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The ASX stock GQG Partners Inc (ASX: GQG) has been a great performer. Since the start of 2024, the GQG share price has gone up by 32%. I’m going to tell you why I still think it’s a buy.

This business is a fund manager, one of the largest on the ASX. It’s also one of the few to be receiving strong net inflows from investors allocating more money to GQG.

The amount of funds under management (FUM) GQG manages plays an important part in the company’s profitability. GQG hardly charges performance fees across its different funds, so growth in FUM can directly lead to growth in revenue and profit.

In fact, when FUM rises, profit can rise faster than revenue for a fund manager. It doesn’t take 10% more employees or a 10% bigger office to manage 10% more funds. In the recently reported FY23 result, net revenue rose 18.5% to US$517.6 million, and diluted earnings per share (EPS) grew 19% to US 9.55 cents.

Positive ongoing FUM growth

The average FUM for FY23 was US$101.9 billion and it finished December 2023 with FUM of US$120.6 billion.

The ASX stock recently revealed its February 2024 FUM, which showed it had reached US$137.5 billion. In other words, FUM has grown by 14% in 2024 to date and it’s 35% higher than the average FUM of FY23.

Part of the growth has been due to strong performance by the investment funds. Net inflows continue to be strong. In the first two months of FY24, it experienced net inflows of US$3 billion. I think there’s a good likelihood that the appealing inflows can continue.

Of course, a large fall of the stock market could hurt the ASX stock’s FUM in the short term, but I think that risk is reflected in the low price/earnings (P/E) ratio. It’s valued at around 15 times FY23’s earnings, and remember the FUM has grown significantly since then.

Private capital business can boost the ASX stock

The core business is going strong, and GQG recently announced it has launched GQG Private Capital Solutions, which it described as its “first foray” into private markets.

It bought minority interests in the fund managers of Avante Capital Partners, Proterra Investment Partners and Cordillera Investment Partners for US$71.25 million.

GQG is going to offer a broad range of financing and strategic solutions to mid-market private capital asset management outfits.

This new business will operate independently from GQG’s traditional global equities business but in synergy with its global distribution network.

I think this is an appealing diversification of earnings, and opens up more growth for GQG.

Foolish takeaway

According to the projection on Commsec, GQG is forecast to pay a dividend yield of more than 8% in FY24. I think this is a very good yield, and we can benefit from pleasing cash returns while holding for the longer term and hopefully seeing more growth.

I think this ASX stock is one of several with a very promising future.

The post This ASX stock has jumped 32% this year, I think it can keep soaring appeared first on The Motley Fool Australia.

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More reading

• 4 ASX growth shares I think will benefit from interest rate cuts in 2024
• Buy this ASX All Ords stock for a 15% gain and 9% dividend yield
• 2 ASX growth stocks I’d buy for rapidly rising profit
• I think they can! 3 ASX shares that can keep chugging higher
• 3 high-yield ASX dividend shares that pay cash every quarter

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

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ANZ Group Holdings Ltd (ASX: ANZ) shares are starting the week positively.

In morning trade, the banking giant’s shares are up almost 1% to $29.29.

Why are ANZ shares rising?

There are a couple of reasons why the bank’s shares are pushing higher on Monday.

The first is that the banking sector is having a particularly positive start to the week. This has seen all the big four and regionals rise this morning, driving the S&P/ASX 200 Financials sector higher.

In addition, there was some news out of ANZ today that may have given its shares a boost.

What did ANZ announce?

This morning, ANZ announced that it has reached an agreement to settle a class action brought against it by Phi Finney McDonald in 2021.

This class action relates to certain interest charged on some ANZ personal credit cards in the period from 1 July 2010 to 1 January 2019.

As a reminder, the claim alleged that ANZ charged interest to customers retrospectively on credit card purchases that previously had the benefit of an interest-free period.

The claim further alleged that ANZ did not provide transparent instructions to its interest-free credit card customers of the manner in which it charged retrospective interest and that customers had no ability to determine the amount they would pay.

According to the announcement, ANZ has agreed to pay $57.5 million to settle the claim.

