Tag: Motley Fool

Woolworths Group Ltd (ASX: WOW) shares have come under pressure this year.

So much so, the supermarket giant’s shares are down 14% year to date and trading within a couple of cents of a 52-week low at $32.07.

A portion of this decline can be attributed to concerns over the launch of a number of industry body inquiries into price gouging and anti-competitive behaviour claims. This includes the ACCC Supermarket Inquiry and the Senate Select Committee on Supermarket Prices.

The good news is that analysts at Goldman Sachs are not concerned about the inquiries and see the recent weakness as a buying opportunity.

Woolworths shares are great value

The broker has been looking at the potential impact from the aforementioned inquiries. It notes that similar inquiries over a decade ago had no real impacts on its earnings. It commented:

The 2008 ACCC inquiry concluded that the supermarkets industry was “workably competitive” and hence the recommended industry changes did not result in a material impact to WOW earnings. Notably, WOW Factset consensus forecasts for NTM EPS increased 12% T+0 to T+260 days.

In addition, it highlights that the previous inquiry put pressure on Woolworths shares, but not to the same extent as this time around. As a result, it appears to feel that the market has overreacted this time around. It adds:

WOW’s 2008 inquiry saw its share price underperform ASX200 by ~15-20% in T+80 to T+120 days largely due to PER compression. 2 weeks post the conclusion of the ACCC inquiry findings, WOW’s share price recovered -2% vs ASX 200. Currently, WOW’s underperformance vs ASX 200 since the Dec 6 Senate Inquiry announcement is 21%, PER premium vs ASX200 is at ~29%.

‘Sufficiently priced in’

In light of the above, the team at Goldman Sachs believes that “WOW’s earnings and valuation risks from the Inquiries are sufficiently priced in and reiterate Buy (on CL).”

As well as its conviction buy rating, Goldman has retained its $40.40 price target on the company’s shares. Based on its current share price, this implies potential upside of 26% for investors over the next 12 months.

The broker is also forecasting a $1.09 per share fully franked dividend in FY 2024. This represents a 3.3% dividend yield, which boosts the total potential return beyond 29%.

The post Why you should buy cheap Woolworths shares before it’s too late appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Down 12% over the past year, is the Woolworths share price a dead duck?
• 3 Australian shares to buy and hold forever in your ASX portfolio
• Better buy: Coles or Woolworths stock?
• 3 ASX shares you can confidently invest $500 in right now

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 Goldman Sachs Group. 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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Investors that are looking for the perfect combination of big gains and generous dividend yields might want to consider Inghams Group Ltd (ASX: ING) shares.

That’s the view of analysts at Bell Potter, which believe the ASX 200 share could deliver very strong returns for investors.

What is the broker saying about this ASX 200 share?

Bell Potter notes that the poultry producer’s share price has remained depressed since its half-year results. This is despite the continued downdraft in both domestic wheat and imported soybean pricing.

The broker appears to believe that the market isn’t fully appreciating what this could mean for its costs and profits. Commenting on feed costs, the broker said:

Since reporting Australian ASW benchmark wheat and soybean meal prices have fallen ~5%. Given ING’s forward purchasing arrangements, we see CY24TD feed cost indicators (drives FY25e COGS) down -13% relative implied FY24e levels, with our spot feed index -19% below the implied FY24e average. While our forecasts already assume a downdraft in FY25e feed COGS, the current implication if sustained is a more material downdraft than allowed for in our forecasts.

In addition, Bell Potter believes that poultry prices have remain reasonable. It adds:

CPI indicators for Feb’24 in NZ demonstrated MOM gains of +1% and while down -1% YOY looks reasonable. CPI indicators for Australia in Jan’24 continued to demonstrate upward inflation, up +1% MOM and +3% YOY. Inflation data has so far supported outlook comments from ING at the 1H24 result.

Big gains and yields expected

In light of the above, the broker has reiterated its buy rating and $4.35 price target on its shares.

Based on where the ASX 200 share currently trades, this implies potential upside of approximately 24% for investors over the next 12 months.

But it gets better. Bell Potter is forecasting a 23 cents per share fully franked dividend in FY 2024 and then a fully franked 24 cents per share dividend in FY 2025. This equates to yields of 6.5% and 6.8%, respectively.

