Tag: Motley Fool

This Super mess?

Because that’s what it’s become. A Super – and super – mess.

We started the week with the Federal Government saying that it might be fair to wind back tax concessions on multi-million dollar Super balances.

Fair enough. Taxing a $3 million super balance at 15%, while wage-earners were paying marginal rates of 21%, 39% or 47%, is… generous.

We want people to build retirement savings, of course. But above a certain level, the taxpayer shouldn’t be subsidising it.

That concept, and the $3m balance level, got broad public support, even if begrudgingly in some quarters.

So unremarkable and reasonable was it, the AFR editorialised in favour, and The Today Show lampooned people who were complaining about it.

Then the wheels fell off.

Yes, politically, but that’s not my specific interest, here.

They fell off, economically, as well.

First, setting a tax rate on a ‘balance’, rather than an ‘income level’ is… not ideal.

A Super account with $4m, made up of property yielding, say, 2%, would pay a marginal 30% tax rate on their $80,000 income.

Someone with $2.5m in shares, earning a dividend yield of, say, 6%, would pay a marginal tax rate of 15% on their $150,000 income.

Which is… strange.

Then we found out the $3m won’t be indexed. So, as incomes, Superannuation contributions, and investment returns compound over time, more and more accounts will be caught by the cap.

Remember, Super will compound over a lifetime of 40 – 45 years of work. A $3m cap for someone at 65 now is pretty reasonable. But will it still be reasonable in almost half a century when prices and wages are much, much higher. Probably not.

That is… problematic.

It got worse…

… and this is the piece de resistance.

The Treasury announcement confirmed that the tax would be levied on fund returns, which included unrealised capital gains. What’s an ‘unrealised gain’? It’s the increase in value of an asset, even if that asset isn’t sold.

So, back to our previous $4m example – if the property increased in value by 10%, the ATO would take that $400,000 ‘gain’ and ask the Super fund to pay tax on it – even though no money had changed hands.

That’s not only almost-unique in our tax system, but… ridiculous.

So here we are.

From almost universal (if in some quarters begrudging) acceptance and support for a reduction in Super tax breaks, the Government had delivered a policy that was as controversial as it was complex and, frankly, poorly designed.

(And, back to the politics for a second, was a political gift – with a large bow – for the Opposition).

Now, I’m not sure what is more likely: that the Government was poorly advised, that Treasury got ahead of itself, or that the Government actually meant all of these things, in full knowledge of the implications.

Because let’s be clear:

Using a balance, rather than income level, to set tax rates, would be a huge policy departure (Assets tests are used for some benefits, so it’s not entirely new… but using it to set tax rates would be a big, bad, jump).

Using unrealised gains, in concert with the fund balance, essentially makes this a wealth tax, not an income tax – another piece of new ground.

And using an un-indexed balance cap means the program is designed to capture more Super funds every year.

If the Government takes the view that those things were deliberate, and that they knew exactly what they were doing, it paints a very clear picture. In that scenario, it’d be hard to escape the view that they’re essentially putting a de facto cap on Super at $3m. Anything above that, and you’re subject to not only a higher rate, but a tax bill on unrealised gains that might be larger than the fund’s cash flows, essentially forcing some/many people to liquidate assets.

Again, this is an ‘if’, but at that point, many, perhaps most, people will reduce their Super balances to below that threshold. As I said, a de facto total cap on Super.

And perhaps we’ve been tricked into agreeing with the headline idea – removing concessions for large balances – and getting sucker-punched by the detail.

So, if this is deliberate, it is not just ‘taxing large funds a little more’, but radically resetting Superannuation.

And if it’s accidental? Then it’s hard to escape the view that the Government has been poorly advised, having let the econocrats loose on policy, with insufficient consultation with outside experts.

I’m not sure which is more likely, but neither looks good, from where I stand.

And again, remember I’m someone who has been loudly agreeing with limiting tax concessions where they’re not absolutely needed and too costly.