The good news is that this amount is fully covered by a provision that was held at 30 September 2023.

ANZ also advised that the “settlement is without admission of liability and remains subject to court approval.”

Following today’s gain, ANZ’s shares are now up an impressive 30% over the last 12 months. To put that into context, a $20,000 investment a year ago would now be worth approximately $26,000. And that doesn’t include the dividends the bank has paid to its shareholders over the period.

The post ANZ shares charge higher on $57.5 million class action settlement news appeared first on The Motley Fool Australia.

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More reading

• Here’s the ANZ dividend forecast through to 2026
• 3 fantastic high-yield ASX dividend shares to buy next week
• 4 ‘overheated’ ASX 200 shares to stay away from
• If I’d put $5,000 in ANZ shares at the start of 2024, here’s what I’d have now
• How I’d invest $20k to target $1,400 a year from ASX dividend shares

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

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I like investments that have the building blocks to deliver a mixture of both capital growth and dividends over time. The S&P/ASX 200 Index (ASX: XJO) dividend stock Brickworks Limited (ASX: BKW) is one of those investments in my opinion.

There are a few different segments to the Brickworks business – it has an investments segment that is delivering long-term capital growth and dividend growth itself. Brickworks has an Australian building products division, a North American building product division and an industrial property division.

It recently reported its FY24 first-half result, which was heavily impacted by lower property valuations due to higher interest rates and lower property development profits.

Brickworks reported a statutory net loss after tax of $52 million, which was a decline of 115% because of a $249 million hit relating to property revaluations and sales.

Strong underlying performance

This period has shown me the strength of the core building products businesses. They have strong pricing power and have unlocked impressive efficiencies. Both the Australian and US building product divisions achieved growth of earnings before interest, tax, depreciation and amortisation (EBITDA).

Demand for building products may reduce in the short-term because of the headwinds for the economy, but Brickworks plans to use this time for maintenance activities.

The ASX 200 dividend stock can’t control property prices, but it’s seeing excellent gross rental income growth – HY24 saw a 17% increase of rental income to $81 million. Despite a 47% increase in borrowing and other costs to $31 million, the net trust income rose 4% to $51 million, with Brickworks having a 50% share of that.

Why I think the ASX 200 dividend stock is a buy

Despite the hit caused by higher interest rates, the business has a very impressive asset base, which I think the market is undervaluing. That includes the value of its listed investments, the property trust net tangible assets (NTA), the building product segments’ NTA, the market value of development land, and the net debt.

Brickworks showed that, as of 31 January 2024, its underlying value per share was $36.68. However, its share price is currently at a 25% discount to this. I think that represents a very appealing valuation.

The ASX 200 dividend stock said that once fully developed, the rental potential of the property trust could reach $340 million, compared to the current annualised rent of the portfolio, which is $172 million. It could take five years before the Oakdale East stage 2 is finished, and it may take a while for the lease renewals and review to flow through.

To me, it seems there is very strong rental growth in line for Brickworks, which can fund bigger dividends.

Brickworks has increased its interim dividend for ten years in a row and it has been 48 years since the last time the full-year normal dividend was decreased. Using the last two declared dividends, it offers a grossed-up dividend yield of 3.4%.

After a 10% fall of the Brickworks share price since 8 March 2024, I think this could be an appealing time to pounce.

The post This ASX 200 dividend stock looks like a top buy to me appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• 5 things to watch on the ASX 200 on Friday
• Why AGL, Brickworks, IGO, and New Hope shares are dropping today
• Brickworks share price tumbles on disappointing half-year loss
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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 300 Index (ASX: XKO) is off to a strong start today, and this ASX 300 stock is doing plenty of the heavy lifting.

At the time of writing on Monday morning, the ASX 300 is up a healthy 0.7%, while shares in this marine-related services provider are up 10.0%, trading for $2.585 apiece.

Any guesses?

If you said MMA Offshore Ltd (ASX: MRM) give yourself a virtual gold star.

Here’s why investors are sending MMA Offshore shares soaring.

