Tag: Motley Fool

I have a goal to reach $30,000 in annual dividend income in the future. And passive income from ASX dividend shares is exactly what I need to reach my objective.

There are many different types of assets that can produce income such as property, savings accounts, term deposits and bonds. For me, ASX dividend shares are the way to go.

I’m not just trying to buy the ASX shares with the highest dividend yield. Nor am I sticking with ASX blue-chip shares for my dividend goal. I believe there are businesses that are a bit smaller which can provide plenty of capital growth and dividend growth over time.

How I’m building towards my passive income dividend goal

It would be great if I were handed $1 million tomorrow so that I could invest and instantly reach my goal.

My actual strategy is to invest a monthly amount, however much my household has saved that month, into the most compelling ASX dividend share at the time that I can see.

I have a watchlist of individual businesses on the ASX, as well as listed investment companies (LIC). Some of the businesses that are currently in my portfolio include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Rural Funds Group (ASX: RFF), Fortescue Metals Group Limited (ASX: FMG), Duxton Water Ltd (ASX: D2O) and Bailador Technology Investments Ltd (ASX BTI).

Sometimes performance can be quite variable in the short term. Just look at the share prices of Fortescue and Bailador over the past year.

Each investment has a different dividend yield. But, let’s say that the investment I make each month comes with an average dividend yield of 5%. Investing $1,000 that month would add an extra $50 of annual income. Investing $2,000 in a month would add $100 of extra income.

If the business paying me $100 of annual income in year one grows its dividend by 10%, then in year two I’d get $110 of annual passive dividend income from that investment.

Investing month after month, year after year will help me reach my $30,000 goal of income.

How long it takes will depend on how much I invest and how well those investments grow. I can control how much I invest, but I view it as important to spend money on things that make my family and me happy. I’m not trying to save every last dollar.

If I’ve chosen a good investment, then I just need to be patient and let it grow over time, including through volatility. The less tinkering the better. Compounding is a very powerful force if it’s allowed to run its course.

Foolish takeaway

Receiving $30,000 of annual passive dividend income still seems like a long way off. But, I believe that if I just keep regularly investing I will get there, it’s just a matter of time. Regular readers may know that I sometimes cover the shares I buy, so I’ll be writing about where I’m seeing value for my own dividend-focused portfolio.

The post ASX passive income: My game plan to reach $30,000 per year appeared first on The Motley Fool Australia.

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More reading

• Which ASX dividend shares I’d buy now to target $50,000 of annual passive income
• Why a merger between Fortescue and this major-league miner could make sense: expert
• Why Fortescue shares could be facing a Meta-like problem
• Should I buy ASX mining shares now or not?
• ASX income stocks: A once-in-a-decade chance to get rich?

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments, Brickworks, Duxton Water, Fortescue Metals Group, Rural Funds Group, 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 Bailador Technology Investments, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Bailador Technology Investments. 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 think that ASX stocks are a great way for investors to unlock passive income. Metcash Limited (ASX: MTS) shares could be one of the best options for dividends.

Metcash might not be a name that many investors are familiar with. However, it’s the company that supplies IGA supermarkets. It’s also the supplier of liquor to Cellarbrations, The Bottle-O, IGA Liquor, Thirsty Camel, Big Bargain Bottleshop, Duncans and Porters Liquor.

But, it also has a hardware division that is the second-largest player in the Australian hardware market. It has the Mitre 10 brand, Home Timber & Hardware and Total Tools. There are over 700 stores across metro and regional areas across the country.

Metcash passive dividend income expectations

A monthly passive income of $500 equates to $6,000 of annual passive dividend income.

According to data on Commsec, the company is projected to pay an annual dividend per share of 22 cents. If an investor had just over 27,000 Metcash shares then they’d get the $6,000 in cash dividends, plus all of the franking credits as well. The franking credits can be a boost to after-tax returns.

At the current Metcash share price, the 22 cents per share forecast equates to a grossed-up dividend yield of around 7.5%.

The dividend yield is quite high because the company aims to have a dividend payout ratio of around 70% of underlying earnings. This still leaves around 30% of annual underlying earnings within the business so that it can achieve more growth in the next year.

Why is the ASX stock compelling?

I think there has to be more to an ASX dividend share than its dividend yield to make it investable. I believe it needs to offer good signs of longer-term profit growth.

With Metcash, the company says that its operating leverage is helping with price competitiveness and high costs.

