Tag: Motley Fool

The Piedmont Lithium Inc (ASX: PLL) share price won’t be going anywhere on Thursday.

This morning, the lithium developer requested a trading halt.

Piedmont Lithium share price halted

According to the trading halt request, the company has requested the trading halt so it can respond to a short-seller report from Blue Orca.

In addition, fellow lithium share Atlantic Lithium Ltd (ASX: A11) has also been halted for the same reason.

What is the report claiming?

Blue Orca notes that Piedmont Lithium’s newly announced Tennessee conversion facility is aiming to produce battery grade lithium through a supply deal from a lithium mine in Ghana.

However, while the company claims that this will lead to revenues and profits flowing from Tennessee in 2025, the short seller believes that this “is a fantasy.”

Blue Orca alleges that Atlantic Lithium obtained key Ghana mining licenses by making secret payments and promises of payment to the immediate family of a high-level Ghana politician. This follows an investigation of source documents and Ghana corporate records.

The research firm claims that Atlantic Lithium paid and “promised tens of millions of dollars in potential royalties to a company secretly owned by the son of a leading politician known as General Mosquito.” He previously served in Ghana’s Parliament as Chair of the Mines and Energy Committee.

In light of this, its analysts don’t believe that authorities in Ghana will ultimately ratify Atlantic Lithium’s mining licenses. It commented:

In our opinion, evidence of Atlantic’s payments to the son of a high-level politician for mining licenses is textbook evidence of corruption. Atlantic still needs Ghana’s Parliament to approve and ratify its mining licenses and permits in order to build the lithium mine. Based on precedents in Ghana and around Africa, including a recent decision by Ghana’s highest court, we do not believe that authorities in Ghana (including the Parliament) will ratify Atlantic’s mining licenses tainted by corruption.

Why is it short Piedmont Lithium?

Given that Blue Orca alleges that Atlantic Lithium has been acting corruptly, readers may be wondering why Piedmont Lithium is being shorted. It explained:

We are short Piedmont because without Atlantic’s Ghana supply, Piedmont and any promise of near-term revenue from its much-hyped Tennessee facility are dead on arrival. Without Ghana, industry experts and even a former Piedmont senior executive have confirmed that Piedmont is unlikely to find a source of replacement spodumene.

In addition, the research firm suspects that the company could lose its US$141.7 Million grant from the US Department of Energy, which was announced late last year. It adds:

Additionally, FOIA requests we obtained from the Department of Energy (“DOE”) suggest that the spodumene from Ghana was important to Piedmont’s grant proposal, meaning that the loss of the offtake agreement, and questions surrounding Piedmont’s own potential liability under the FCPA and other anti-corruption statutes, raise doubt about whether Piedmont will ultimately receive the conditional government funding.

The Piedmont Lithium share price is expected to remain in its halt until Monday when the company releases its response to these allegations.

The post Piedmont Lithium share price frozen amid short-seller attack appeared first on The Motley Fool Australia.

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More reading

• 5 ASX lithium shares being added to the All Ordinaries in the latest rebalance
• Why are ASX lithium shares being hammered on Monday?
• Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher

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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A little-known ASX biotech stock is setting the bar high today.

In morning trade on Thursday, the All Ordinaries Index (ASX: XAO) is up a slender 0.1%.

But shares in this biotechnology company rocketed 29% in earlier trade. At the time of writing, shares remain up a heady 24%.

Any guesses?

If you said Prescient Therapeutics Ltd (ASX: PTX), go to the front of the class. If you’re unfamiliar with the stock, Prescient is a clinical stage oncology company developing personalised therapies to treat cancer.

What’s driving investor interest in the ASX biotech stock?

Investors are bidding up the Prescient Therapeutics share price after the ASX biotech stock reported that the US Food and Drug Administration (FDA) has granted Orphan Drug Designation for its PTX-100 targeted therapy compound.

The new designation covers the treatment of T-cell lymphomas (TCL), including cutaneous TCL (CTCL).

