Tag: Motley Fool

The Pilbara Minerals Ltd (ASX: PLS) share price is on watch this morning.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock closed up 5.1% yesterday trading for $4.48 apiece.

The price action will be one to keep an eye on this morning, after the company reported its half-year results for the six months ending 31 December (1H FY23).

Pilbara Minerals share price on watch following inaugural dividend

• Sales revenue of $2.18 billion, up 305% from the $292 million reported in 1H FY22
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $1.81 billion, up 1,091% year on year
• Statutory net profit after tax (NPAT) of $1.24 billion, up 989%
• Inaugural fully franked dividend of 11 cents per share

What else happened during the half year?

The Pilbara Minerals share price could also see some sizeable moves today on some other strong metrics.

That included an 83% year on year increase in production, with the ASX 200 lithium miner producing 309,255 dry metric tonnes (dmt) of spodumene concentrate over the six months. 286,876 dmt were shipped during the period, an increase of 68%.

The miner said it enhanced its output after adopting a production and marketing strategy focused on maximising sales volumes by “deliberately targeting a lower product grade to optimise product yield and maximise concentrate production”.

This all came on the back of a 305% lift in the average realised sales price Pilbara Minerals received, which came in at US$4,993/dmt ~ SC5.4 basis (CIF China).

As you’d expect, the surge in revenue saw a huge improvement in the company’s cash balance, which increased by $1.63 billion between 30 June and 31 December. At 31 December, the company had a net cash position of $2.08 billion.

What did management say?

Commenting on the results that have put the Pilbara Minerals share price on watch this morning, CEO Dale Henderson said:

This is an exceptional financial result… The strong cash generation from the Pilgangoora Project has further strengthened the company’s balance sheet, putting us in an enviable position with $2.23 billion in the bank as at 31 December 2022 – a $1.63 billion increase on the prior corresponding period…

This strong financial performance provides the Company a great platform, supporting our growth and diversification strategy to become a leading, sustainable battery materials supplier.

What’s next?

Looking at what might impact the Pilbara Minerals share price in the months ahead, Henderson said, “The company and its stakeholders are poised to continue to thrive. The combination of a world-class asset, operating expertise and team spirit is coming together and delivering into a growing market.”

Henderson ended on this optimistic note, “The stage is set for Pilbara Minerals to take massive growth steps in the months and years ahead. This is just the beginning.”

Pilbara Minerals share price snapshot

As you can see on the chart below, the Pilbara Minerals share price has been a strong performer, up 71% over the past 12 months.

We’ll wait and see how the market reacts to today’s results.

The post Pilbara Minerals share price on watch amid 989% profit surge appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Broker says Pilbara Minerals share price is heading even higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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

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The excitement of reporting season is nearly behind us. It is now the last few stragglers left to post their financials. This means a much quieter day for ASX shares reporting today compared to yesterday.

Nevertheless, there are still some important names in the lineup that are worth checking out. Each report could be a window of opportunity into the next investment. There can be incredible insights to glean from earnings season, so let’s make the most of it.

To help you on your merry way, here is a quick summary of today.

These ASX shares are releasing their results today

Ranked in order of market capitalisation (largest to smallest)

Accent Group Ltd (ASX: AX1), $1.2 billion

Allkem Ltd (ASX: AKE), $7.3 billion

Block Inc CDI (ASX: SQ2), $64.2 billion

Brambles Limited (ASX: BXB), $16.8 billion

Jumbo Interactive Ltd (ASX: JIN), $917.4 million

Mayne Pharma Group (ASX: MYX), $262.5 million

Mineral Resources Ltd (ASX: MIN), $16.2 billion

Perpetual Ltd (ASX PPT), $2.9 billion

What can we expect to see?

It’s time for another ASX buy now, pay later (BNPL) share to do the walk around the block. Afterpay acquirer, Block Inc CDI (ASX: SQ2), is set to post its fourth quarter and full-year earnings for FY2022 today.

Although, Aussie investors can already get a glimpse of the fintech giant’s numbers due to its US parent company already publishing the details earlier this morning.