Frankly, I hope it’s accidental. They can say ‘we were hasty, let us consult and improve things’.

If it’s deliberate? Then it’s bad policy, advocated with a bait-and-switch PR campaign. And that does them no credit.

Now… while I’m mindful that I’ve already written quite a lot, above, if you’re interested (and you should be – this will impact increasing numbers of people!) – I’m going to quickly propose a better alternative.

It’s this simple:

1. All Super accounts are tax-free during our working lives until and unless the balance hits $1.7 million (giving lower income earners the best possible chance of maximising Super)

2. Index the $1.7 million to CPI each year.

3. Once over $1.7m, the fund becomes taxable at 20% of realised gains.

4. Once the member is over 65, the fund must distribute a set percentage of its capital to the member (probably 4% per year).

5. The fund distributions are taxable in the hands of the member, at that member’s marginal tax rate.

6. Every Australian over 65 would get the aged pension, which would be taxable income; but

7. Set the tax free threshold for over 65s at $10,000 above the aged pension level.

What would this do?

A lot. And very, very simply.

First, it rewards saving for retirement.

Second, it gives lower income earners the very best chance to retire with enough Super.

Third, it limits the cost of concessions for higher income earners.

Fourth, it stops Super being used as a tax shelter (by requiring withdrawals and taxing those withdrawals appropriately).

Fifth, it hugely reduces the stupid complexity of the Superannuation system with its various rules and perverse incentives.

And sixth, it removes disincentives for older Australians to dip in and out of the workforce as their circumstances allow / require.

Perfect? No.

Contentious? Yes.

Could it be improved? Probably… and if you have better ideas, let me know!

But doesn’t it seem a helluva lot better than the current tangled mess of incentives and disincentives, with so many different rules and processes that you almost need an accountant on speed-dial just to understand it?

I think my proposal is simple, workable, and achieves all of the aims of Super. It stops it being used as a tax shelter, and reduces the administrative complexity (and cost) enormously.

So… it probably will fall on deaf ears! But just in case…

Treasurer Chalmers, this hasn’t been your best week.

Give me a call. Let’s chat. I’d love to help.

Fool on!

The post Unscrambling the Superannuation mess appeared first on The Motley Fool Australia.

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More reading

• Arafura share price plummets. Broker tips 28% upside
• 3 ASX 200 shares trading ex-dividend on Friday
• Guess which ASX 300 share has been bought up by 3 directors this week
• ASX investors: How to earn $533 each month in passive income
• Hoping to bag the boosted Bendigo Bank dividend? Here’s how

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 Arafura Rare Earths Ltd (ASX: ARU) share price has taken a tumble in morning trade.

At the time of writing, the rare earths developer’s shares are down 8% to 56 cents.

Why is the Arafura share price sinking?

Investors have been selling rare earths shares amid concerns over comments made at Tesla’s investor day event on Thursday.

According to Bloomberg, Tesla’s Colin Campbell has stated that it will drop the use of the rare earths in its future electric vehicle models due to health and environmental risks that come with mining the critical minerals.

Tesla instead plans to use a permanent magnet motor that won’t use rare earths.

Yang Jiawen, from Shanghai Metals Market, told Bloomberg:

It would be a big blow to the rare earth industry if there is a complete substitute to rare earth based on current technology. Without Tesla disclosing any information on possible substitutes, I am cautious on the news.

Is this a buying opportunity?

While the team at Bell Potter only has a speculative hold rating on the company’s shares, it does see plenty of value in the Arafura share price at the current level.

It currently has a price target of 72 cents on its shares, which implies potential upside of 28% over the next 12 months.

Last week, it commented:

ARU has performed in-line with our investment thesis, with the stock gaining +74% since initiating in May-22. Over the coming months, key catalysts for further stock price appreciation are 1) reaching a Final Investment Decision (FID) (BPe Mar-23) 2) securing ~85% binding offtake (34% secured to date) and 3) progressing financing for the Nolans Project. As the business successfully reaches these milestones, we believe it prudent to un-wind our risk discount for the Nolans project, which is currently set at 30%. In our view, recent share price appreciation implies these events to be priced in.