In 2022, Prescient Therapeutics separately received Orphan Drug Designation for peripheral TCL (PTCL).

The ASX biotech stock applied for the same designation for CTCL. Investor interest looks to be piqued by the news that the FDA granted a broader designation than Prescient requested, encompassing all TCLs.

Prescient said that collectively, TCLs represent an area of unmet or poorly met patient needs. And the FDA’s Orphan Drug Designation program is designed to provide benefits to incentivise drug development in less common diseases.

Commenting on the FDA approval sending the ASX biotech stock soaring higher today, CEO Steven Yatomi-Clarke said, “Prescient is delighted to be granted this Orphan Drug Designation by the FDA, and is pleasantly surprised for the granting of the designation that is broader than our request.”

Highlighting the benefits of the designations, Yatomi-Clarke added, “This now confers the certainty of seven years of market exclusivity for PTX-100 in a broader range of diseases with unmet or poorly met clinical need. We look forward to sharing updates on the PTX-100 trial shortly.”

Prescient Therapeutics share price snapshot

As you can see in the chart below, with today’s big boost factored in, the ASX biotech stock is down 14% in 2023.

The post Guess which ASX biotech stock just rocketed 29% on big FDA news 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 CSL share price on the slide today?
• Why is the Xero share price racing 11% higher today?
• Myer share price rockets 17% on doubled profits and special dividend
• Why is the Rio Tinto share price tumbling 4% on Thursday?

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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Arafura Rare Earths Ltd (ASX: ARU) shares have come under pressure this month.

This has been driven by concerns over comments out of Tesla, which suggested that the electric vehicle giant may stop using rare earths in its cars.

Should you buy Arafura shares following this weakness?

According to a note out of Bell Potter, its analysts believe that investors should be taking advantage of this weakness.

At the start of the week, the broker upgraded the company’s shares to a speculative buy rating with a 72 cents price target.

Based on the current Arafura share price of 60 cents, this implies potential upside of 20% for investors over the next 12 months.

‘A knee jerk reaction’

Bell Potter believes the Tesla-induced selling has been an overreaction. It commented:

The recent 16% sell-off in ARU in reaction to the Tesla Investor Day presentation was a knee jerk reaction and in our view, was overdone. We maintain our valuation for ARU of $0.72/share and return to a Speculative BUY recommendation.

We view TSLAs’ announcement as risk management to support its current growth in EV sales over the next decade (20m EV sales by 2030) as the decision reduces procurement risks stemming from a lack of secure near term supply ex-China.

The broker also highlights that even if Tesla were to increase its electric vehicle market share from 13% to 40% by 2030 and went without rare earths, there would still be a need to increase supply materially over the coming years. It adds:

We have calculated an alternative to our base case D&S model and assumed TSLA’s ambitious growth target, basically assuming they hold 40% market share (up from 13% currently) by 2030. The result reduced our NdPr demand estimates by 10ktpa, which would still require the addition of 4.3x of Nolans capacity over the next 7 years. Given the scale, grade and advanced nature of the Nolans project we would still view this as a difficult task to achieve thus concluding price support for NdPr should be maintained.

All in all, the broker remains positive on the future of Arafura and its shares.

The post Are Arafura shares still a buy if Tesla ditches rare earths? appeared first on The Motley Fool Australia.

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More reading

• 4 ASX mining shares that have soared over 150% in a year
• Why Ampol, Arafura, GQG, and Retail Food shares are dropping today
• Arafura share price plummets. Broker tips 28% upside
• Why is the Arafura share price storming 7% higher?
• Why did the Arafura share price charge 10% higher on Tuesday?

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 Tesla. 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 CSL Limited (ASX: CSL) share price is dipping in morning trade on Thursday, down 0.9%.

Shares in the S&P/ASX 200 Index biotechnology company closed yesterday trading for $297.10. Shares are currently swapping hands for $294.31.

So why is the CSL share price on the slide today?

CSL share price drops as stock trades without its dividend

CSL reported its half-year results on 14 February (H1 FY23). The CSL share price closed 0.9% higher on the day.

