (from US$100/t) with a 3m target of US$150/t (vs. spot at US$125/t) with the expectation that the seaborne market should swing into significant deficit of 43Mt in 1H23 on the back of lower seasonal supply from Australia and Brazil and an expected recovery in Chinese steel volumes.

If this proves accurate, it could potentially lend some support to the Fortescue share price in the near term.

Dividend outlook not so good

Another thing that could help prop up the Fortescue share price in the near term is its dividend. And while it is expected to be cut down meaningfully in FY 2023, it is still likely to provide investors with an above-average yield.

For example, Goldman Sachs is now forecasting a 22% cut to US$1.18 (A$1.79) per share, which equates to a fully franked 8.1% dividend yield.

However, whether income investors will be willing to hold onto its shares beyond the payment of this dividend is a matter for debate.

With Fortescue’s spending on its decarbonisation ambitions expected to jump in FY 2024, its free cash flow will begin to dwindle and put huge pressure on its dividends.

It is for this reason that Goldman expects a further 47.5% cut to 60 US cents (91 Australian cents) per share dividend for that year. Based on the current Fortescue share price, this will mean a more modest 4.1% yield.

It’s been a long time since Fortescue’s shares have traded with that sort of yield, so it is conceivable that its shares will drop to a level that means its yield remains greater than 6%. For that to happen with this forecast dividend, the Fortescue share price would need to be trading at approximately $15.00. This is broadly in line with Goldman’s sell rating and price target of $15.50.

Looking even further ahead, unfortunately, Goldman expects a further dividend cut to 40 US cents (61 Australian cents) per share in FY 2025. So, for its shares to offer a 6% dividend yield, they would need to drop to approximately $10.00.

All in all, this could mean the Fortescue share price remains elevated for the next six months, before starting a significant decline once its final dividend has been paid in September.

The post Will the Fortescue share price crash in 2023? appeared first on The Motley Fool Australia.

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More reading

• Why Fortescue, Lynas, Myer, and New Hope shares are dropping today
• This ASX 200 dividend share failed to be one of the world’s biggest payers in 2022. Could it get worse?
• What’s moving the Fortescue share price this week?
• Here are the top 10 ASX 200 shares today
• Has this ‘completely changed the landscape’ for the future of Fortescue shares?

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 S&P/ASX 200 Index (ASX: XJO) coal shares have suffered a sell-off over the past couple of months.

Since 20 January 2023, the New Hope Corporation Limited (ASX: NHC) share price has dropped by 16% and the Whitehaven Coal Ltd (ASX: WHC) share price has sunk 24%.

The ASX 200 has only fallen by 1.9% over that same period. So these two ASX 200 coal shares have significantly underperformed.

But, it’s worthwhile to keep in mind the meteoric rise of both of these ASX mining shares over the past year. The New Hope share price has gone up by around 100% and the Whitehaven share price has risen by around 80%.

Coal prices have sunk

According to reporting by The Australian, the global benchmark for coal prices has dropped heavily since the last quarter of 2022.

Coal was trading at US$450 per tonne in September. It had dropped by 13% to US$392.82 per tonne on 3 January 2023. But this week, Newcastle Coal futures trading on the ICE exchange had dropped to US$179.25 per tonne.

This means that since September, the coal price has fallen by around 60%.

What’s the reason for this huge decline?

The Australian reported that coal prices have fallen amid a warm European winter which had “cooled down fears held by many investors that the continent faced a potential energy crisis as a result of the Russian invasion of Ukraine”.

This can have a major impact on the monthly profitability of ASX 200 coal shares. I don’t think many investors were expecting coal prices to stay above US$400 per tonne for the long term. But the speed of their rapid decline may have been a surprise.

It costs miners roughly the same to mine its resource each month, so extra revenue for that same tonne of a commodity is mostly extra profit for the business. But, it also means that a lower coal price largely wipes off profitability.

Is the party over for ASX 200 coal shares?

The coal miners’ share prices are still much higher than they were 12 months ago. At the current coal price, both of the coal miners can still make strong profits and pay dividends.

Commsec numbers suggest that the New Hope share price is valued at less than 4x FY23’s estimated earnings with a possible grossed-up dividend yield of 29%.

The analyst estimate also suggests that the Whitehaven share price is valued at less than 3x FY23’s estimated earnings with a grossed-up dividend yield of 13.3%.

However, profit is expected to drop by FY25.

But, a key question for these ASX 200 coal shares could be whether the coal price holds up for a while, or whether it keeps dropping over the rest of 2023. Time will tell.

The post Is the party well and truly over for ASX 200 coal shares? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Is now the time to buy Telstra shares for passive income?
• 3 good reasons I’m avoiding CBA shares at all costs!
• Why is the ASX 200 taking a tumble today?