The post Arafura share price plummets. Broker tips 28% upside appeared first on The Motley Fool Australia.

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More reading

• Why is the Arafura share price storming 7% higher?
• Why did the Arafura share price charge 10% higher on Tuesday?
• Top ASX small-cap shares to buy in 2023
• Why has ASX 300 rare earths stock Arafura rocketed 40% in 2023?

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 market may be pushing higher this morning, but the same cannot be said for the ASX 200 shares listed below.

However, these shares are not falling because something bad has happened. Rather, they are falling because they are trading ex-dividend today.

When a share trades ex-dividend, it means the rights to an upcoming dividend payment remain with the seller and don’t transfer to the buyer. In light of this, a share price will often drop in line with the dividend to reflect this.

Three ASX 200 shares that are trading ex-dividend today are named below. Here’s what you need to know about them and their dividends:

Ampol Ltd (ASX: ALD)

This fuel retailer’s shares are down 6% after trading ex-dividend for its fully franked $1.55 per share final dividend for FY 2022. Eligible shareholders can now look forward to receiving this dividend in their bank accounts at the end of the month on 30 March.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

This media company’s shares have dropped 3% on Friday after going ex-dividend for its interim dividend. Last month, Nine released its half-year results and declared a fully franked interim dividend of 6 cents per share. This will be paid to eligible shareholders next month on 24 April.

Treasury Wine Estates Ltd (ASX: TWE)

Finally, this wine giant’s shares have slipped into the red in early trade. This morning, the Penfolds owner traded ex-dividend for its fully franked 18 cents per share interim dividend. It plans to pay this to eligible shareholders at the start of next month on 4 April.

The post 3 ASX 200 shares trading ex-dividend on Friday appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• ‘Result was incredible’: 3 ASX 200 shares Jun Bei Liu would buy now
• 7 ASX 200 shares with ex-dividend dates next week
• 3 ASX dividend stocks to try and turn $10,000 into $1 million!
• 3 ASX 200 stocks being punished on their results announcements

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 recommended Nine Entertainment and Treasury Wine Estates. 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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S&P/ASX 300 Index (ASX: XKO) tech share Dicker Data Ltd (ASX: DDR) has been struggling in recent months.

It’s fallen 38% since this time last year. Not to mention, it was trading at a more-than-two-year low of $7.88 earlier on Tuesday.

But insiders at the tech company appear to be confident in its future. Indeed, they forked out a combined $376,000 to snap up handfuls of its stock this week.

Let’s take a look at all the director buying going down with the embattled ASX 300 computer parts and software distributor’s stock.

Insiders stock up on shares in ASX 300 tech outfit Dicker Data

Directors were snapping up shares in Dicker Data left, right, and centre on Tuesday amid the ASX 300 share’s new 52-week low.

Getting the best deal was executive director and chief information officer Ian Welch, who bought 10,000 shares for $7.90 apiece. That marks a total of $79,000.

Executive director and chief financial officer Mary Stojcevski also acquired a sizeable parcel. She bought 7,000 shares in the tech outfit for $8 apiece – a total of $55,300.

Finally, joining in on the buying action was executive director and chief operating officer Vladimir Mitnovetski, who bought 30,000 of the company’s stocks for an average price of around $8.06 apiece.

That saw Mitnovetski handing over the most cash for their bolstered stake – a grand total of $241,900.

The barrage of director buying came just one day after the ASX 300 tech company posted its full-year earnings, detailing rising revenue but slightly lower profits.

The market sent the stock tumbling on its results despite Mitnovetski forecasting a “prosperous” year to come.

The Dicker Data share price plummeted 3.4% on Monday, dipping to its new multi-year low on Tuesday before returning to the green.

Right now, the tech share has fallen 17% year to date to trade at $8.46 at the time of writing. Meanwhile, the ASX 300 has lifted 4% so far this year.