The ASX stock is focused on improving the network competitiveness of the food stores, with upgrades and refreshes. The supply chain is being improved with distribution capacity and capability expansion – a new distribution centre in Victoria is expected in 2024.

In liquor, there are investments in stores and cool room upgrades. It’s introducing more owned and exclusive brands to the portfolio to support supplier partnerships. Metcash is also working on improving the supply chain of the liquor division.

The hardware division now makes the most earnings before interest and tax (EBIT). The company is working on growing the store network, improving its offer for builders, as well as growing its presence in the DIY part of the market.

The second half of FY23 started well. In the first four weeks, Metcash reported food sales growth of 4%, hardware sales growth of 8% and liquor sales growth of 8.9%. This could drive the passive dividend income higher in FY23.

Foolish takeaway

I think Metcash’s operations offer a good mix of defensive earnings with food and liquor, as well as growth through the hardware division.

Its shares look good value to me, trading at just 13 times FY23’s estimated earnings according to Commsec.

The post Want $500 in monthly passive income? Buy 27,000 shares of this ASX stock in 2023 appeared first on The Motley Fool Australia.

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More reading

• 3 cheap ASX shares that can help me easily build a second income
• 4 best ASX dividend shares to buy right now: expert
• Here are the top 10 ASX 200 shares today
• Are ASX 200 retail shares on sale in 2023?
• Why ASX dividend shares are so ‘critical’ right now: fundie

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Metcash. 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 Bank of Queensland Ltd (ASX: BOQ) share price has struggled to keep up with the S&P/ASX 200 Index (ASX: XJO) over the last decade.

$1,000 likely would have bought 123 Bank of Queensland shares in January 2013. Then, the bank’s stock was trading at around $8.10.

Today, the Bank of Queensland share price is around 14% lower at $6.93, leaving our figurative parcel valued at just $852.39.

For comparison, the ASX 200 has gained nearly 55% over the last decade.

But have the dividends on offer from Bank of Queensland made up for its share price’s sluggishness? Let’s take a look.

All the dividends offered by Bank of Queensland shares since 2013

Here are all the payments the Queensland-based bank has offered shareholders over the last 10 years:

BOQ dividends’ pay date	Type	Dividend amount
November 2022	Final	24 cents
May 2022	Interim	22 cents
November 2021	Final	22 cents
May 2021	Interim	17 cents
November 2020	Final	12 cents
November 2019	Final	31 cents
May 2019	Interim	34 cents
November 2018	Final	38 cents
May 2018	Interim	38 cents
November 2017	Final and special	46 cents and 8 cents
May 2017	Interim	38 cents
November 2016	Final	38 cents
May 2016	Interim	38 cents
November 2015	Final	38 cents
May 2015	Interim	36 cents
November 2014	Final	34 cents
May 2014	Interim	32 cents
December 2013	Final	30 cents
May 2013	Interim	28 cents
Total:		$6.04

As the chart above shows, those invested in the bank’s shares have likely received $6.04 per stock in dividends since early 2013.

That means our figurative parcel probably yielded $742.92 – enough to boost its returns back into the green. 

Considering both share price movements and dividends, the stock boasts a 10-year return on investment (ROI) of 60%.

And that’s before considering any additional benefits investors may have received from franking credits. All the bank’s offerings during that time were fully franked.

Bank of Queensland shares currently offer a notable 6.6% dividend yield.

The post Did you buy $1,000 of Bank of Queensland shares 10 years ago? Here’s how much dividend income you’ve made appeared first on The Motley Fool Australia.

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More reading

• 10 types of ASX companies that can grow even if the economy tanks
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Will Liontown Resources post a profit in 2023?
• ‘Exploration breakthrough’: What’s going on with this ASX 200 copper share today?

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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Although they are trading well off their highs, Core Lithium Ltd (ASX: CXO) shares have still been a great place to invest over the last 12 months.

As you can see on the chart below, the lithium developer’s shares have risen 52% since this time last year.

This would have turned a $10,000 investment into $15,200.

But that was then, and this is now. What might a $10,000 investment today look like in a year?

What return could you get from Core Lithium shares

Opinion is divided on where Core Lithium shares are heading between now and this time next year.

In the bear corner you have Goldman Sachs, which thinks the company’s shares are overvalued. It has a sell rating and 95 cents price target on them. This compares to the current Core Lithium share price of $1.11.

If Goldman is on the money with its recommendation, a $10,000 investment would be worth approximately $8,500 at the end of the year. Not great!

The bull corner

In the bull corner you have Macquarie.