ASX 300 stock rockets on takeover offer

ASX investors are snapping up MMA Offshore shares after the company announced it has entered into a binding scheme implementation deed with Cyan MMA Holdings for the proposed acquisition of all the ASX 300 stock’s shares via a scheme of arrangement.

Cyan is owned by Seraya Partners, an infrastructure fund focused on energy transition and digital infrastructure.

Under the proposed acquisition, shareholders will receive $2.60 cash per MMA Offshore share. That’s 10.6% above Friday’s closing price of $2.35 a share. And it values the ASX 300 stock on a fully diluted basis at approximately $1.03 billion.

Cyan said it plans to keep MMA Offshore’s workforce and to expand further into offshore wind support services. Cyan also intends to continue offering marine and subsea services to existing clients in the offshore energy and broader maritime industries.

Commenting on the takeover offer sending the ASX 300 stock rocketing today, MMA Offshore chairman Ian Macliver said, “We have been in discussions with Cyan since October 2023 and the board has now reached the required level of confidence to enter into the scheme implementation deed.”

Macliver added:

We believe Cyan’s offer provides compelling value for MMA today, representing a 31% premium to the 90- day volume weighted average share price, a 91% premium to the company’s net tangible asset value and a 7.7x earnings multiple based on annualised first half FY24 EBITDA.

The MMA Offshore board unanimously recommends shareholders vote in favour of the scheme at the scheme meeting, barring a superior proposal.

MMA Offshore share price snapshot

It’s been a great year for MMA Offshore shareholders, with the ASX 300 stock now up 137% over 12 months.

The post Guess which ASX 300 stock is rocketing 10% on a $985 billion cash bid! appeared first on The Motley Fool Australia.

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More reading

• 4 Australian shares set to soar in 2024
• Which ASX shares delivered the biggest profit jumps of the earnings season?

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 recommended Mma Offshore. 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 illustrious ASX 50 index is home to 50 of the largest listed companies on the Australian share market.

While there are a number of quality options on offer in the index, two that could be in the buy zone according to analysts at Morgans are listed below.

Here’s why the broker believes these ASX 50 shares are best buys:

CSL Ltd (ASX: CSL)

Morgans remains very positive on this biotechnology giant and continues to see it as a top option for investors. Particularly after its shares underperformed in recent times. It commented:

While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares trading at 25x, a substantial discount (20%) to its long-term average.

Morgans has an add rating and $315.40 price target on its shares. This implies potential upside of almost 12% for investors.

Woodside Energy Group Ltd (ASX: WDS)

Another ASX 50 share that has been given the thumbs up by analysts at Morgans is energy giant Woodside.

Its analysts are positive on the company due to its attractive valuation, healthy balance sheet, and the progress it is making with its current capex phase. It commented:

A tier 1 upstream oil and gas operator with high-quality earnings that we see as likely to continue pursuing an opportunistic acquisition strategy. WDS’s share price has been under pressure in recent months from a combination of oil price volatility and approval issues at Scarborough, its key offshore growth project.

With both of those factors now having moderated, with the pullback in oil prices moderating and work at Scarborough back underway, we see now as a good time to add to positions. Increasing our conviction in our call is the progress WDS is making through the current capex phase, while maintaining a healthy balance sheet and healthy dividend profile. WDS still has to address long-term issues in its fundamentals (such as declining production from key projects NWS/Pluto), but will still generate substantial high-quality earnings for years to come.

Morgans has an add rating and $34.20 price target on its shares. This suggests potential upside of 14% for investors. In addition, the broker is forecasting a 4.5% dividend yield in FY 2024, boosting the total potential return beyond 18%.

The post 2 of the best ASX 50 shares to buy now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Buy Westpac and this ASX dividend giant
• Here are the top 10 ASX 200 shares today
• ASX energy shares losing charge amid fresh warnings of gas supply shortfalls
• I’d spend $5k on these ASX 200 shares today to target a $13,080 passive income

Motley Fool contributor James Mickleboro has positions in CSL and Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. 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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Various stock markets are close to all-time highs. The S&P/ASX 200 Index (ASX: XJO) is close to its recent all-time high, with many ASX shares at a higher valuation.