The post Guess which ASX 300 share has been bought up by 3 directors this week appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Dicker Data, South32, and Winsome Resources are pushing higher
• Dicker Data share price falls on FY22 earnings and dividend decline
• 2 quality ASX 300 shares trading at bargain-basement prices today
• These 2 ASX All Ords shares will trade ex-dividend next week
• Dicker Data share price tumbles to multi-year low. Is it too cheap to miss?

Motley Fool contributor Brooke Cooper 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 Dicker Data. The Motley Fool Australia has positions in and has recommended Dicker Data. 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 ASX share market can be a wonderful place to generate monthly passive income.

Yes, ASX dividend shares aren’t going to be as consistent as savings accounts. Share prices do go up and down. Plus, most companies only pay dividends two or four times a year, so investors need to manage their cash flow a little bit.

But, there are a few things that I love about owning ASX shares.

The good ASX shares are capable of growing their dividend payments over time. Capital growth is possible. Juicy dividend yields are out there, though some investors may not need to target higher yields, and the biggest yields may be cut sooner rather than later (they can be called dividend traps).

How to earn $533 each month in passive income

Getting an annual investment income of over $6,000 a year sounds like a great idea to me.

But, it takes saving and time for an investor to build up to that amount. Most households don’t have a cash pile in the six digits just sitting around.

Earning $533 a month, or $6,396 a year, would likely take building up a portfolio worth over $100,000.

At a 5% dividend yield, it would need a portfolio worth around $128,000 to earn the targeted amount of dividend income.

The question is – how do we get to $128,000?

Shares have produced an average return per annum of 10% per annum over the long term. So, investing and achieving that sort of return can do a lot of the financial lifting with compounding.

How much can we invest? That’s down to each investor to figure out. But, assuming we invested $533 a month of saved money from monthly finances while the portfolio grew at 10% per annum, we’d reach $128,000 in less than 12 years.

Investing more cash each month would achieve the goal of passive income quicker.

Which ASX dividend shares have a 5% dividend yield?

There are a wide number of options that have a good dividend yield, but it could be worthwhile to find ideas that can deliver earnings growth which can help fund dividends, and hopefully lead to share price growth.

Using estimates on Commsec, the following businesses are expected to have a grossed-up (including franking credits) dividend yield of at least 5% for FY23:

Bunnings and Kmart owner Wesfarmers Ltd (ASX: WES) could pay a grossed-up dividend yield of 5.6%.

Telstra Group Ltd (ASX: TLS) could pay a grossed-up dividend yield of 6%.

Pinnacle Investment Management Group Ltd (ASX: PNI) could pay a grossed-up dividend yield of 5.4%.

Centuria Industrial REIT (ASX: CIP) could pay a distribution yield of 5%.

Foolish takeaway

I believe the long-term outlook for ASX shares is still very positive, even if the short-term is a bit uncertain.

I’m working on my own portfolio for growing passive income. Hopefully one day I’ll have enough to replace a lot of my worked earnings.

The post ASX investors: How to earn $533 each month in passive income appeared first on The Motley Fool Australia.

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More reading

• An ASX 200 dividend heavyweight I’d buy over CBA shares right now
• Should I target $1,000 of annual dividends by investing $10,000 today?
• Own Telstra shares? Here’s how the ASX 200 telco is raising $650 million
• Looking to buy Telstra shares? Boss reveals ‘profound opportunity’ for growth
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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 Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management 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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Investors that want the dividend from Bendigo and Adelaide Bank Ltd (ASX: BEN) shares will need to be quick because the ASX bank share is about to allocate its dividend.

Bendigo Bank recently reported its FY23 half-year result and the bank also announced its interim dividend for investors.

Bendigo Bank ex-dividend date incoming

There is a cut-off date for when investors need to own Bendigo Bank shares. This is called the ex-dividend date.

Investors need to own shares before the ex-dividend date to be entitled to the dividend of 29 cents per share.