Its analysts recently upgraded the company’s shares to an outperform rating with a $1.30 price target. Based on its current share price, this implies potential upside of 17% for investors over the next 12 months.

This would turn a $10,000 investment into $11,700, which is much better!

Will the bulls or bears win?

It is impossible to know which broker will make the right call.

However, what may have a major say on things is the lithium price. With Goldman Sachs expecting lithium prices to start their significant decline later this year, sentiment could improve if prices stay strong.

Conversely, if they start to weaken as Goldman predicts, this could put a lot of pressure on the lithium industry and send Core Lithium shares tumbling towards the broker’s bearish price target.

Investors may want to keep a close eye on the monthly digital lithium auctions held by Pilbara Minerals Ltd (ASX: PLS). The prices it commands each month should provide investors with an idea of what is happening behind the scenes in the industry.

The post If I invest $10,000 in Core Lithium shares now, what could my return be this year? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Here are the top 10 ASX 200 shares today
• Down 41% since November, is the Core Lithium share price a bargain buy now?
• Here are the 10 most shorted ASX shares
• My top predictions for ASX lithium shares 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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With so many uncertainties in 2023, ‘structural growth’ seems to be the hot buzz term in investing at the moment.

Inflation is still raging, higher interest rates are bearing down on businesses and consumers, and many experts reckon the global economy is about to put the brakes on very soon. 

Those barracking for ‘structural growth’ ASX shares are taking the logic that those businesses will be more resistant to short-term calamities because they have long-term trends driving their earnings.

Pengana investment specialist Tim Richardson recently named ageing population as one of his drivers of structural growth.

“Ageing populations in developed economies and Asia will support spending on healthcare, including medical insurance, care facilities, and pharmaceutical development.”

Tribeca portfolio manager Jun Bei Liu agreed that healthcare is a theme worth backing at the moment.

“In this environment, you need to find some of the structural defensive growth leaders. We like the healthcare sector,” she said at a GFSM briefing in Sydney on Tuesday.

Don’t just buy any old healthcare stock though

It’s critical not to go all-in on a particular sector though. Bottom-up analysis is crucial in 2023 for stock picking, according to Liu.

“The challenge [for healthcare] is they do have that foreign US dollar sort of exposure. As the US dollar becomes weaker, the earnings will fall.”

Liu named two particular ASX shares in health that she loves at the moment: Ramsay Health Care Ltd (ASX: RHC) and CSL Limited (ASX: CSL).

Ramsay shares plunged last year after a private equity consortium led by KKR cancelled a takeover bid.

That just gives it a mouth-watering entry point, as far as Liu is concerned.

“I always say this company is something I put my mother’s money in — and I do. 

“It’s very defensive. It’s going into an earnings upgrade cycle with double its earnings because of hospitals reopening. It’s got assets — something like $1 billion — they can spend out to improve the balance sheet.”

If private equity comes sniffing again, then that’s icing on the cake.

She nominated CSL as a safe bet in the coming period.

“I know it’s boring but it’s very defensive. It’s going to grow double digits for the next three years and [the] share price hasn’t really rallied aggressively relative to others.”

Ramsay shares have risen 5.6% this year, while CSL is up 5.7%.

Liu’s recommendations concurred with the analysts at Firetrail, who released a memo this month explaining their overweight position in healthcare.

The Firetrail team, just like Liu, loves the look of Ramsay and CSL.

“Ramsay will likely deliver above-trend growth in 2023/24 as the surgery backlog is addressed,” read the memo.

“CSL is the ultimate defensive… CSL grew earnings per share by 60% during the global financial crisis, compared to a 20% fall in EPS for the S&P/ASX 200 Index (ASX: XJO).”

The post Jun Bei Liu’s 2 ‘structural growth’ ASX shares to buy now appeared first on The Motley Fool Australia.

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More reading

• 3 of the best ASX 200 shares to buy in 2023: Bell Potter
• 3 ASX shares to buy in the hottest sector for 2023: Firetrail
• If I invest $10,000 in CSL shares now, what could my return be this year?
• Top brokers name 3 ASX shares to buy next week
• How I’d invest $40k in ASX shares and aim for $1 million

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

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Coles Group Ltd (ASX: COL) shares look like a solid S&P/ASX 200 Index (ASX: XJO) share in my opinion.

The Coles business has three different divisions – supermarkets, liquor and service stations. Some of the liquor brands include Liquorland, First Choice Liquor and Vintage Cellars.

Coles shares have seen a bit of pain, down around 10% over the past six months. With the defensive nature of supermarket earnings, I think it’s a good idea to look at Coles in the economic environment.