By the looks, Block had a fairly solid performance in Q4. Total net revenue increased 14% year on year to US$4.65 billion and gross profits jumped 40% to US$1.66 billion. Furthermore, it appears the company’s BNPL segment assisted in boosting gross profit growth given Block’s comparables excluding this segment weren’t as strong.

However, like Zip Co Ltd (ASX: ZIP), Block reported steepening losses for the quarter and the full year. In Q4, net losses reached US$114 million compared to US$77 million a year prior.

A completely different ASX share that will be grabbing some attention today is lithium producer, Allkem.

The price of lithium began a swift move downwards from mid-November through to the end of the financial period. As such, shareholders will be nervously awaiting clarity on the extent of the impact of weakening lithium prices.

Earlier in the week, I covered the rumblings among analysts on the deteriorating lithium outlook. Fortunately, Allkem’s guidance could shed some light on the expected supply and demand dynamics.

The Allkem share price is now only slightly higher in 2023. On 30 January, shareholders were sitting on a tidy return of 27%, which has since largely disappeared.

Don’t forget to check back in throughout the day for our earnings coverage.

The post Earnings preview: Here are the ASX shares reporting on Friday appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 mining shares to buy for takeover potential: expert
• Top brokers name 3 ASX shares to buy today
• Here’s the latest ‘bearish news’ from brokers on ASX 200 lithium stocks
• Why are ASX 200 lithium shares having such a stellar run today?
• Why is the Core Lithium share price rebounding 5% on Tuesday?

Motley Fool contributor Mitchell Lawler has positions in Block and Jumbo Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Jumbo Interactive, and Zip Co. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Accent Group and Jumbo Interactive. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Two that are rated as buys and tipped to offer huge dividend yields are listed below. Here’s what you need to know about these shares:

Charter Hall Long WALE REIT (ASX: CLW)

The first ASX dividend share that has been tipped to provide a big yield is the Charter Hall Long Wale REIT.

It is a property company that invests in high quality real estate assets that have long weighted average lease expiries (WALEs).

These properties certainly are in demand with end users, which are mainly corporate and government tenants. When the company released its half-year results, it reported a WALE of 11.8 years and a 99.9% occupancy rate.

Citi was pleased and has retained its buy rating with a $5.00 price target.

As for dividends, the broker is expecting dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT unit price of $4.54, this will mean yields of 6.15% and 6.4%, respectively.

Woodside Energy Group Ltd (ASX: WDS)

Another ASX dividend share that analysts are expecting a big dividend yield from is Woodside Energy.

It is of course one of the world’s leading energy producer’s with a collection of world class assets across the globe.

A note out of Morgan Stanley reveals that its analysts are expecting the energy giant to pay fully franked dividends of $3.86 per share in FY 2022 and then $2.72 per share in FY 2023. Based on the current Woodside share price of $34.37, this equates to sizeable 11.2% and 7.9% dividend yields for investors.

Morgan Stanley has an overweight rating and $41.00 price target on the energy producer’s shares.

The post These ASX dividend shares offer huge yields: experts appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• My 3 best forms of passive income for 2023
• Should I buy Woodside shares before the ASX 200 energy giant reports next week?
• 5 things to watch on the ASX 200 on Wednesday
• Own Woodside shares? Here’s what the market is expecting from its full-year results

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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If you’re wanting to receive the outsized Santos Ltd (ASX: STO) dividend payment, you don’t have much time. 

The S&P/ASX 200 Index (ASX: XJO) energy stock released its full-year results on Wednesday.

The strong results – including a 221% year on year increase in net profit to US$2.1 billion – saw the Santos share price finish the day up 3.1%. It also saw the board declare an unexpectedly juicy, unfranked final dividend.

So, when does Santos trade ex-dividend?

When do Santos shares trade ex-dividend?

Santos trades ex-dividend on Monday, 27 February.

Meaning today is the last day investors have to buy stock in the ASX 200 dividend share to receive the payout.

And what a payout it is.

Santos’ 15.1 US cent per share final dividend is up 78% from the 2021 final dividend payout.

You’ll notice that the figure is quoted in US currency. Aussie investors, however, will receive their payout in Australian dollars, to be calculated at the going exchange rate on 2 March.

At the current exchange rate, the final dividend works out to 22.1 Australian cents per share.

