Every three months, S&P Dow Jones Indices announces its quarterly rebalance of the S&P/ASX Indices.

This sees a number of ASX shares move into and out of particularly indices, such as the All Ordinaries index, the S&P/ASX 200 Index, and the S&P/ASX 100 index.

On Friday, the index solutions company released its latest rebalance of these indices and revealed that four shares will be dumped from the widely followed, benchmark ASX 200 index when the index rebalances in two weeks on 20 March.

Which ASX 200 shares are being dumped?

The four ASX 200 shares that will be kicked out later this month are building materials company Adbri Ltd (ASX: ABC), battery technology company Novonix Ltd (ASX: NVX), gold miner Ramelius Resources Ltd (ASX: RMS), and fleet management company Smartgroup Corporation Ltd (ASX: SIQ).

Normally, this sort of news would put a lot of pressure on a company’s share price. That’s because the sell side will soon become stacked with sell orders from funds that track the index and fund managers that have strict investment mandates allowing them to only invest in companies in the ASX 200 index and above.

However, with the market charging higher today following a very strong night of trade on Wall Street on Friday, these shares aren’t faring too badly given the circumstances. Here’s that state of play:

• The Adbri share price is up 1%
• The Novonix share price is 2.5%
• The Ramelius share price is up 1%
• The Smartgroup share price is down slightly

Replacing these ASX 200 shares in the illustrious index will be location technology company Life360 Inc (ASX: 360), construction and mining contractor NRW Holdings Limited (ASX: NWH), medical device company Polynovo Ltd (ASX: PNV), and graphite producer Syrah Resources Ltd (ASX: SYR).

The post These ASX shares are being dumped from the ASX 200 index this month appeared first on The Motley Fool Australia.

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More reading

• Should I buy Flight Centre shares at $19?
• These 4 ASX shares could rocket this month: Here’s why
• This ASX 200 dividend share failed to be one of the world’s biggest payers in 2022. Could it get worse?
• 5 things to watch on the ASX 200 on Monday
• I’d invest $20 a week the Warren Buffett way as I aim to build wealth

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and PolyNovo. The Motley Fool Australia has positions in and has recommended Smartgroup. 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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I like to own ASX shares that I could potentially own forever. Certainly, BHP Group Ltd (ASX: BHP) could be one of the names that enters my portfolio at some point.

BHP has already shown that it has excellent longevity. It’s one of the oldest businesses on the ASX at more than 100 years old.

I believe that resources are always going to be in demand around the world. BHP has a diversified portfolio of commodities including iron, copper, nickel, and coal.

Typically, I don’t think that many commodity businesses can make great investments. However, at the right price, I think a forward-thinking business is worthwhile, particularly if it’s able to generate strong profits when commodity prices are favourable.

Keep in mind that I already own Fortescue Metals Group Limited (ASX: FMG) shares in my portfolio, so owning BHP shares at some point wouldn’t be too much of a stretch.

Why I’m not invested already

BHP is already one of the biggest businesses in the world. It’s the biggest Australian company and for that reason, it could be tricky for the business to achieve substantial capital growth.

According to the ASX, it has a market capitalisation of $243 billion. For it to organically double in size, it would need to be worth almost $500 billion. Therefore, I’d want to buy at the right price.

After a 30% rise over the last six months, I think it has experienced such a large jump because investors have become optimistic about the positive impacts of China’s COVID-19 reopening.

Yet the demand for iron can be cyclical. I think, at some point, there will be another lull and this could lead to a lower price for iron — and BHP.

As a bonus, if I’m able to invest at a lower BHP share price then I’d also be getting a stronger future dividend yield as well.

Why I like BHP shares

I like that BHP is focusing on greener commodities like copper, nickel, and now potash.

Potash is seen as a greener form of fertiliser. BHP is working on the Jansen project in Canada, which could generate a high earnings before interest, tax, depreciation and amortisation (EBITDA) margin once it’s fully operational.

If the world is going to decarbonise then it needs a lot more copper, nickel, and so on. BHP’s scale gives it the potential to be a very low-cost producer and earn high margins.

I like that BHP has committed to a relatively high dividend payout ratio, which should mean solid cash returns each year, even if the share price is volatile.