The company saw total revenue for the six months increase 19% to US$7.2 billion.

Net profit after tax (NPAT) went the other way, falling 8% year on year. Profits were hampered by currency headwinds and increased acquisition costs.

Still, NPAT came in at a healthy US$1.6 billion.

This saw the board declare an interim dividend of US$1.07 per share, unfranked.

That’s up 2.9% from the interim dividend paid in the 2022 financial year in US dollar terms.

However, as Aussie investors will receive the payout in Australian dollars, the increase is significantly more. That’s because the greenback has gained on our currency over the past 12 months.

The H1 FY22 interim dividend worked out to $1.42 per share in Aussie dollars.

At the current exchange rate of 65.9 Aussie cents to the US dollar, the current dividend comes out to AU$1.62 per share, up 14%.

That’s likely close to what investors can expect. CSL will use tomorrow’s exchange rate to determine the exact payout.

Which brings us back to why the CSL share price is sliding today.

Most of that looks to be because the biotech stock trades ex-dividend today.

That means anyone buying shares today will no longer be eligible to receive the dividend payout.

Investors who held shares at yesterday’s close can expect that payment to hit their bank accounts on 5 April.

The post Why is the CSL share price on the slide today? appeared first on The Motley Fool Australia.

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More reading

• Should I buy CSL shares while they’re under $300?
• 10 ASX 200 stocks trading ex-dividend tomorrow
• Hoping to collect the latest CSL dividend? Here’s how
• Why is the CSL share price beating the ASX 200 on Friday?
• I would invest $10,000 into these ASX shares in March

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

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The Xero Limited (ASX: XRO) share price is racing higher on Thursday morning.

In early trade, the cloud accounting platform provider’s shares were up 11% to $87.50.

The Xero share price has eased back a touch since then but remains up 8% to $85.18.

Why is the Xero share price racing higher?

Investors have been buying the company’s shares this morning after it announced a program to streamline its operations, realign the business to drive greater operating leverage, and better balance its growth and profitability.

The key to this will be reducing its workforce by 700-800 roles. This represents upwards of 16.3% of its 4,915 full time equivalent employees.

Management expects this action to reduce its operating expense to revenue ratio to approximately 75% in FY 2024.

As a comparison, total operating expenses as a percentage of operating revenue came to 83.9% or NZ$552.2 million during the first half.

At a ratio of 75%, Xero’s operating expenses would have been NZ$493.9 million for the half. This is an improvement of NZ$50 million, which annualises to over NZ$100 million.

Clearly, big cost savings lie ahead if this program is a success. This goes some way to explaining why the Xero share price is having such a strong showing today.

Broker response

The team at Goldman Sachs has responded to the news and appear pleased with management’s plans. It said:

Xero has today announced a 700-800 headcount reduction globally (c. 14-16% of the 4.9k Full-time-employees as at Sep-22), consistent with our view that the business may shift to profitable growth, following a considerable drop in job vacancies. While having a limited impact on FY23 costs (Xero reiterated FY23 opex guidance for lower end of 80-85% of revenue, GSe 81.6%), this is expected to drive a material reduction into FY24, with opex expectations of c.75% of revenue (vs. GSe 79%).

Appears to be focused on efficiency, not on any changes to trading: with the rationale for the cost out to be to: (1) streamline operations; (2) drive greater operating leverage; and (3) achieve a better balance of growth and profitability.

Goldman currently has a conviction buy rating and $109.00 price target on Xero’s shares.

The post Why is the Xero share price racing 11% higher today? appeared first on The Motley Fool Australia.

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More reading

• Xero share price on watch amid major cost cutting plans
• Top ASX growth shares to buy in March 2023
• Analysts say these exciting ASX growth shares are buys this month
• Why are ASX 200 tech stocks like Xero having such a stellar start to the week?
• These are the ASX 200 shares to buy in March: experts

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 Xero. The Motley Fool Australia has positions in and has recommended 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 Myer Holdings Ltd (ASX: MYR) share price is shooting higher on Thursday morning.