At yesterday’s closing price that works out to an almost instant yield of 3.2%. Though, keep in mind, the Santos share price is likely to fall on Monday when the stock trades ex-dividend.

If you own the stock before market close today, you can expect to be paid on 29 March.

And Santos’ dividend reinvestment plan (DRP) is active for interested investors.

How has this ASX 200 energy share been performing?

As you can see in the chart below, the Santos share price is down 2% so far in 2023, not including the passive income the stock offers.

The post Looking to get in on the boosted Santos dividend? You better hurry! appeared first on The Motley Fool Australia.

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More reading

• 7 more ideas for buying ASX shares this reporting season: expert
• 5 things to watch on the ASX 200 on Thursday
• Why Origin, Santos, Service Stream, and WiseTech shares are racing higher
• The Santos dividend just rocketed by 78%. Here’s the lowdown
• Santos share price marches higher on surging dividend payout

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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Reporting season continues amid a background of geopolitical tensions and economic turbulence.

Morgans analyst Andrew Tang has been monitoring all the financial reports and regularly declaring his favourites to buy.

Here are the latest seven ASX shares he likes:

Explosive growth while the rest of the world struggles

Lovisa Holdings Ltd (ASX: LOV) has been a darling on the ASX, rising 51% over the past 12 months when most other non-mining stocks have been in the red.

But the results just announced still exceeded Morgans’ expectations.

“Lovisa reported net profit after tax [NPAT] of $50.5 million (pre-AASB 16) — 1% higher than our forecast,” Tang wrote on the Morgans blog.

“Sales growth was 45%, driven by store rollout and +12.5% like-for-like sales growth.”

The current growth is at breakneck pace.

“Lovisa opened a net of 86 new stores in 1H23, more than in all of FY22.”

Tang’s team is recommending a buy for Lovisa shares and has upgraded future earnings expectations for the company.

‘Momentum in the business is strong’

Meanwhile, Superloop Ltd (ASX: SLC) exceeded Morgans’ expectations for earnings but slightly missed for net profit after tax.

But the stock is a buy, with the broadband provider heading in the right direction.

“Momentum in the business is strong with Superloop delivering 28% YoY organic revenue growth and EBITDA lifting more due to positive leverage,” said Tang.

“Underlying EBITDA was up 89% YoY and operating cash flow conversion was impressive at 103%.”

Healthcare goods distributor EBOS Group Ltd (ASX: EBO) enjoyed “a record 1H23 result”, showing off “double-digit gross order receipts and EBITDA growth through acquisitions and organically”.

According to Tang, the company has successfully navigated through “an operationally challenging environment with supply chain issues and cost pressures”.

“EBOS continues to be a leader and hold strong market positions in both healthcare and animal care operating segments,” he said.

“We have upgraded our EPS forecast by ~1% in FY24/25.”

Energy sector still in demand in 2023

While Karoon Energy Ltd (ASX: KAR)’s wasn’t mind-blowing by any means, the result left the “valuation in its dust”, according to Tang.

“Even the lower-than-expected 1H23 result with EBITDAX of US$176 million puts Karoon on an EBITDAX multiple of just ~2.0x, a sector low,” he said.

“Karoon maintaining FY23 unit cost and production guidance highlights the bulk of earnings are skewed to 2H23.”

Also in the energy sector, Tang noted Santos Ltd (ASX: STO) posted “record profits and cash flow, upsized shareholder returns and developments across several key assets”. 

“On balance, a steady 2H22 result, falling just short of consensus expectations. Strong final dividend of 15.1 US cents, vs Morgans’ [forecast] 14.3 US cents.”

Both these energy players are a buy right now for the Morgans team.

‘Remarkably strong’ businesses

Insurance claims repairer Johns Lyng Group Ltd (ASX: JLG) posted a “remarkably strong” half-yearly result due to “unprecedented” amount of work from catastrophic (CAT) weather events.

“EBITDA of $59.4 million — 15% above our forecast of $51.7 million — was up 63% vs pcp,” said Tang.

“Underlying NPAT of $25.9 million was 10% above our forecast and up 82% vs pcp. FY23 guidance was upgraded by ~5.5% on a headline basis.”

The stock is a buy, with more catalysts to come for the business.