If I can buy BHP shares at a good share price, then I’ll be able to buy at a level that gives me a good margin of safety.

What price am I looking for? Certainly under $40, perhaps under $37.50. I don’t mind if it takes months or even a few years for that price to come along – patience is important when it comes to investing in ASX shares, in my opinion.

The post Why I don’t own BHP shares (yet) appeared first on The Motley Fool Australia.

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More reading

• Have BHP shares always paid better dividends than Rio Tinto?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• BHP share price on track for biggest daily gain in almost four months
• ASX shares declared a record $98b of dividends last year. Do you own the market’s biggest payer?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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 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 Flight Centre Travel Group Ltd (ASX: FLT) share price has shot higher in 2023 – it’s up by around 30%. That’s an excellent return considering the S&P/ASX 200 Index (ASX: XJO) has only risen by 5% in 2023 so far.

The ASX travel share has done very well but, interestingly, it’s at a price that’s lower than where it was for a lot of the first half of 2022.

Maybe investors were too optimistic too early last year, but now the share price is reflecting the positive situation.

A couple of weeks ago, the business revealed a number of positives in its FY23 half-year result.

Earnings recap

Flight Centre said that in the first six months of the financial year, it generated $95 million of underlying earnings before interest, tax, depreciation and amortisation (EBITDA). This was 19% higher than the mid-point of its initial first-half target of between $70 million to $90 million while being in line with its upgraded guidance.

That means it was almost a $280 million turnaround from the FY22 first-half loss.

The ASX travel share said that it was profitable in the corporate and leisure divisions, and profitable in nearly all regions except Asia where it was breakeven.

Flight Centre said its total transaction value (TTV) was $9.9 billion and was 80% of its record FY20 half-year result. The corporate business is delivering “record TTV and set to top $10 billion during FY23”.

The company said there are positive margin trends as the company targets a 2% underlying profit before tax (PBT) margin by the end of FY25. It noted a record low underlying cost margin (of under 10%), while the revenue margin is trending “upwards”.

FY23 guidance

Reassuringly, Flight Centre reaffirmed its FY23 guidance with no signs of a slowdown in the early part of the FY23 second half. Guidance can have a notable impact on the Flight Centre share price if it wasn’t what the market was expecting.

Excluding the acquired Scott Dunn, Flight Centre is targeting $250 million to $280 million of underlying FY23 EBITDA.

January 2023 saw a post-pandemic record for monthly TTV and profit in leisure. There was also an acceleration of corporate activity from mid-January. China is seeing a “solid rebound” after the COVID reopening.

Is the Flight Centre share price a buy?

The ASX travel share is now seemingly firing on all cylinders and it’s benefiting from the strong demand.

Analyst estimates suggest that profit will return to normal in FY24 and FY25. Current Commsec projections are for earnings per share (EPS) of $1.01 in FY24 and $1.24 in FY25.

That puts the current Flight Centre share price at 19 times FY24’s estimated earnings and 15 times FY25’s estimated earnings.

In FY25, the dividend could normalise with a possible payment of 64 cents, which would be a grossed-up dividend yield of 4.9%.

I think that Flight Centre shares could rise more during 2023. However, investors are now expecting a strong profit rebound. Flight Centre would need to positively surprise investors even further to outperform, in my opinion.

I wouldn’t be rushing to try to buy at this price, but I think the company has a promising future and may be one of the few ASX 200 shares to report profit growth in both FY23 and FY24 amid wider economic uncertainty.

The post Should I buy Flight Centre shares at $19? appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares this week
• This ASX 200 dividend share failed to be one of the world’s biggest payers in 2022. Could it get worse?
• 5 things to watch on the ASX 200 on Monday
• I’d invest $20 a week the Warren Buffett way as I aim to build wealth
• For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock

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

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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) has returned to the top of the chart after its short interest rose to 12%. Short sellers don’t appear to be giving up on Flight Centre despite its return to form in FY 2023. Revenue margin headwinds may be a cause for concern.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest ease slightly to 11.6%. Competition and cash burn concerns could be weighing on this betting technology company’s shares.
• Sayona Mining Ltd (ASX: SYA) has 10.7% of its shares held short, which is flat week on week. There are fears that lithium prices have now peaked and are about to decline materially.
• Core Lithium Ltd (ASX: CXO) has short interest of 10.1%, which is up week on week. As with Sayona Mining, continued weakness in spot lithium prices appear to have spooked investors.
• Megaport Ltd (ASX: MP1) has seen its short interest fall again to 9.3%. Short sellers have been targeting this network as a service provider after it reported softening operating trends with its results.
• Zip Co Ltd (ASX: ZIP) has short interest of 9.1%, which is up strongly week on week. Short sellers appear to be doubting this buy now pay later provider’s ability to achieve its profitability goals.
• Liontown Resources Ltd (ASX: LTR) has short interest of 8.1%, which is up week on week. Concerns over material cost blow outs at the Kathleen Valley Lithium Project have been weighing on sentiment.
• City Chic Collective Ltd (ASX: CCX) has jumped into the top ten with short interest of 7.3%. This plus sized fashion retailer’s abject performance and inventory management are likely to be behind this short interest.
• Lake Resources N.L. (ASX: LKE) has 6.9 % of its shares held short, which is flat week on week. Doubts over this lithium developer’s technology and project funding are reasons why one short seller is targeting Lake.
• Vulcan Energy Resources Ltd (ASX: VUL) has short interest of 6.8%, which is down slightly week on week. This also appears to be down to lithium prices being tipped to fall materially in the next 18 months.

The post Here are the 10 most shorted ASX shares this week appeared first on The Motley Fool Australia.

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More reading

• Buy this punished ASX 200 tech stock when it’s forced into a capital raise: expert
• Zip share price gains amid global asset sale
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher today?
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 Betmakers Technology Group, Megaport, and Zip Co. The Motley Fool Australia has recommended Betmakers Technology Group, Flight Centre Travel Group, and Megaport. 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 shares have great potential to be able to deliver capital growth for investors. But I like that ASX dividend shares can deliver a pleasing stream of passive income through dividends.

Dividends, or distributions, are a simple way for a business to share some of its profit with investors.

There’s a cliché that says the first million dollars is the toughest to achieve.

I think we can say the same about dividend income. Making the first $1,000 of dividend income could be the hardest if starting from scratch.

However, I wouldn’t suggest thinking $1,000 is an end goal. Rather, I’d think of it as just a milestone.

Most investors have many more years to live, so I think it makes sense to target businesses that can provide a combination of a decent starting dividend yield and growth.

Earnings growth can enable investors to benefit from dividend growth and share price growth over time. In my opinion, it’s very helpful for the investment to help grow the dividend income.

With that in mind, I’d want to target these two names.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa describes itself as a “fashionable on-trend jewellery and accessories specialist”. There are a number of reasons why I think this business has a compelling future.

For starters, I don’t think young shoppers are going to be as affected by a possible economic downturn as other age groups.

Lovisa is rapidly growing its geographic presence, with very profitable stores. In the FY23 first half, it added 86 net new stores to its portfolio, ending the period with 715 stores. By the date of the result release, it had 746 stores.

The ASX dividend share has recently entered a number of new markets including Italy, Poland, Hungary, Romania, Canada, Hong Kong, and Mexico. Each of these markets can turn into important earnings generators. It’s also growing rapidly in the US, a huge potential market for the business.

HY23’s net profit after tax (NPAT) jumped 31.9% to $47.7 million. Using its last two dividends, it has a grossed-up dividend yield of 4.5%. By FY25, it could pay an annual dividend per share of 95 cents according to Commsec, which (if fully franked) would be a grossed-up dividend yield of 5.7%.

Universal Store Holdings Ltd (ASX: UNI)

Universal Store also focuses on younger shoppers so I think it could be another business that’s more resilient than expected.

The company describes itself as owning a portfolio of “premium youth fashion brands and omnichannel retail and wholesale businesses”. Its main businesses are Universal Store and the THRILLS brand, and it’s also trialling the Perfect Stranger brand as a standalone retail concept. It has 93 stores, as well as e-commerce options for customers.

The ASX dividend share’s half-year result included a number of positives, including a 31.7% increase in statutory net profit after tax, while the interim dividend was increased by 27%.

During the period, it added another six new stores, combined with 10 acquired THRILLs stores. The Perfect Stranger trial “continues to perform”, with national expansion plans now “in play”.