Resilient business model

We all need to eat, lots of people like to drink alcohol and a large amount of the population need to use a petrol station regularly. When you put that all together, it seems like Coles’ earnings could hold up, even if there’s a recession. Though, the business is looking to sell its petrol business to Viva Energy Group Ltd (ASX: VEA).

According to Commsec, in the 2023 financial year, the business is expected to generate 79.6 cents of earnings per share (EPS). Then, EPS could rise to 82 cents in FY24 according to Commsec.

In FY22, the company generated 78.8 cents of EPS, so the current projections show that earnings could rise slightly, despite all of the disruption to the economy with inflation and so on.

I think the update for the first quarter of FY23 showed this potential (slight) growth for FY23 in action, with total sales revenue growth of 1.3% to $9.89 billion.

Why I think the ASX 200 share looks like an opportunity

Despite the projection that the business is going to grow earnings over the next two years, the Coles share price is lower than earlier in the year, so investors can invest at a seemingly better value.

Using the estimates on Commsec, Coles is valued at 22x FY23’s projected earnings. Woolworths Group Ltd (ASX: WOW) shares are valued at 25x FY23’s projected earnings. Coles shares look a bit cheaper than its main competitor.

I think the ASX 200 share is doing a number of good things to grow profit in the future, including lowering its costs, launching more own brand products, investing in automated distribution warehouses and being a more sustainable business.

The dividend income could also provide a good boost to the total return in 2023 and beyond. It’s expected, according to Commsec, to pay a grossed-up dividend yield of 5.4%.

While it may not generate a lot of growth, I think the business can achieve slow-and-steady progress, which could be enough to produce outperform this year.

The post I think Coles shares are a top ASX 200 buy for 2023 appeared first on The Motley Fool Australia.

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More reading

• Coles shares: Here are the dividend forecasts for 2023 and 2024
• Here are the top 10 ASX 200 shares today
• Are ASX 200 retail shares on sale in 2023?
• Want 17% upside plus dividend income? Broker says buy Coles shares
• How I’d invest my very first $500 in ASX shares in 2023

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 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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Goldman Sachs has been busy running the rule over the insurance industry and named QBE Insurance Group Ltd (ASX: QBE) shares as its top pick.

This morning, the broker has initiated coverage on the company with a buy rating and $16.67 price target.

Based on its current share price of $13.60, this implies potential upside of over 22% for QBE shares over the next 12 months.

Goldman is also expecting a 5.3% dividend yield in FY 2023, boosting the total potential return beyond 27%.

Seven reasons to buy QBE shares

The broker has named seven reasons why it thinks investors should buy QBE shares right now.

The first couple of reasons relate to favourable industry tailwinds, which are expected to boost its near term performance. It explained:

We like QBE because: 1) It is most exposed to the strength in the commercial premium rate cycle which we think will continue, particularly in classes exposed to higher reinsurance costs and underlying claims inflation such as commercial property / motor. Comments from QBE have been clear that they are pricing ahead of loss cost inflation; 2) QBE is seeing organic volume growth on a constant currency basis ex-crop and price increases. We think the strong rate environment coupled with underlying volume growth provides flexibility for QBE to manage any trade-off between top line net earned premium (NEP) growth and margins. 3QYTD constant currency GWP growth was 16% v guidance of 10% constant currency for FY22 – which we think looks conservative.

Goldman also likes the company’s reserve strength and sees opportunities for further margin expansion thanks to stronger yields and changes in the property business. The broker commented:

3) We note that QBE continues to build reserve strength by assuming an extended inflationary environment across reserving / pricing; 4) Yields are supporting margins and could see further upside into FY23. QBE is most sensitive to a lift in global interest rates including the US; 5) We see continued opportunity for margin expansion through remediation of QBE’s property business in North America and increasing mix to Crop. Our FY23 underlying insurance margins are close to 12%, and above Visible Alpha consensus of 11.5%. This is about a 1% improvement from FY22E at 10.9% underlying on 94% COR.

Finally, the broker believes QBE shares are trading at an attractive level compared to historical levels, particularly given its strong capital position. It concludes:

6) Valuation not demanding at ~9x FY23E BBG consensus v recent historical trading range around ~12-15x. We think an ongoing build of reserve strength and catastrophe allowances through a strong premium rate environment should help QBE improve the predictability and consistency of its results supporting a valuation re-rate. 7) Strong capital position expected at FY22 – at the upper end of target range.