At the time of writing, the department store operator’s shares are up 17% to a 52-week high of $1.12.

This follows the release of the company’s half-year results.

Myer share price jumps after profits double

• Total sales up 24.2% over the prior corresponding period to $1,884.9 million
• Gross profit up 17.4% to $683.2 million
• Cost of doing business (CODB) reduced to 23.5% of total sales
• Net profit after tax increased 101.4% to $65 million
• Fully franked interim dividend of 4 cents per share
• Special dividend of 4 cents per share

What happened during the half?

For the six months ended 28 January, Myer reported a 24.2% increase in total sales to $1,884.9 million. This reflects strong in-store sales growth, which offset a pullback in online sales.

And while Myer’s gross profit margin softened due to the unfavourable impact of higher shrinkage and foreign exchange movements, its CODB improved meaningfully and supported strong net profit growth.

Myer reported a 101.4% increase in net profit after tax to $65 million. This led to its cash balance lifting by $50 million to $267 million and allowed the Myer board to reward shareholders with both an interim dividend and special dividend of 4 cents per share each.

Management commentary

Myer’s CEO, John King, was rightfully pleased with the strong result. He said:

We are very pleased with the strength and quality of our first half results, with a best-on-record first half sales performance, significantly improved profitability and a balance sheet that continues to provide a strong foundation for future growth. The result reaffirms our view that the Customer First Plan is the right strategy, which continues to deliver strong outcomes for our business and shareholders.

Our omni-channel offer is strong, we continue to invest in MYER one, one of the country’s most effective retail loyalty programs and have also demonstrated our ability to capitalise on customers returning to stores and CBD locations through a targeted program of store space optimisation, a stronger merchandise offer, key refurbishments and improved customer service.

Commenting on the dividends and current trading, King added:

Our ordinary fully franked dividend and additional special dividend demonstrates the confidence in the momentum being built as we move through FY23, with Department store sales growth in the eight weeks post Christmas up 16.1% over the corresponding period in the prior year; continuing to deliver sales momentum despite tightening economic conditions.

The post Myer share price rockets 17% on doubled profits and special dividend appeared first on The Motley Fool Australia.

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More reading

• Why Fortescue, Lynas, Myer, and New Hope shares are dropping today
• 2 ASX shares to buy that have ‘strong momentum’: expert

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 Rio Tinto Ltd (ASX: RIO) share price is having a tough time on Thursday morning.

At the time of writing, the mining giant’s shares are down 4% to $120.00.

Why is the Rio Tinto share price falling?

The reason that Rio Tinto’s shares are falling on Thursday is that they are one of ten ASX 200 shares going ex-dividend this morning.

When a share trades ex-dividend, it means that the rights to an upcoming dividend payment are now settled and new buyers won’t be entitled to receive this payout.

As you would expect, investors aren’t willing to pay for a dividend they won’t receive, so a company’s share price will invariably drop to reflect this.

This has been the case with the Rio Tinto share price today.

Rio Tinto dividend

Last month, Rio Tinto released its full-year results and reported a 13% decline in revenue to US$55,554 million and a 41% reduction in net profit after tax to US$12,420 million.

Management advised that this profit decline reflects weaker commodity prices, the impact of higher energy and raw materials prices on its operations, and higher rates of inflation on operating costs and closure liabilities. Something which we have seen across most miners with iron ore exposure.

In light of its softer profits, the Rio Tinto board was forced to cut its fully franked final dividend. It reduced it by 46% over the prior corresponding period to US$2.25 or A$3.265 per share.

Today, the miner’s shares have traded ex-dividend for this, which means that it won’t be too long until eligible shareholders receive this dividend. Rio Tinto is planning to pay this dividend next month on 20 April.

The post Why is the Rio Tinto share price tumbling 4% on Thursday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Last chance to snag the next dividend from these 4 ASX 200 mining shares
• 10 ASX 200 stocks trading ex-dividend tomorrow
• It’s time to buy Rio Tinto shares: Goldman Sachs
• Hoping to pocket the next Rio Tinto dividend? Read this

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 BHP Group Ltd (ASX: BHP) share price is taking a tumble on Thursday morning.