It’s planning to open another four to six additional Universal Stores in the second half of FY23, along with three or four Perfect Stranger stores and one new THRILLs store.

The last two dividends amount to a grossed-up dividend yield of 6.3%.

By FY25, according to Commsec, it could pay a grossed-up dividend yield of 9%.

The post Making the first $1,000 in passive income: These are the ASX shares I would buy first appeared first on The Motley Fool Australia.

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More reading

• 2 explosive ASX growth shares to buy this month: analysts
• We still hold this ASX 8-bagger because there’s more to come: QVG
• Buy Rio Tinto and this ASX dividend share: Goldman Sachs
• Morgans names 2 ASX dividend shares to buy with big yields
• I would invest $10,000 into these ASX shares in March

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 Lovisa. The Motley Fool Australia has recommended Lovisa. 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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Investors are advised to watch four ASX shares this month as they will receive a huge boost in their fortunes.

After close of trade on Friday, S&P Dow Jones announced the latest adjustment to the S&P/ASX 200 Index (ASX: XJO) constituency.

And for four lucky stocks, they are about to hit the big time on 20 March as they enter the exclusive ASX 200 club.

Welcome to the ASX 200

The ASX shares to be added to the index this month are:

• Life360 Inc (ASX: 360)
• NRW Holdings Limited (ASX: NWH)
• Polynovo Ltd (ASX: PNV)
• Syrah Resources Ltd (ASX: SYR)

Those businesses are obviously growing at a sufficient pace to overtake other companies in entering the ASX 200.

But the mere announcement that they will enter the index will in itself be a boost to the share price.

That’s because all those funds — both unlisted and ETFs — that track the ASX 200 will be forced to buy those shares on 20 March.

That will drive up demand for the stocks, thereby pushing up the prices.

What have these companies been doing?

Life360 makes personal security software for families. The stock could do with a boost from the index inclusion, as it has dropped 1.64% since the start of the year.

The market has, though, already given plenty of recognition for the US tech company’s growth over the past half year or so. 

The Life360 share price has almost doubled since 23 June.

The Motley Fool’s James Mickelboro reported last week that Goldman Sachs rates Life360 shares as a buy.

“Life360 is exposed to a US$12 billion global TAM [total addressable market] with a large opportunity to expand its product suite, grow average revenue per paying circle (ARPPC), increase payer conversion, and lift penetration rates outside of the US.”

Meantime, NRW Holdings is a mining and construction services provider from Western Australia.

Despite growth in revenue for the December quarter and the positive prospect of a ramp-up in China’s post-COVID economy, the stock is down 3.58% year to date.

Polynovo is a developer of medical technology.

Its share price has risen a whopping 16.2% year to date, in recognition of a bumper December quarter that saw a 62% increase in revenue year-on-year.

Finally, Syrah Resources produces graphite, which is a key ingredient for lithium-ion batteries.

It boasts prominent clients such as Tesla Inc (NASDAQ: TSLA) and LG Electronics Inc (KRX: 066570).

The post These 4 ASX shares could rocket this month: Here’s why appeared first on The Motley Fool Australia.

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• Buy these 3 ASX growth shares this month: experts
• 2 high-profile ASX healthcare shares lifting on blazing revenue growth
• Why did the ASX 200 leap higher on rising unemployment data?
• 2 ASX All Ords shares making massive moves on results announcements
• Looking for growth? 3 ASX shares experts rate as buys

Motley Fool contributor Tony Yoo has positions in Life360 and Nrw. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, PolyNovo, and 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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Are you looking for ASX 200 dividend shares to buy? If you are, then you may want to check out the two listed below that have been named as buys.

Here’s why analysts rate them highly right now:

Macquarie Group Ltd (ASX: MQG)

The first ASX 200 dividend share to buy could be investment bank, Macquarie.

Analysts at Morgans are positive on the company and believe Macquarie is well-placed for the long term thanks partly to structural drivers.

It highlights the company’s “exposure to long-term structural growth areas such as infrastructure and renewables” and its potential to “benefit from recent market volatility through its trading businesses.”

Morgans has an add rating and $222.80 price target on Macquarie’s shares.