“We maintain our positive view on JLG, and continue to see it well placed to benefit from ongoing elevated claims activity, further market share gains across its four key growth pillars in Australia, US and New Zealand, and ongoing market consolidation via M&A.”

Hotel Property Investments Ltd (ASX: HPI) is not a name often heard of, but Morgans likes the investor of pubs.

Tang noted that its dividend guidance was maintained after the latest result, which indicates “an implied distribution yield of +5%”. 

“The portfolio is valued at $1.25 billion, weighted average lease expiry +10 years, and hotel occupancy 100%.”

The net tangible asset was recalculated to $4.06, which is far above the current stock price.

“HPI’s focus remains on portfolio quality via the refurbishment program (well progressed), as well as potential asset divestments.”

The post 7 more ideas for buying ASX shares this reporting season: expert appeared first on The Motley Fool Australia.

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More reading

• Why Lovisa, Medibank, Qube, and Smartgroup shares are charging higher
• Results in! Buy these ASX growth shares now: analysts
• 5 things to watch on the ASX 200 on Thursday
• 3 ASX 200 shares defying the market following earnings announcements
• Why Origin, Santos, Service Stream, and WiseTech shares are racing higher

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group, Lovisa, and Superloop. The Motley Fool Australia has positions in and has recommended Hotel Property Investments. The Motley Fool Australia has recommended Johns Lyng Group and 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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The Motley Fool has already revealed Wilsons equities strategist Rob Crookston’s best growth and asset-rich ASX shares that could become takeover targets.

The theory is that buying up stocks that are tempting for acquisitions could be “lucrative” because takeover offers are often far higher than market prices.

“As we start moving into 2023 we still believe there will be bids made on the Australian market as there are still well-priced equities that represent value for the right buyer,” Crookston said in a memo to clients.

“As institutional money continues to flow in the quest for yield, private capital is increasingly looking for opportunities in the listed space.”

A third area where such candidates pop up is among resources companies.

Here are Crookston’s best ideas from that area:

Looking forward to ‘a robust year’ for resources shares

Crookston is anticipating “a robust year for resources stocks”.

“[This] will include M&A activity as the sector undertakes growth and consolidation to take advantage of strong balance sheets after a bumper 2022.”

Electric vehicle and battery ingredients will be in hot demand for years to come, as the world transitions to a zero-carbon future.

“We believe the large major miners are looking to diversify towards EV minerals,” said Crookston.

“We saw this with BHP Group Ltd (ASX: BHP)’s bid for Oz Minerals Limited (ASX: OZL) last year.”

The gold industry has been in a frenzy for a while and, according to Crookston, 2023 will be no different.

“Gold miners have also continued a five-year trend of deal-making which has largely been driven by an arms race between the two biggest miners Newmont Corporation (NYSE: NEM) and Barrick Gold Corp (NYSE: GOLD),” he said.

“We saw this with the recent bid for Newcrest Mining Ltd (ASX: NCM) from Newmont in January 2023.”

So considering these drivers, Crookston’s team came up with four stocks that they consider prime takeover targets:

• Mineral Resources Ltd (ASX: MIN)
• Allkem Ltd (ASX: AKE)
• Lynas Rare Earths Ltd (ASX: LYC)
• Northern Star Resources Ltd (ASX: NST)

Northern Star is a gold miner with operations in Australia and the US. Its share price is up 8.3% over the past 12 months.

Allkem and Mineral Resources both have credentials as lithium producers, seeing their stock prices rise 32% and 86% respectively over the past year.

Lynas is one of the few major producers of rare earth minerals outside of China. Despite this, the share price is down 3% over the past 12 months due to licensing issues with the Malaysian government.

The post 4 ASX 200 mining shares to buy for takeover potential: expert appeared first on The Motley Fool Australia.

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More reading

• Mineral Resources share price lower despite plan to be a ‘world-leader in lithium mining’
• Top brokers name 3 ASX shares to buy today
• Here’s the latest ‘bearish news’ from brokers on ASX 200 lithium stocks
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today

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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped into the red. The benchmark fell 0.4% to 7,285.4 points.