All in all, if Bell Potter is on the money with its recommendation, investors could generate a total return of approximately 30% over the next 12 months.

To put this into context, a $10,000 investment would generate a return of $3,000 for investors.

The broker concludes:

Trading at the lower bound of its historical EV/EBITDAL trading range and well below its historical average (of 8.3x EV/EBITDAL) we retain our Buy rating.

The post Buy this ASX 200 share for a 24% gain and 6% dividend yield appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Thursday
• 13 ASX 200 shares with ex-dividend dates next week
• Key takeouts for ASX shares this earnings season: CBA analysis
• Passive income watch: The ASX stocks dishing out the biggest dividend boosts this earnings season

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 think the ASX healthcare stock Sonic Healthcare Ltd (ASX: SHL) looks very undervalued. It’s so cheap that I’m thinking about buying some Sonic Healthcare shares myself.

The Sonic Healthcare share price has fallen more than 15% in the past year and it’s down around 25% since April 2023.

This global pathology business is one to look into, in my opinion.

I love investing in growing businesses where the share price has dropped because this means the price/earnings (P/E) ratio has reduced and is usually more attractive.

Multiple growth avenues

COVID-19 testing revenue has almost entirely gone, which has reduced the company’s operating leverage.

But, the FY24 first-half result demonstrated a number of the positives that I like about the business.

For starters, it reported base business revenue growth (which excludes COVID-19 testing) of 15%. Its organic revenue growth was 6.2% (which excludes things like acquisitions), which is a solid core business growth rate.

The base business is benefiting from different tailwinds, like a growing population, which means there are more potential patients, while an older population could increase the frequency that services are required.   

Sonic Healthcare is regularly investing in making new acquisitions, which can boost its scale – this can increase the profit margins. Around A$500 million of new annual revenue has been secured from acquisitions and contract wins, including $175 million from Synlab Suisse and $265 million from German acquisitions.

The ASX healthcare stock also said its cost reduction programs are “well advanced”, which could be beneficial for margins in future reporting periods.

Sonic Healthcare can benefit from several new technology sources, including PathologyWatch, AI, and its involvement with Microba Life Sciences Ltd (ASX: MAP), to help its future earnings.

Growing dividend

I don’t know for sure what the Sonic Healthcare share price is going to do. But, the ASX healthcare stock’s ongoing dividend growth can provide ‘real’ returns while we wait for a recovery. It said it has a progressive dividend policy.

According to the estimate on Commsec, the company could pay an annual dividend per share of $1.08, which would translate into a forward dividend yield of 4%, excluding franking credits.

Appealing valuation

After the recent decline of the Sonic Healthcare share price, it’s now valued at under 19 times FY25’s estimated earnings, which I think is very reasonable for a business in a defensive industry like healthcare.

Due to its fairly large market capitalisation size, I’m not expecting huge gains, but I believe it can be a steady compounder and outperform the S&P/ASX 200 Index (ASX: XJO) over the long term, at the current Sonic Healthcare share price. I’m thinking about buying some Sonic Healthcare shares for my own portfolio at the current level when Motley Fool’s trading rules allow me to.

The post 1 ASX healthcare stock that looks severely undervalued appeared first on The Motley Fool Australia.

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More reading

• Why I think these 2 ASX shares are steals
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• If I were 60 I’d buy these ASX shares for dividends
• 25 ASX 200 shares with ex-dividend dates next week
• Morgans names 3 ASX stocks to buy following results

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 Sonic Healthcare. 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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Like the rest of the big four banks, the Westpac Banking Corp (ASX: WBC) dividend is a popular option for income investors on the Australian share market.

And it isn’t hard to see why.

For over two decades, Australia’s oldest bank has shared a good portion of its profits with shareholders each year.

Pleasingly, this trend continued in FY 2022, with the company rewarding its shareholders with a $1.42 per share fully franked dividend for the 12 months. This was an increase of 14% on what was paid out in FY 2022.

This equates to a total dividend payment of $5 billion, which is greater than the current valuation of regional rival Bank of Queensland Ltd (ASX: BOQ).

In fact, Westpac could have bought Bank of Queensland with its dividend and still had approximately $750 million of spare change.