In early trade, the mining giant’s shares are down almost 3% to $46.37.

Why is the BHP share price sinking?

Thankfully, the BHP share price isn’t tumbling today because of significant iron ore price weakness or the release of a disappointing update.

Today’s decline could actually be considered a positive for shareholders. That’s because the Big Australian’s shares are falling after trading ex-dividend for its next dividend payment, which means payday is just around the corner.

What does ex-dividend mean?

When a company’s shares trade ex-dividend, it means that any new shareholders from that day on will not be entitled to receive the upcoming payment.

Instead, the rights to that dividend payment will remain with shareholders who held the shares at the market close the day before the ex-dividend date (yesterday). That’s even if they sell the shares between now and the payment date.

As a result of this, the BHP share price has declined to reflect this. After all, if you were buying its shares, you wouldn’t want to pay for something that you’re not going to receive.

The BHP dividend

Last month, when BHP released its half-year results, the mining giant reported underlying EBITDA of US$13,230 million. This was down 28% on the prior corresponding period due to weaker iron ore prices and cost pressures.

Understandably, this led to the BHP board cutting its fully franked interim dividend by 40% to 90 US cents per share (A$1.306 per share). This represents a total return of US$4.6 billion and is the equivalent to a 69% payout ratio.

Eligible shareholders won’t have to wait long to receive this dividend. It is scheduled to be paid towards the end of the month on 30 March.

The post Why is the BHP share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Last chance to snag the next dividend from these 4 ASX 200 mining shares
• 10 ASX 200 stocks trading ex-dividend tomorrow
• Hoping to collect the latest CSL dividend? Here’s how
• Keen to bag the latest BHP dividend? You’ll need to be quick

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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There are some S&P/ASX 200 Index (ASX: XJO) tech shares that I believe could make great investments if they were a bit cheaper.

It has been a strange last 18 months or so. While plenty of ASX 200 tech shares were among the best performers during the COVID-19 pandemic, a number of tech names suffered a sell-off in 2022.

However, pleasingly for shareholders, some of the strongest players in the tech space have gone through a recovery.

I think that both of the below names, global leaders at what they do, would make very attractive investments, particularly if they were 20% cheaper.

Altium Limited (ASX: ALU)

Altium is a leader at providing electronic PCB design software around the world.

The ASX 200 tech share has done well over the past year, rising by around 25%.

I think that the company is doing everything right to succeed. Altium is spending on marketing and software development on existing products, while its newer offerings are showing very promising signs of growth, including the online cloud platform called Altium 365. Electrical parts search engine Octopart has also grown substantially over the past few years.

The FY23 half-year result showed growth in all the right areas. Revenue rose 17% to US$119.5 million and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved from 34.1% to 36.2%. This helped earnings per share (EPS) rise 29% to 22.53 US cents and the interim dividend was boosted by 19% to 25 Australian cents.

In FY23, the ASX 200 tech share is expecting to grow revenue by between 15% to 20%, with the cloud platform segment expecting revenue growth of between 20% to 30%.

Over the next few years, Altium is expecting to approximately double its revenue, while increasing profit margins.

However, while I am a shareholder and very optimistic about its future, its valuation reflects a lot of the potential. According to Commsec, it’s valued at 62 times FY23’s estimated earnings. So, it would be even better to buy shares if it were 20% cheaper.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne describes itself as Australia’s largest enterprise software company, with locations globally.

It provides a global software as a service (SaaS) enterprise resource planning (ERP) solution that “transforms business and makes life simple” for customers. The ASX 200 tech share has over 1,200 leading corporations, government agencies, local councils and universities,

I think that TechnologyOne’s earnings could be really defensive, even in a downturn. Businesses, governments and so on still need to use software, even if the GDP or the share market goes backwards.