The ex-dividend date for Bendigo Bank’s dividend is 6 March 2023. That means investors need to own shares by the end of trading today because Monday is the ex-dividend date.

The payment date for the dividend is 31 March 2023.

Earnings recap

The interim dividend was increased by 9.4% to 29 cents per share. This came after a 22.2% increase in the earnings per share (EPS) to 52.2 cents.

Total income on a cash basis increased by 14.5% to $958.2 million. Meanwhile, the cost to income ratio was 54.6%, an improvement of 500 basis points.

A helpful part of the result was that the net interest margin (NIM) increased by 19 basis points (0.19%) to 1.88%. The NIM is a key profitability measure which tells investors how much profit a bank is making on its lending. While the revenue is from the lending, the cost of the lending is the funding, such as deposit savings.

The bank’s residential lending grew at the same pace as the overall loan system, while Bendigo Bank’s total lending fell 1.1%.

Total cash earnings increased 22.9% to $294.7 million, while statutory net profit after tax (NPAT) soared 49.3% to $249 million.

The Bendigo Bank CEO and managing director Marnie Baker said:

We are Australia’s most trusted bank with market leading customer advocacy and satisfaction scores. Our customer numbers are growing because customers are attracted to our products, digital capability, service levels and our longstanding purpose of feeding into the prosperity of the community.

At the full year result I spoke of our strengthened focus on returns, execution and sustainability. To the first focus area, through careful management of volumes and margins and prudent cost management we have delivered a 145- basis point increase in our ROE and a 500-basis point improvement in our cost to income ratio.

Our business must also be sustainable. Residential lending is growing at system on a rolling 12-month basis. Over the half it has tapered as we managed the trade-off between volumes and margins. We are competing selectively and seeking opportunities that deliver appropriate returns for our business and its shareholders.

Commsec numbers currently suggest that Bendigo Bank is going to pay a dividend per share of 60 cents in FY23, which is a potential grossed-up dividend yield of 9%.

Bendigo Bank share price snapshot

Since the start of the year, Bendigo Bank shares are flat in 2023 to date.

The post Hoping to bag the boosted Bendigo Bank dividend? Here’s how appeared first on The Motley Fool Australia.

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More reading

• 6 ASX 200 directors buying up their company shares in the past week
• Here are the top 10 ASX 200 shares today
• Bendigo Bank share price volatile amid 50% profit boost
• 5 things to watch on the ASX 200 on Monday
• Yields of up to 8%! Should I buy these ASX 200 dividend stocks in February?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. 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 Australian mining sector has been booming again this week following the release of strong economic data out of China.

If you’re wanting to gain exposure to the sector, then you may want to check out the three ASX 200 mining shares listed below. Here’s why they have been named as buys:

Allkem Ltd (ASX: AKE)

The first ASX 200 mining share to consider is Allkem. It is one of the world’s largest lithium miners with projects in Argentina, Australia, and North America that provide it with significant production growth potential. It is because of this that Goldman Sachs is bullish on Allkem even though it is very bearish on lithium prices. It notes that “Allkem has the best LCE growth outlook with production growing >4x to FY27E with further downstream optionality on carbonate production.”

Goldman has a buy rating and $15.40 price target on Allkem’s shares.

Pilbara Minerals Ltd (ASX: PLS)

Another ASX 200 mining share to look is Pilbara Minerals. It could be a top option if you’re bullish on lithium and expect demand for the battery making ingredient to outstrip supply and keep prices higher for longer. Morgans believes that will be the case and suspects that “demand in the Chinese market could increase from March onwards.”

Morgans currently has an add rating and $5.30 price target on this lithium miner’s shares.

South32 Ltd (ASX: S32)

A final ASX 200 mining share to consider is South32. It is a diversified mining and metals company that produces a range of commodities including aluminium, copper, manganese, and nickel. As these metals will play a key role in the decarbonisation of the planet, South32 looks well-placed for the long term. Morgans is also a fan of South32 and believes its portfolio transformation is “substantially boosting group earnings quality, as well as S32’s risk and ESG profile.”