The post 7 reasons to buy QBE shares: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Broker names 2 high yield ASX 200 dividend shares to buy now
• Buy QBE and this ASX 200 blue chip share: broker
• Buy Telstra and this ASX 200 dividend share: Morgans
• Morgans names 2 ASX 200 dividend shares to buy now
• ASX financial shares lifted the ASX 200 today

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 United States has just been through one of the coldest cold snaps in its history, with the weather so extreme that dozens of people died.

Energy systems strained under high demand, leaving 1.8 million American homes and businesses without electricity on Christmas Eve. Thousands of flights during the busy holiday season were cancelled.

“Two-thirds of the country were under extreme weather alert as the ‘bomb cyclone’ brought blizzard-like conditions and temperatures as low as minus 45 degrees celsius to some states,” read a Firetrail memo to clients.

Remarkably, out of this chaos, the team at Firetrail has picked out an ingenious stock investment idea:

This ASX company could be busy this year

Such a cold snap is a foreign concept to most Australians, who consider 15 degrees a “cold” day.

But Firetrail analysts noted that what the US has just been through puts a huge strain on infrastructure.

“A freeze event causes water in the pipes of home plumbing systems to expand, freeze and ultimately burst,” read the memo.

“The upshot is that repair and maintenance work for plumbers will spike following the catastrophic event.”

So what does this mean for ASX shares?

Firetrail reckons plumbing parts supplier Reliance Worldwide Corporation Ltd (ASX: RWC) could rake it in from all the pipes that need fixing in the US.

“Back in 2021, Reliance Worldwide saw an incremental $42 million, or 8.5%, increase in sales driven by the [previous] freeze event.”

The current forecast is for 3% revenue growth for the second half, but the Firetrail team suspects the company could beat this.

“We see upside to these expectations as the freeze event will clear any surplus inventory in the channel supporting demand into 2023,” the memo read.

“We believe the market is underestimating the portion of Reliance Worldwide’s sales that are linked to routine, nondiscretionary repair work.”

Freezing weather is becoming more routine

Unfortunately, global warming means extreme weather is becoming a more regular phenomenon.

“Events like these are becoming more frequent as illustrated by the fact that the last major freeze event in the US occurred in only 2021.”

To top it off, the Reliance share price is fairly cheap for anyone wanting to jump on the bandwagon right now.

That’s despite a 14.5% climb already this month.

“At 12x one-year forward P/E, we believe Reliance Worldwide offers investors an attractive entry point to a quality growth stock.”

The post ASX share to buy right now to cash in on a FREEZING American winter: Firetrail appeared first on The Motley Fool Australia.

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More reading

• Here’s a top ETF to buy for a passive income boost
• 3 small-cap ASX shares to rocket from this year’s mega-trends: fund manager
• 10 types of ASX companies that can grow even if the economy tanks
• 5 things to watch on the ASX 200 on Wednesday
• Guess which four ASX 200 lithium shares charged higher 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 positions in and has recommended Reliance Worldwide. The Motley Fool Australia has recommended Reliance Worldwide. 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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Wouldn’t it be great if you could build an income portfolio filled with quality dividend shares without any effort?

Well, here is some good news for you. There are a number of exchange traded funds (ETFs) listed on the Australian share market that have been designed to help income investors.

One that could be worth considering is listed below. Here’s what you need to know about this popular ETF:

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A top ETF for income investors to look at buying this month is the Vanguard Australian Shares High Yield ETF.

This ETF provides investors with easy access to ASX listed shares that have higher than average forecast dividends. Vanguard notes:

VHY is built smarter. Unlike most high yield equity ETFs, VHY uses forward looking broker estimates to determine which securities go in the fund. This ensures VHY can look past historical information and capture the securities that are forecast to pay a higher yield.

Vanguard also has diversity in mind when building its portfolio. The fund manager restricts the proportion invested in any one industry to 40% and 10% for any one company. This ensures that income investors are holding a diverse collection of dividend shares and not just a group of coal miners.

Included in the fund are a number of income investor favourites. This includes mining behemoth BHP Group Ltd (ASX: BHP), Australia’s largest bank Commonwealth Bank of Australia (ASX: CBA), and telco giant Telstra Corporation Ltd (ASX: TLS). Australian Real Estate Investment Trusts (A-REITS) are excluded from the index.

At the time of writing, the Vanguard Australian Shares High Yield ETF was trading with an estimated forward dividend yield of 5.6%.

The post Here’s a top ETF to buy for a passive income boost appeared first on The Motley Fool Australia.