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

ASX 200 expected to rise

The Australian share market looks set to edge higher on Friday following a volatile but positive night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 1 point higher this morning. In late trade in the United States, the Dow Jones is up 0.2%, the S&P 500 is up 0.5%, and the NASDAQ index is up 0.7%. The US market was up strongly, then down heavily, and now looks set to finish higher.

Oil prices rebound

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good finish to the week after oil prices rebounded overnight. According to Bloomberg, the WTI crude oil price is up 1.9% to US$75.35 a barrel and the Brent crude oil price is up 1.9% to US$82.16 a barrel. Tightening supplies boosted prices.

Pilbara Minerals results

The Pilbara Minerals Ltd (ASX: PLS) share price will be one to watch on Friday. After the market close yesterday, the lithium giant released its half-year results. It posted a 647% increase in revenue to $2.18 billion and a 989% increase in profit after tax to $1.24 billion. This allowed the company to declare its inaugural 11 cents per share fully franked interim dividend. Management also upgraded its FY 2023 production guidance.

Gold price slumps

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a subdued finish to the week after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.6% to US$1,830.6 an ounce. Gold hit a two-month low on rate hike concerns.

Qantas is a buy

The Qantas Airways Limited (ASX: QAN) share price is great value according to analysts at Goldman Sachs. In response to its first-half results, the broker has retained its conviction buy rating with an $8.30 price target. It commented: “We believe the current share price does not reflect the group’s improved earnings capacity.”

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

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More reading

• Here are the top 10 ASX 200 shares today
• Broker says Pilbara Minerals share price is heading even higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Platinum, Qantas, Red 5, and Zip shares are dropping today
• 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 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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Even though stock markets might be looking ahead to a pause in interest rate hikes, the real world is still grappling with stubbornly high inflation.

The yearly increase in Australia’s consumer price index stands at 7.8%, which is far higher than what the Reserve Bank would like.

It also means that $100 in your wallet one year ago now only has $92.20 of spending power.

Fidelity International investment director Tom Stevenson is worried about the longer-term consequences.

“It’s a worrying reminder that, when the dust has settled, we may find ourselves in an ongoing environment of higher structural inflation,” Stevenson said in the UK’s The Telegraph.

“Even a mildly inflationary environment can be a tricky one for investors to navigate.”

Inflation is a corrosive ‘tax’ on your investment returns

As well as the obvious cost-of-living pressures imposed on everyday consumers, high inflation is also an “insidious tax” on investors.

A simple reverse application of The Rule of 72 quickly shows how inflation eats into capital, according to Stevenson.

“Divide the expected rate of inflation into 72 and the answer indicates how many years it will take to halve your real, inflation-adjusted purchasing power,” he said.

“At 6%, it will only take 12 years. That 25-year retirement you are hoping for might halve your real wealth twice.”

That means that the first priority for investors in 2023 is to minimise the gap between investment returns and the rate of inflation.

“Keep the difference to 3% and the halving of your real wealth will take 24 years. At 2% the reduction will take 36 years,” said Stevenson.

“Reduce it to zero and, self-evidently, you will keep your head above water in real terms.”

Then obviously you want to earn an investment return on top of this break-even point.

These are the rocks to look under

So where are you going to find an asset to reliably bring back at least 7.8% per annum?

According to Stevenson, the first admission that investors need to make is that exceeding or even just matching inflation in the current environment will involve taking on some risk.

“Cash won’t cut it and fixed income investments like bonds will only be useful in spurts, as and when interest rates come down to tackle slowing growth. This year may be one of those, but longer-term I don’t expect bonds to be the answer,” he said.

“Even inflation-linked bonds offer only a partial solution.”

So turning to equities, Stevenson suggested seeking stocks living in one or more of five areas.

First is to invest in dividend-paying ASX shares.

“No chief executive wants to cut the pay-out to shareholders so dividends tend to be the more stable component of a share’s total return.”

Second is to focus on the finance and commodities sectors.

“A bank makes its profit in the gap between what it charges to lend you money and what it will pay you to borrow your cash. In a higher rate environment that gap is likely to be wider,” said Stevenson.

“Commodities, too, are often good performers in an inflationary environment, not least because higher prices for oil, gas, food and metals are often a contributor to inflation in the first place.”