In respect to dividends, the broker is expecting Macquarie to pay partially franked dividends of $8.28 per share in FY 2023 and $7.64 per share in FY 2024. Based on the current Macquarie share price of $185.47, this implies yields of 4.5% and 4.1%, respectively.

Woolworths Limited (ASX: WOW)

Another ASX 200 dividend share that has been named as a buy is Woolworths.

Goldman Sachs rates the retail giant highly thanks to its strong market position and digital leadership. The broker is expecting the latter to support further market share and margin gains in the future, which could be good news for its earnings and dividend growth.

Goldman currently has a conviction buy rating and $41.00 price target on the company’s shares.

As for dividends, the broker is forecasting fully franked dividends of $1.03 per share in FY 2023 and $1.16 per share in FY 2024. Based on the current Woolworths share price of $36.48, this will mean yields of 2.8% and 3.2%, respectively.

The post Buy these ASX 200 dividend shares for passive income: analysts appeared first on The Motley Fool Australia.

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• Brokers name 3 ASX shares to buy now
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• Why is the Woolworths share price sliding lower today?
• Watch out CBA: This ASX 200 bank share is rapidly growing
• Hoping to bag the bigger Woolworths dividend? You’ll need to hurry

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

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Certainly 2023 has brought some relief for ASX technology and growth shares, but most are still well down on what they were 15 months ago.

The S&P/ASX All Technology Index (ASX: XTX), to demonstrate, is still about one-third lower than where it was in November 2021.

That’s despite climbing up 10.5% since the new year.

Shaw and Partners portfolio manager James Gerrish, in his Market Matters newsletter, set about finding a well beaten-up stock that might be worth picking up at a heavy discount right now.

“Statistically, buying market ‘dogs’ is NOT a winner’s game, but there is occasionally a diamond to be found in the rough.”

Buy this one… but at the right price

One S&P/ASX 200 Index (ASX: XJO) tech stock that’s especially had a brutal time is virtual network provider Megaport Ltd (ASX: MP1).

The share price has now lost an eye-watering 74% since the November 2021 peak.

And it hasn’t even participated in the recent tech rally, actually losing 8.5% year to date. 

Gerrish said its recent financial update was to blame.

“Megaport has been sold off following a disappointing result, with the main issue coming from slowing growth with the number of ports being added simply not enough to justify its $880 million market capitalisation.”

Megaport shares still have a high level of interest from short sellers, meaning many professional investors are expecting further falls.

A potential shortage of working capital, according to Gerrish, is behind the pessimism.

“A large driver behind the large 9.2% short interest comes from logical concerns around cash burn and the subsequent potential need to raise equity.”

However, he would pick up Megaport shares at the right price.

“We would like Megaport under $5, especially if it were after a capital raise,” said Gerrish.

“Market Matters believes Megaport is an aggressive buy into weakness.”

The stock closed Friday at $5.51.

He’s not alone in the potential for a bargain in Megaport. According to CMC Markets, eight out of 14 analysts currently covering the stock reckon it’s a strong buy.

The post Buy this punished ASX 200 tech stock when it’s forced into a capital raise: expert appeared first on The Motley Fool Australia.

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• Here are the 10 most shorted ASX shares this week
• Here are the 10 most shorted ASX shares this week
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• Why are ASX 200 tech stocks like Xero having such a cracking run today?
• Buy these 2 struggling ASX 200 shares now while they’re cheap: fund

Motley Fool contributor Tony Yoo has positions in Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Megaport. 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) dividend share Fortescue Metals Group Limited (ASX: FMG) has been one of the biggest dividend payers on the ASX — and indeed the world.

Fortescue has been making significant profit over the last few years and paying big dividends. But the latest half-year dividend was the smallest interim dividend per share since 2019.

Last year, Fortescue was one of the top 10 biggest dividend payers in the world. Also on the list in 2021 were Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

But in 2022, the Janus Henderson Group (ASX: JHG) Global Dividend Index report noted that “lower commodity prices…meant mining payouts fell from their record 2021 high point”.

The report also said, “2023 dividends are unlikely to repeat the sharp increases of 2022, as oil prices have moderated and mining payouts are likely to fall further.”