The global share market has also been reaching all-time highs. Just look below at the unit price of the exchange-traded fund (ETF) Vanguard MSCI Index International Shares ETF (ASX: VGS).

Finding opportunities can be trickier when asset prices are high. Buying things at appealing prices can usually give us a better margin of safety. But what are we supposed to do when there’s less margin of safety?

In my mind, there are three ways to go.

Look for the pockets of opportunity

The entire ASX stock market doesn’t move in unison – if the ASX 200 goes up 1%, it doesn’t mean every single business has gone up 1% – some will have increased by 2% or 3% and a few may have gone down. We can still find opportunities among the expensive valuations. There are always some companies that are being underpriced, in my opinion.

I think the recent strength of the ASX 200 has been driven by the ASX bank share sector, including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

Plenty of businesses with good growth prospects aren’t at all-time highs. I’ve been looking at companies like Johns Lyng Group Ltd (ASX: JLG), Metcash Ltd (ASX: MTS), Close The Loop Ltd (ASX: CLG), Accent Group Ltd (ASX: AX1) and Brickworks Limited (ASX: BKW).

I’m not going to call ASX iron ore shares great opportunities at this stage, though their share prices have fallen amid a decline in the iron ore price. If/when the iron ore price goes below US$100 per tonne on a sustained basis, that could be a more appealing time to invest in names like Rio Tinto Ltd (ASX: RIO) and BHP Group Ltd (ASX: BHP).

Exchange-traded funds (ETFs)

If we can’t decide on a particular business to invest in, it could still be a good option to invest in the share market as a whole and hold the ETF for the long term.

The VGS ETF has hit numerous all-time highs over the past decade – it would have been a mistake never to invest just because it had reached an all-time high in 2017. Of course, there has been volatility along the way, but rising profits have helped push share prices higher over time.

I’m not saying the global share market is great value today, but I believe the long-term is still promising.

I’d be willing to invest in the VGS ETF, as well as other ASX-listed ETFs that I think have appealing capital growth potential such as VanEck Morningstar Wide Moat ETF (ASX: MOAT) and Betashares Global Cybersecurity ETF (ASX: HACK).

Be patient

The last four years have shown that volatility for the (ASX) stock market is usually never too far away. We don’t need to rush investing, we can be patient and wait until we find something we like.

Earnings can grow, and/or there could be a fall in share prices in the future.

Warren Buffett, one of the world’s greatest investors, has said some wise things about this:

The stock market is a device to transfer money from the impatient to the patient.

Buffett also once made a comparison between baseball and investing, making the point that you don’t need to swing at every pitch. He said:

The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.

Being patient wouldn’t be a bad thing at all with ASX shares.

The post Where should I invest in ASX shares when the stock market is at an all-time high? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Invest $500 in these outstanding ASX ETFs
• Here are the top 10 ASX 200 shares today
• 12 ASX ETFs breaking the mould to hit 52-week highs today
• How a potential demerger could deliver a 10% upside for this ASX 200 stock

Motley Fool contributor Tristan Harrison has positions in Accent Group, Brickworks, Close The Loop, Johns Lyng Group, and Metcash. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Cybersecurity ETF, Brickworks, Close The Loop, and Johns Lyng Group. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF and Brickworks. The Motley Fool Australia has recommended Accent Group, Close The Loop, Johns Lyng Group, Metcash, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. 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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Electro Optic Systems Holdings Ltd (ASX: EOS) shares have returned from a trading halt and crashed deep into the red.

In morning trade, the high-flying ASX All Ords stock is down 19% to $1.69.

Though, the defence and space systems technology company’s shares remain up approximately 275% on a 12-month basis despite today’s weakness.

Why is this ASX All Ords stock crashing?

The catalyst for this weakness has been the completion of the company’s fully underwritten placement.

According to the release, Electro Optic Systems has successfully completed a $35 million fully underwritten placement of approximately 20,588,235 new shares to eligible institutional investors at a price of $1.70 per new share.

This represents an 18.3% discount to where the ASX All Ords stock was trading prior to its halt.

It will now push ahead with its share purchase plan which aims to raise a further $5 million at the same price as its institutional placement. Though, given today’s decline, it remains to be seen how appealing this will be to shareholders.