The world continues to digitise, which I think is a strong tailwind for a business that is helping enable that. Saving organisations’ time, enabling more efficiencies and providing accessibility is valuable, so it doesn’t surprise me that TechnologyOne has such a high retention rate and customers want more of TechnologyOne’s software over time.

In the half-year result for the six months to September 2022, total revenue rose 18% to $369.4 million and net profit after tax (NPAT) grew by 22% to $88.8 million.

The company’s profit before tax margin was 32% and this is expected to rise to 35% in the coming years thanks to “significant economies of scale”.

The ASX 200 tech share is valued at 53 times FY23’s estimated earnings according to Commsec, so being able to own shares at a 20% discount to today’s price would be welcome.

The post The ASX 200 tech shares I’d be thrilled to buy at a 20% discount appeared first on The Motley Fool Australia.

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More reading

• Buy and hold these ASX 200 shares: brokers
• 5 high-profile ASX 200 shares that will trade ex-dividend on Monday
• Buy these 3 ASX growth shares this month: experts
• Up 45% in a year! But this boom ASX 200 tech share is still a buy: expert
• 7 ASX 200 growth shares to buy for possible takeovers: expert

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has recommended Technology One. 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) bank share ANZ Group Holdings Ltd (ASX: ANZ) is predicted to pay a very large dividend yield in FY23 and beyond. Investors could use ANZ shares to generate a pleasing amount of monthly dividend income.

ASX 200 banks typically trade with a low price/earnings (P/E) ratio. That means they trade on a low multiple of their earnings. The lower the P/E ratio, the higher the dividend yield if the business has the same dividend payout ratio.

ANZ usually pays a dividend every six months, so shareholders don’t actually receive a payment each month. But, if investors think of the dividend as an annual amount, they can divide that into 12 equal parts.

Dividend estimate

According to Commsec, ANZ shares are expected to pay an annual dividend per share of $1.60.

At the current ANZ share price, this translates into a grossed-up dividend yield of 9.4%.

There aren’t too many businesses on the ASX that are expected to pay a dividend yield of more than 9% and expected to increase dividends each year to 2025.

Of course, those are just estimates at this stage. Things can change.

How to make $300 of monthly dividend income from ANZ shares

Receiving $300 of monthly dividend income equates to an annual total of $3,600 of dividends.

If an investor wanted that level of passive income, they’d need to own 2,250 ANZ shares.

At the current ANZ share price of $24.33, that means an investment today would cost around $55,000.

But, investors may not need quite as much if we think about what the dividends may be in FY24 and FY25.

In FY24, the dividend is estimated to grow by 2.5% to $1.64 per share. In FY25, Commsec estimates suggest the dividend could rise again slightly to $1.65.

If investors are focused on the possible FY24 dividend of $1.64 per share from the ASX 200 bank share, investors would only need 2,196 ANZ shares.

Should investors buy ANZ shares for dividend income?

ANZ shareholders are probably happy that the dividends are going to recover to pre-COVID levels.

However, the profit boom in this higher interest rate environment may not happen as much as investors were initially hoping. The Commonwealth Bank of Australia (ASX: CBA) boss, Matt Comyn, commented on the extremely competitive environment for banks:

The home lending market is undergoing a period of extreme change and intense competition.

Cash backs are growing in size and prevalence, and we estimate that banks have deferred costs relating to cash backs of over $1 billion. This figure has increased almost 50% in the past two years, and combined with a substantial increase in commissions over the same period, creates a margin headwind that will flow unevenly across the market.

While ANZ can pay large dividends, I’m also looking for investments that can deliver ongoing growth, so ANZ would not be one of my first picks for dividend income.

The post Here’s how much I’d need to invest in ANZ shares to generate a $300 monthly income appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank shares slump could continue: Morgan Stanley
• Should I buy ANZ shares at almost $24?
• Watch out CBA: This ASX 200 bank share is rapidly growing
• How did the ANZ share price manage to beat the other ASX 200 big-four banks in February?
• How I’d invest $200 a month in ASX shares to target a $1,000 passive income

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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