Fortescue announced in the first half of FY23, net profit after tax (NPAT) dropped 15% to US$2.37 billion, while the ASX 200 dividend share’s earnings per share (EPS) declined by 14% to 77 US cents. Fortescue’s interim dividend declined 13% to 75 Australian cents.

Is the Fortescue dividend going to get worse?

The Fortescue profit is highly influenced by the iron ore price. Sometimes it can be hard to gauge which way the iron ore price is heading, or how long it will stay where it is.

In the middle of last year, there were forecasts the iron ore price was going to drift lower to 2024. While the future is unknown, the iron ore price remains in the US$120s per tonne, defying the negativity.

The current price enables Fortescue to generate a sizeable amount of profit while also helping its decarbonisation and Fortescue Future Industries (FFI) efforts.

Looking at the forecasts on Commsec, the dividend is predicted to decrease from here.

The full-year dividend for the 2023 financial year is expected to be $1.55 per share. This would translate to a grossed-up dividend yield of 9.7%.

In FY24, the annual dividend per share could then fall almost 25% to $1.17. This would represent a grossed-up dividend yield of 7.35%.

FY25 could then see another dividend cut of 26% to 86.6 cents per share. If that were to happen, it would be a grossed-up dividend yield of 5.4%.

However, profit and dividend estimates could change in the future if the iron ore price is stronger (or weaker) than currently forecast.

Fortescue share price snapshot

Since the beginning of 2023, the iron ore miner has risen by 11.6%.

The post This ASX 200 dividend share failed to be one of the world’s biggest payers in 2022. Could it get worse? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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 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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It feels like investors, consumers, and businesses have barely had a chance to catch their breath after nine consecutive months of steep interest rate rises.

But brace yourselves because Tuesday will see a tenth rate hike.

That’s according to a whopping 93% of economists surveyed this week by comparison site Finder.

The overwhelming majority (86%) thought that the Reserve Bank of Australia would add 25 basis points to the cash rate at its board meeting on Tuesday afternoon.

It’s a cruel blow, especially for the many younger Australians who have never experienced such steep rises in their adulthood.

“The rate increases so far have already added around $12,000 per year to the average 30-year mortgage,” said Finder head of consumer research Graham Cooke.

“Finder’s Consumer Sentiment Tracker shows that 52% of Australians are feeling financial stress due to the increased costs, with younger Australians experiencing the highest amount of worry.”

Stressed consumers mean they will spend less, leading to lower earnings for businesses. and pain for ASX shares.

It hurts, but the RBA doesn’t have much choice

Unfortunately, inflation is still unacceptably high and the Reserve Bank’s only tool to fight it is to fatten up interest rates.

The big worry is that inflation expectations become entrenched in people’s minds. That could cause a price-wage spiral that will be very difficult to get out of.

University of Melbourne economist Matthew Greenwood-Nimmo said the RBA would be doing its utmost to avoid that scenario.

“Higher interest rates will help to manage inflation and keep inflation expectations anchored at appropriate levels.”

A separate study of homeowners by Mozo earlier this year showed 36% of mortgage holders could not afford another rate rise on Tuesday.

“It’s really shocking to think how many households will be struggling if there are more rate rises,” said Mozo personal finance expert Claire Frawley.

“Everyone has already been making big sacrifices when it comes to finding extra cash, now they will need to decide what’s next on the chopping block.”

Comparing 1990s apples to 2020s oranges

While some older Australians have pointed out that they faced interest rates of 17% in the 1990s, property prices were much lower back then.

“Typical house prices used to be about four times incomes. Now they’re more than eight times incomes, and more in Melbourne and Sydney,” said Grattan Institute’s Brendan Coates and Joey Moloney.

“This has meant that for any given mortgage rate, the share of income taken up by mortgage payments is much, much higher.”

There could be some relief coming soon, though.

The majority of economists (55%) reckon that the Reserve Bank will hold the cash rate in its April meeting.

“I expect the Reserve Bank to raise the cash rate in March in its continued effort to contain inflation, however, we are likely nearing the end of this rate rise cycle,” said Mortgage Choice economist Anthony Waldron.

The post Big bomb to explode on Tuesday for ASX shares: economists appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
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• I’d invest $20 a week the Warren Buffett way as I aim to build wealth
• Top brokers name 3 ASX shares to buy next week
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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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