Why is it raising funds?

Electro Optic Systems advised that it is raising the funds to support future sales growth in key global markets. This is through the investment in long lead time critical supplies, specifically RWS cannons, investment in other long lead time equipment components, and security deposits for bank guarantees.

The ASX All Ords stock’s managing director and CEO, Dr Andreas Schwer, was pleased with the placement. He said:

The Placement attracted healthy demand. We are grateful for the ongoing support from our existing institutional shareholders and pleased to welcome a number of new international and local institutional investors to the register. We are delighted to have secured the funding required to support our ongoing growth.

The post Guess which high-flying ASX All Ords stock is crashing 19% today appeared first on The Motley Fool Australia.

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More reading

• Up 102% in 2024, here’s why this ASX All Ords stock is now frozen
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• Why APM, DroneShield, EOS, and NextDC shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. 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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Pilbara Minerals Ltd (ASX: PLS) shares are starting the week in the red.

In morning trade, the lithium miner’s shares are down 1.5% to $3.85.

Why are Pilbara Minerals shares falling?

Investors have been seling the company’s shares today after broad weakness in the lithium industry offset the release of an update on its downstream plans.

According to the release, Pilbara Minerals and Ganfeng Lithium have executed a binding term sheet to complete a joint feasibility study for a potential 32,000 tonnes per annum (tpa) downstream conversion facility to produce lithium chemicals.

Ganfeng Lithium is one of the world’s leading lithium chemical converters.

The feasibility study will also assess production of a potential intermediate lithium chemicals product in Australia to reduce transportation volumes and carbon footprint.

The study is expected to be completed in the March quarter of 2025 with an option to progress to a final investment decision and formation of a joint venture soon after.

The release also explains that an agreement has been made on a range of principles which the parties intend to give effect to if the joint venture proceeds. This includes 50:50 ownership, offtake of 300,000 tpa of spodumene concentrate supplied by Pilbara Minerals, and willingness to explore Inflation Reduction Act (IRA) benefits through a project equity sell-down.

Location

Part of the study will be focused on assessing the location for the lithium chemical plant.

While Australia is an option, management advised that it will explore greater geographical diversification in the battery chemicals supply chain.

It notes that preliminary engagement with several countries has indicated strong interest in establishing lithium chemical production with potential economic, taxation, and funding incentives on offer, together with access to land and offers of assistance with permitting and approvals.

‘Delighted’

Pilbara Minerals’ managing director and CEO, Dale Henderson, was delighted with the news. He said:

We are delighted to have selected our long-standing customer, Ganfeng, to join us in taking the next step towards a major downstream facility for lithium battery chemicals production. This incremental move supports our strategic aim to capture greater value through the supply chain and realise the benefits of supply chain integration.

Ganfeng is a leader and major supplier of lithium chemicals globally. Over the course of its 24-year history, Ganfeng has grown extensive global supply chain relationships with many of the major operators in this emerging battery materials industry. Ganfeng has also distinguished itself for its strong R&D capability and operating performance, especially for producing low cost and high-quality lithium chemicals. These attributes, in combination with our strong alignment to maximise shareholder returns, provide a great match to extend our established relationship together.

Pilbara Minerals shares remain up 12% over the last 12 months.

The post Pilbara Minerals shares fall despite downstream deal with Ganfeng Lithium appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• What is the current lithium price?
• Analysts say these beaten down ASX lithium shares are strong buys
• The price I would pay for Pilbara Minerals shares during this lithium slump
• These are the 10 most shorted ASX shares

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

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If you’re searching for some income options for your portfolio, then it could be worth checking out the two ASX 300 dividend shares listed below.

Here’s what analysts are saying about these buy-rated shares:

Centuria Industrial REIT (ASX: CIP)

The first ASX 300 dividend share that could be a buy according to analysts is Centuria Industrial.

It is Australia’s largest domestic pure play industrial property company with a portfolio of 88 high-quality, fit-for-purpose industrial assets. Management notes that approximately 66% of portfolio income is derived from tenants directly linked to the production, packaging and distribution of consumer staples, pharmaceuticals and telecommunications.