Thirdly, take a look at “defensive” sectors producing goods and services consumers just can’t cut out. Stevenson suggested supermarkets and household product makers meet this criteria.

“Fourthly, look for companies with pricing power,” said Stevenson.

“These companies are more likely to be at either end of the scale — either luxury goods companies selling things to people that don’t know there’s a cost-of-living crisis or low-cost, feel-good providers like McDonald’s Corp (NYSW: MCD) for those that do.”

The final area to search for are businesses that are “part of the solution”.

“Inflation or not, people will continue to seek answers to the world’s problems. That might come in the form of a renewable energy company or a cloud computing business.”

The post 5 types of ASX shares to buy for high inflation times: expert appeared first on The Motley Fool Australia.

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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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Dividend stocks are a popular option for investors, and it isn’t hard to see why. These stocks provide investors with income on a regular basis, usually twice a year but in some cases quarterly.

While some investors will use these dividends as income to live from, they can also be reinvested.

It is the latter option that could help you generate significant wealth in the future if you are able to invest consistently over a long period of time. This is thanks to the power of compounding, which is what happens when you earn interest on top of interest.

For example, according to Fidelity, between 1991 and 2021, the Australian share market provided investors with an average total return of 9.6% per annum. Thanks to compounding, this means that a single $10,000 investment generating this return would have grown into $155,000 over 30 years.

And while past performance is no guarantee of future returns, this is in line with historical averages and it would be disappointing if similar returns were not generated in the future.

Investing consistently

The above example was a single investment left to run for 30 years. But what would happen if you kept investing rather than just settling for a single investment?

If you could spare a further $5,000 each year after that initial $10,000 investment, then by investing in ASX stocks and reinvesting your dividends, you could grow your wealth to $1 million after three decades if you generated an average 9.6% per annum return.

At that point, you could construct your portfolio so that it contains ASX dividend stocks that provide 5% yields. And then instead of reinvesting your dividends, you could take your $50,000 dividend pay check as a source of income to live from. All without ever having to lift a finger.

But which ASX dividend stocks could be top options?

Investors may want to look for ASX dividend stocks that have strong business models, sustainable dividends, positive long term growth outlooks, and competitive advantages. These are qualities that Warren Buffett looks for when investing, and given his track record, it’s hard to argue against this strategy.

Companies such as Goodman Group (ASX: GMG), Sonic Healthcare Limited (ASX: SHL), and Treasury Wine Estates Ltd (ASX: TWE) tick a lot of these boxes and could be worth a closer look.

The post 3 ASX dividend stocks to try and turn $10,000 into $1 million! 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 Goodman Group, Sonic Healthcare, 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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If you’re looking for exposure to the banking sector, then ANZ Group Holdings Ltd (ASX: ANZ) shares could be the way to do it.

That’s the view of analysts at Citi, which have named the banking giant as its top pick in the sector.

Its analysts recently responded to the bank’s first quarter update by retaining their buy rating and $29.25 price target on its shares.

Based on the latest ANZ share price of $24.77, this implies potential upside of 18% for investors over the next 12 months.

And with the broker expecting a $1.66 per share fully franked dividend in FY 2023, which would yield 6.7%, the total potential return on offer with ANZ shares stretches to almost 25%.

Why is the broker bullish on ANZ shares?

Citi was pleased with ANZ’s performance in the first quarter and particularly the strong trends it is exhibiting in lending growth and asset quality.

And while no earnings data was provided, the broker believes that the update suggests that the bank’s earnings are trending ahead of expectations. The broker commented:

ANZ’s 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings, although subject to movements in deductions/reserves.

Asset quality is set to be the key focus of today’s release, with an $83m provision release in the quarter driven by largely unchanged CP and a $101m IP release. Despite fears of deteriorating asset quality, impaired assets declined again in the quarter, although this could be the bottom as seasonally mortgages and personal credit arrears tick higher in the March quarter. Institutional lending momentum continued and accelerated in the Dec qtr, which we expect was driven by more available liquidity and pricing vs debt markets.

All in all, the broker believes this makes ANZ shares the best option for investors in the sector right now. It concludes:

ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

The post Why ANZ shares are this broker’s ‘top pick in the sector’ 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 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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