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 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 Qantas Airways Limited (ASX: QAN) share price hit another 52-week high on Thursday.

The ASX 200 travel share ascended to $6.87 in morning trading, up 1.47% on the previous close.

Meantime, the S&P/ASX 200 Index (ASX: XJO) is flat today at 7,370 points.

Why is the Qantas share price taking off?

The Qantas share price is up 30% over the past six months compared to 6% for the ASX 200.

Qantas shares have been on a tear since mid-2022 when the ASX 200 began to regather from the shock of rising inflation and the commencement of a rising interest rate cycle for the first time since 2010.

But what’s really pushing Qantas shares up is a rapid return to travelling post-pandemic.

Domestic and international travel is rising, and China’s recent decision to relax some travel restrictions adds to the clear blue-sky outlook for the Qantas share price.

Could Qantas shares really hit $10?

According to The Australian today, top broker JPMorgan thinks Qantas shares could rise above $10 for the first time if earnings growth continues.

Analyst Anthony Longo forecasts the Qantas share price to reach $9 within a year. That would represent a 30% rise on today’s new 52-week high. And Longo reckons it could rise to $10 or more from there.

Longo cites a few reasons for his bold predictions. They include the highly successful Qantas loyalty program, Virgin Australia’s impending initial public offering (IPO), a fleet refresh, and increased airfares.

Longo expects Qantas to deliver a $2.5 billion profit before tax in FY23, increasing to $2.8 billion by FY25.

To put this into perspective, Qantas just reported an underlying profit before tax of $1.43 billion for 1H FY23. So, it’s more than halfway towards achieving a full-year profit around the level Longo expects.

This compares to a 1H FY22 loss of $1.3 billion — talk about a rapid turnaround!

Are travellers paying to boost Qantas profits?

Increased domestic airfares almost 30% above those of 2019 are a bone of contention for travellers right now, with the Australian Competition and Consumer Commission stepping in to warn airlines to cut them.

According to abc.net.au, the average domestic ticket price across all fare types was 29% higher in nominal terms (actual prices) in January, or 13% higher in real terms (adjusted for inflation) than in 2019.

The ACCC has also revealed that Qantas is the most complained about airline.

What’s been happening with Qantas stock lately?

The ASX 200 travel stock took a dive on 23 February when the company released its 1H FY23 results.

Despite reporting a $1.43 billion profit and a $500 million share buyback, Qantas was sold off.

As my Fool colleague James reported, this was because the result was slightly below expectations and capex expenditure was rising faster than anticipated.

Also, some investors may have been disappointed with the choice to do a buyback instead of resuming dividends.

However, a dramatic rebound began immediately.

The Qantas share price is now up 13% in the two weeks since the results were released.

The post Qantas share price could surge to $10: JPMorgan appeared first on The Motley Fool Australia.

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More reading

• Qantas share price flying higher despite new labour disruptions
• Qantas share price takes off to new multi-year high on Tuesday
• Own Qantas shares? Here’s how the ASX 200 airline plans to grow
• Boost your portfolio with these blue chip ASX 200 shares in March: experts
• Own Qantas shares? Guess who just joined the race to be the next CEO

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase. 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 Santos Ltd (ASX: STO) share price is up 1% during lunchtime trading.

Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas company closed yesterday trading for $7.32 each. They are currently trading for $7.39 apiece.

The company’s share price is faring better than the benchmark index which is 0.06% in the green at the time of writing.

Today’s gain puts the Santos share price up 4% in 2023 so far.

But according to United Kingdom-based activist environmental, social and governance (ESG) investor Snowcap, investors should be seeing significantly higher returns.

Why is the activist investor worried about growth projects?

As The Australian Financial Review reports, Snowcap has labelled Santos’ growth strategy, launched by CEO Kevin Gallagher in April 2021, as “misguided and reckless”.

The activist investor believes a series of reforms could see Santos increase its value for shareholders by up to 50%.

Snowcap says Santos has “drastically underperformed” its international peers since 2021 by focusing on developing major new oil and gas projects rather than returning capital to shareholders. Snowcap also took aim at the $6 million bonus incentive for Gallagher, which is dependent on successfully rolling out new projects.

According to Snowcap partner Chris Kinnersley (quoted by the AFR):

Mr Gallagher originally led a successful turnaround at Santos based on many of the same principles that we are arguing for today, namely capital discipline. But the company’s aggressive ramp-up in upstream growth spending has undone much of that good work.

The activist investor believes the Santos share price will suffer if the company doesn’t address the risks from the ongoing global energy transition.

“We believe Santos must take urgent action to reduce its upstream capex, increase capital returns, and realign executive incentives,” Snowcap said. “Doing so has the potential to unlock 30% [to] 50% upside in Santos’ share price and materially improve the company’s alignment with the energy transition.”