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More reading

• Which of the Vanguard ASX ETFs has performed best over the past year?
• How I’d generate a $4,000 monthly passive income using only ASX ETFs
• Top ASX dividend shares to buy in January 2023
• Here are the ASX ETFs to buy for a passive income boost in 2023
• 2 excellent ETFs for ASX investors in January

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 Vanguard Australian Shares High Yield 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Eley Griffiths portfolio manager Nick Guidera explains why two mining companies and one tourism business are the best bets at the moment.

Hottest ASX shares

The Motley Fool: What are the three best stock buys right now?

Nick Guidera: Monadelphous Group Ltd (ASX: MND) — we believe mining services have been in the wilderness for much of the past five years, impacted by slowing global growth, COVID, labour shortages, rampant cost inflation, and the power resting squarely with the miners. As such, we have seen consolidation amongst the players, and a number of companies go broke.

Monadelphous is considered one of the quality tier-one contractors that is regularly used by the major miners BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) to build new mines and infrastructure as well as maintain some of the existing plants. Commodity prices had a strong end to 2022, buoyed by a falling US dollar and the hope of China’s reopening demand. Higher commodity prices are incentivising the miners to embark on new capital projects to increase or replace production. Monadelphous, as one of the superior engineering firms, is well placed to benefit from a significant amount of new work in a more rational operating environment. 

Iron ore prices have rallied from their lows of sub US$80 in late 2022 to a seven-month high a few days ago of US$127/tonne. Commodity traders are expecting that China’s reopening will follow a similar path to previous stimulus and be focused on property and infrastructure, which will ultimately require demand for steel and hence more iron ore. 

While China’s reopening is expected to be choppy, and the outlook beyond [lunar] new year remains unknown, we remain constructive on the outlook for commodities and China’s end demand for iron ore into 2023. 

Higher iron ore prices will mean stronger revenues and cash flow for iron ore miners. One notable small-cap pure play is Champion Iron Ltd (ASX: CIA). A low cost operator that produces a premium product, with an expanding production profile, [it’s] well placed to benefit from higher prices.

The third pick is Tourism Holdings Ltd (ASX: THL).

‘Van life’ is back in vogue, as travel resumes and a generation of people are keen to explore new destinations. New Zealand RV [recreational vehicle] manufacturing, rental, and retail business Tourism Holdings recently completed its merger with Apollo Tourism & Leisure and the new business was listed for the first time on the ASX, while maintaining its existing listing on the NZX.  

The merger saw the two largest RV rental companies come together in Australia and New Zealand. The combined business owns and operates everything from the humble van to a six-berth driving hotel. 

It has [a] global footprint with operations in North America and Europe, and local manufacturing to produce the best product for the local market, and a retail footprint to dispose of those vehicles at the end of life. 

With any merger there are risks. However, with $27 to $31 million of recurring cash synergies by bringing the businesses together, there is also potential upside. With tourism seen for many as a non-discretionary spend nowadays, the more affordable option of a motorhome should be well placed to benefit from any consumers trading down.

The post 3 small-cap ASX shares to rocket from this year’s mega-trends: fund manager appeared first on The Motley Fool Australia.

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More reading

• 6 ASX mining shares just upgraded by brokers
• Here are the top 10 ASX 200 shares today

​​DISCLAIMER: This presentation has been prepared and issued by Eley Griffiths Group Pty Limited (ABN 66 102 271 812, AFSL 224 818) (EGG) as the investment manager of the Eley Griffiths Group Small Companies Fund and Eley Griffiths Group Emerging Companies Fund (Fund). The Trust Company (RE Services) Limited ABN 45 003 278 830, AFSL 235 150 (Perpetual) is the Responsible entity and issuer of units in the Fund. It is general information only and is not intended to provide you with financial advice and has been prepared without taking into account your objectives, financial situation or needs. You should consider the product disclosure statement (PDS), prior to making any investment decisions. The PDS and target market determination (TMD) can be obtained for free by visiting our website https://www.eleygriffithsgroup.com/invest/.  If you require financial advice that takes into account your personal objectives, financial situation or needs, you should consult your licensed or authorised financial adviser. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. 

Neither EGG, nor any company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Neither EGG nor Perpetual give any representation or warranty as to the reliability or accuracy of the information contained in this presentation. Any opinions, forecasts,  estimates or projections reflect judgments of EGG as at the date of this document and are subject to change without notice. Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct. Actual returns could differ significantly from any forecasts, estimates or projections provided. Past performance is not a reliable indicator of future performance.

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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