Morgans currently has an add rating and $5.60 price target on the miner’s shares.

The post Buy these ASX 200 mining shares before they boom: expert appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in March 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why BHP, Dicker Data, South32, and Winsome Resources are pushing higher
• Why Brainchip, Coles, Karoon Energy, and Pilbara Minerals shares are tumbling

Motley Fool contributor James Mickleboro has positions in Allkem. 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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If you’ve owned Northern Star Resources Ltd (ASX: NST) shares for the last 10 years, you’ve likely been pretty happy with your investment.

The gold miner’s stock has leapt a whopping 1,133% in that time. That’s right, it’s a true 10-bagger.

10 years ago, a $1,000 investment likely would have seen a buyer with 1,123 Northern Star shares.

Today, that parcel would be worth $12,319.31. The Northern Star share price last traded at $10.97.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has jumped around 43% in that time.

What happens when we also factor in all the dividends offered by the now-ASX 200 gold giant over the last 10 years? Let’s take a look.

Dividends offered to those invested in Northern Star shares

Here are all the dividends handed to Northern Star investors since March 2013:

Northern Star dividends’ pay date	Type	Dividend amount
September 2022	Final	11.5 cents
March 2022	Interim	10 cents
September 2021	Final	9.5 cents
March 2021	Interim	9.5 cents
September 2020	Final and special	9.5 cents and 10 cents
July 2020	Interim	7.5 cents
November 2019	Final	7.5 cents
April 2019	Interim	6 cents
September 2018	Final	5 cents
April 2018	Interim	4.5 cents
September 2017	Final	6 cents
April 2017	Interim	3 cents
November 2016	Special	3 cents
October 2016	Final	4 cents
April 2016	Interim	3 cents
October 2015	Final	3 cents
April 2015	Interim	2 cents
October 2014	Final	2.5 cents
April 2014	Interim	1 cent
September 2013	Final	2.5 cents
April 2013	Interim	1 cent
Total:		$1.215

As readers can see, each Northern Star share has yielded $1.215 of passive income since early 2013.

That means our figurative parcel has likely provided $1,364.45 of dividend income over its life – that’s more than the initial investment!

It also leaves the stock boasting a total return on investment (ROI) of around 1,269%. That’s certainly nothing to scoff at.

And that’s before we consider the franking credits attached to all of those payouts. They might have brought additional benefits for some investors at tax time.

Not to mention, if one were to have reinvested those dividends – perhaps through the company’s dividend reinvestment plan (DRP) – they could have realised some major compounding.

Right now, Northern Star shares offer a 1.96% dividend yield.

The company recently declared its next dividend, worth 11 cents to be paid later this month. It will trade ex-dividend on Tuesday.

The post Did you buy $1,000 of Northern Star shares 10 years ago? If so, here’s how much dividend income you’ve earned appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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My portfolio is designed to try to provide a combination of dividends, dividend growth and share price growth. None of those things is guaranteed, but I think the ASX dividend share names I’ve invested in can provide a good source of passive income.

We should expect that the share market is going to see some volatility each year. There is a changing mix of buyers and sellers each day, combined with changing headlines in the news.

But, I’ve focused on ASX dividend shares that aim to provide investors with growing dividends. That way, I can concentrate on my growing dividend cash flow and not worry what the share price is going to do next.

Washington H. Soul Pattinson and Co. Ltd (ASX:SOL)

I think that Soul Pattinson has the best record when it comes to dividend growth. The business has grown its dividend every year since 2000. No other ASX share has dividend growth consistency like this company.

It owns a portfolio of assets – both listed and unlisted. The portfolio is diversified across sectors like telecommunications, building products, resources, agriculture, financial services and swimming schools.

The ASX dividend share receives dividends from its portfolio each year. The majority of that money is sent to shareholders as a growing dividend, with the rest kept to re-invest in more opportunities to enable further growth.

The company’s FY22 ordinary dividend per share of 72 cents translates into a grossed-up dividend yield of 3.6%.