Snowcap’s admonishment comes just two days after prime minister Anthony Albanese announced the government’s strong support for gas power in that energy transition.

“Gas in particular has a key role to play, as a flexible source of energy – providing peaking power today and continuing to provide firming and back-up power,” he said.

Indeed, judging by the frantic demand to secure domestic gas supplies over the past year in Australia and across the globe, Santos’ growth projects may not look quite so reckless and misguided once they come online and start producing revenue.

Santos share price snapshot

As you can see in the chart below, the Santos share price is down 5% over the past 12 months.

The post Is the Santos share price being stifled by ‘reckless’ growth? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Why is the Santos share price marching higher on Tuesday?
• 2 ASX 200 mining shares to buy in March: analysts
• 5 things to watch on the ASX 200 on Monday
• ‘Result was incredible’: 3 ASX 200 shares Jun Bei Liu would buy now

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 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 team at Morgans has been busy picking out its best ASX share ideas for March.

These are the shares that its analysts think offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

The first three shares we looked at can be found here. Read on for the next three:

CSL Limited (ASX: CSL)

Morgans is a very big fan of this biotherapeutics giant and has an add rating and $337.92 price target on its shares. It believes CSL is a great COVID exit trade. The broker explained:

A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long term forward multiple of ~30x.

Treasury Wine Estates Ltd (ASX: TWE)

Another ASX 200 share that Morgans is bullish on is Treasury Wines. It has an add rating and $15.05 price target on the wine giant’s shares. The broker is forecasting strong earnings growth over the coming years. It said:

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The foundations are now in place for TWE to deliver strong earnings growth from the 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Westpac Banking Corp (ASX: WBC)

Finally, Morgans has an add rating and $25.80 price target on Westpac’s shares. It is feeling very positive on the bank’s potential to improve its key return on equity metric. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

The post Morgans names 3 more of the best ASX shares to buy in March appeared first on The Motley Fool Australia.

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More reading

• Why is the CSL share price on the slide today?
• Forget high interest savings accounts and buy these ASX 200 dividend shares with huge yields: analysts
• Here’s how I’d invest $20,000 in ASX 200 shares for a supercharged second income
• Top ASX growth shares to buy in March 2023
• Should I buy CSL shares while they’re under $300?

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 Treasury Wine Estates 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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It’s been a bumpy day for the S&P/ASX 200 Index (ASX: XJO) so far this Thursday. After opening sharply lower this morning, the ASX 200 rebounded into positive territory but has since slipped back into the red, currently down by 0.02%. But let’s talk about the South32 Ltd (ASX: S32) share price.

This ASX 200 resources share is getting hammered today. South32 closed at $4.53 a share yesterday, but opened at $4.50 a share this morning and is trading at $4.46 at the time of writing, down a seemingly nasty 1.55%.

So what’s going on with South32 shares today that would explain this pointed market underperformance?

Well, this loss is due to what is a pretty good reason to have your shares fall in value. South32 has just traded ex-dividend for its next shareholder payment.

South32 share price slides after trading ex-dividend

When an ASX share declares a dividend payment, it must also nominate an ex-dividend date. This forms a wall between shareholders, cutting off new investors from receiving this dividend.

Put simply, anyone who owned South32 shares as of yesterday’s close is eligible to receive South32’s next dividend payment. Anyone who buys South32 shares from today onwards, taking advantage of this lower share price, is not eligible. 

This is why we typically see a fall in a company’s share price when a company trades ex-dividend – it reflects this inherent loss of value.

So in South32’s case, this mining giant announced a 4.9 US cents per share interim dividend last month when South32 revealed its latest half-yearly earnings report. As we covered at the time, these earnings saw the company report an 8% drop in revenues, as well as a 34% slump in profits after tax and a 33% fall in earnings per share (EPS).  

As a consequence, South32’s interim dividend of 4.9 US cents, fully franked, is a 43.8% drop from the interim dividend of 8.7 US cents that we saw get paid out last year.

Still, investors can look forward to receiving this dividend payment on 6 April next month. But we’ll only find out on 16 March what the exact amount that investors will be receiving is in Australian dollar terms. On today’s exchange rates, South32’s dividend would be worth approximately 7.4 cents per share.

The company now has a dividend yield of 6.49% at the current South32 share price.

Despite the red numbers in South32’s latest earnings, the company’s shares are still up a healthy 12.7% in 2023 year to date: 

The post Here’s why the South32 share price is being hammered today appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Is now the time to buy Telstra shares for passive income?
• Last chance to snag the next dividend from these 4 ASX 200 mining shares
• 3 good reasons I’m avoiding CBA shares at all costs!

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

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