In response to last month’s half-year results, analysts at UBS retained their buy rating and $3.71 price target on its shares.

As for income, the broker is expecting Centuria Industrial to pay dividends per share of 16 cents in both FY 2024 and in FY 2025. Based on the current Centuria Industrial share price of $3.54, this represents yields of 4.5% in both years.

Coles Group Ltd (ASX: COL)

Another ASX 300 dividend share for income investors to look at is supermarket giant Coles.

Bell Potter is has become a big fan of the company following earnings season. So much so, it has just added the supermarket operator to its preferred list. These are Australian equities that it believes offer attractive risk-adjusted returns over the long term.

It made the move thanks to a stronger than expected half-year profit and its belief that “management has multiple levers to profit improvement.”

The broker is now forecasting fully franked dividends of 64 cents per share in FY 2024 and 70 cents per share in FY 2025. Based on the current Coles share price of $16.49, this will mean yields of 3.9% and 4.25%, respectively.

Bell Potter has a buy rating and $19.00 price target on its shares.

The post Buy Coles and this ASX 300 dividend share appeared first on The Motley Fool Australia.

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More reading

• Popular ASX All Ords shares with ex-dividend dates next week
• 2 things I’m waiting for before buying Coles shares
• How I’d invest $20k to target $1,400 a year from ASX dividend shares
• Why these excellent ASX dividend shares have been named as buys
• Where I’d invest $30,000 in ASX shares for passive income

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 Coles 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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The iShares S&P 500 ETF (ASX: IVV) has done fabulously well for investors in the past 12 months, up around 34%. The S&P/ASX 200 Index (ASX: XJO) has only risen by around 11% in the same time.

I would say it’s unlikely that the IVV ETF will increase by another 34% over the next year.

After such a strong rise, it’s important to ask the question of whether it’s a good time to buy. I’m going to look at the pros and cons of potentially purchasing right now.

Negatives of buying today

No business is a buy at any price, nor are the 500 largest US businesses a buy at any price.

Investing in assets is obviously better at lower prices rather than higher prices. We don’t know when prices will move up or down, but volatility does regularly occur. Buying near all-time highs is not an ideal purchase price.

It’s possible that a better price could be just around the corner, and we can earn a solid rate of interest income in the meantime.

Interest rates are very high compared to the last several years, which is meant to drag down on asset prices. Inflation is rising again in the US and this may mean that interest rates have to stay higher for longer than some investors are expecting. Today’s valuations may have gotten ahead of themselves.

There is also the looming US election that could have an impact on US valuations, depending on what happens.

Positives of buying the IVV ETF today

I think one of the most effective investment strategies for regular Aussies is to invest regularly in quality exchange-traded funds (ETFs). This can be called dollar cost averaging. Sometimes it means investing during a bear market at good prices and sometimes it means investing at higher prices.

Long-term growth over time has meant anyone who bought a decade ago, five years ago or a year ago has seen good capital growth. Capital growth is definitely not certain, particularly over shorter periods of time, but there are positive trends to help.

Businesses keep offering new and improved services, the population keeps rising, and the inflationary environment is helping (advantaged) companies increase prices. Bigger profits is one of the most helpful things to support higher share prices over time.

In a decade from now, I think the IVV ETF unit price could be substantially higher than where it is today.

Foolish takeaway

If I were regularly investing in the iShares S&P 500 ETF, I’d be willing to invest right now and hold for the long-term.

However, if I had a one-off $5,000 to invest, I’d be willing to wait for a lower price sometime this year. I still think there are a number of good value ASX shares closer to home.

The post The pros and cons of buying the iShares S&P 500 ETF (IVV) right now appeared first on The Motley Fool Australia.

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More reading

• 12 ASX ETFs breaking the mould to hit 52-week highs today
• 4 top ASX exchange-traded funds smashing record highs on Wednesday
• 3 Australian shares to buy and hold forever in your ASX portfolio
• Can you buy Nvidia shares on the ASX?
• Are these record-breaking ASX ETFs now too expensive to buy?

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 iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. 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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