Duxton Water Ltd (ASX: D2O)

Duxton Water is a unique company on the ASX – its purpose is to own water entitlements and lease them to farmers on contracts of various lengths.

The ASX dividend share says that it has an “intention to pay a consistent and growing dividend stream”. It just declared a dividend per share of 3.5 cents. It plans to increase this payment by 0.1 cents per share every six months to the 2024 interim payment which is guided as 3.7 cents per share.

Water entitlements could become increasingly important as more water-hungry crops are planted, such as almonds.

I think water entitlements are a good way to indirectly invest in the agricultural industry.

With the reported imminent end of La Nina – the wetter weather system – this could lead to less rain, pushing up water prices.

The FY23 grossed-up dividend yield from Duxton Water is expected to be 5.7% and the company has indicated an intention to lower debt because of the higher interest rates.

Brickworks Limited (ASX: BKW)

Brickworks is one of the largest manufacturers of building products in Australia, with offerings such as bricks, paving, masonry and roofing.

Interestingly, the ASX share owns a significant chunk of Soul Pattinson shares, which provides Brickworks with growing dividends and stability – very handy with the cyclical nature of building products.

But, for me, without praising Soul Pattinson again, another very positive side of Brickworks is that it owns half of an industrial property trust where advanced warehouses are being built on excess Brickworks land that has been sold into the trust.

Businesses like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Amazon are some of the tenants in the huge warehouses.

Brickworks said that the property portfolio’s valuation has seen the “positive impact of rental growth outstrip the effect of capitalisation rate expansion.” It also has a large development pipeline. At the end of the FY23 first half, Brickworks’ net property trust assets are expected to exceed $2.2 billion and this could keep rising as properties are completed.

The property trust rental profit and Soul Pattinson’s dividend have helped increase the Brickworks dividend steadily over the past several years.

Brickworks currently has a grossed-up dividend yield of 3.7% and it hasn’t cut its dividend for over 40 years.

The post 3 ASX shares I own for passive income appeared first on The Motley Fool Australia.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Brickworks, Duxton Water, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon.com, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Amazon.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking to boost your passive income, then you may want to check out the ASX dividend shares listed below.

Goldman Sachs has tipped these ASX shares to pay their shareholders very attractive dividends this year and next. Here’s what you need to know about them:

Rio Tinto Ltd (ASX: RIO)

The first ASX dividend share for investors to look at is mining giant Rio Tinto.

It could be a top option for investors that are not averse to investing in the mining sector. Especially given the attractive yields its shares are tipped to provide in the coming years.

In addition, Goldman Sachs believes that Rio Tinto shares are in the buy zone due to their “compelling valuation” and the company’s “return to production growth in 2023.”

Its analysts are forecasting fully franked dividends per share of US$4.23 in FY 2023 and then US$5.46 in FY 2024. Based on current exchange rates and the latest Rio Tinto share price of $124.44, this will mean yields of 5% and 6.5%, respectively.

Goldman Sachs has a buy rating and lifting its price target to $131.70.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX dividend share that has been named as a buy by Goldman Sachs is youth fashion retailer Universal Store.

It is a fan of the company due to its exposure to younger consumers, which are less impacted by rising mortgage payments. Combined with an increase to the minimum wage, the broker believes they will continue to spend as normal despite the cost of living crisis.

This certainly has been the case so far in FY 2023. Last month, the company released its half-year results and reported a 34.5% increase in sales to $145.7 million and a 43.2% jump in earnings before interest and tax (EBIT) to $28.5 million.

In response to the result, Goldman retained its buy rating with an improved price target of $8.05.

As for dividends, its analysts now expect fully franked dividends of 27 cents in FY 2023 and 34 cents in FY 2024. Based on the latest Universal Store share price of $5.47, this equates to yields of 4.9% and 6.2%, respectively.

The post Buy Rio Tinto and this ASX dividend share: Goldman Sachs appeared first on The Motley Fool Australia.

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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 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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