But that dividend has since been paid and is now back in the economy. So, what’s next for owners of Westpac shares? Let’s take a look and find out what analysts are expecting from the big four bank.

Westpac dividend forecast

As a reminder, Westpac paid out $1.42 per share fully franked dividend in FY 2023. Based on the current Westpac share price of $26.25, this equates to a generous 5.4% dividend yield.

Looking ahead, the team at Goldman Sachs has been running the rule over the bank’s recent quarterly update and revealed that it believes Westpac remains positioned to increase its payout this year.

However, it won’t be as big an increase as the year before. The broker has pencilled in a modest 1.4% lift in the Westpac dividend to $1.44 per share in FY 2024. This represents a fully franked 5.5% yield for investors buying at today’s price.

Moving on, in FY 2025 the broker believes that the bank will be keeping its dividend flat at $1.44 per share again. This will mean another 5.5% dividend yield for shareholders.

And if you like consistency, you will appreciate that Goldman expects a third consecutive $1.44 per share fully franked dividend to be paid by Westpac in FY 2026. This will mean yet another 5.5% dividend yield from its shares.

But it is worth remembering that a lot can change between now and then for the better or for the worse. So, investors may want to use these forecasts as a guide for what could be coming and not take them as gospel.

The post Here’s the Westpac dividend forecast through to 2026 appeared first on The Motley Fool Australia.

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More reading

• Why Westpac shares could suffer from a ‘significant reset’
• Here’s what Westpac says the RBA will do with interest rates next week
• Why Pilbara Minerals, Syrah Resources, Tabcorp, and Westpac shares are sinking today
• Why are ASX investors so obsessed with dividends?
• What’s going so wrong for ASX 200 shares on Friday?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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As long as you understand the risk and diversify your portfolio, there is nothing wrong per se with buying some speculative shares.

So if you are in that mood, here are two ASX shares considered suitable for those who are willing to tolerate some risk:

Top ASX shares for a business with a plan to become a world leader

Manganese miner Jupiter Mines Ltd (ASX: JMS) has seen its share price plunge more than 25% since May.

However, Sequoia Wealth Management senior advisor Peter Day likes the direction the company is heading.

“The company previously released a strategy update, outlining a five-year plan to become the leading manganese producer in the world,” Day told The Bull.

“The company has a long life, open pit manganese mine with an integrated ore processing plant in South Africa.”

Day, while admitting the stock is not for the faint-hearted, noted the business is ramping up.

“Mining volumes in the first half of fiscal year 2024 were up compared to the prior corresponding period.”

Day has good support among his peers. Broking platform CMC Invest shows all three analysts covering Jupiter Mines rating it as a strong buy.

How delayed is the gratification for these shares?

Casino operator Star Entertainment Group Ltd (ASX: SGR) has been crushed under regulatory scrutiny over the past couple of years.

Painfully the share price has lost more than 86% since October 2021.

Just when investors thought they might get some relief, a bombshell landed last month.

“The New South Wales Independent Casino Commission is holding another inquiry to investigate whether Star Entertainment is suitable to hold a Sydney casino licence,” said Day.

“A final report is due on May 31.”

Eventually, the business is bound to recover from its failings, but the second probe makes this an even more speculative buy than it was already.

“The company generated net revenue of $865.7 million in the first half of fiscal year 2024, down 14.6% on the prior corresponding period.”

Other experts are more divided on this one than Jupiter Mines. Five out of 10 analysts currently surveyed on CMC Invest consider Star Entertainment a buy at the moment.

The post My top high-risk, high-reward ASX shares to buy in March appeared first on The Motley Fool Australia.

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More reading

• Why Core Lithium, Jupiter Mines, Newmont, and Perpetual shares are dropping today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Why Harvey Norman, Macquarie Technology, Ramsay Health Care, and Star are rising
• Star Entertainment share price jumps 5% on strengthening outlook

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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According to conventional wisdom, ASX mining stocks are notoriously cyclical.

And that is true in most circumstances. Global prices for any mineral swings up and down wildly according to the health of the economy and the subsequent demand.

But there is one S&P/ASX 200 Index (ASX: XJO) company specialising in one particular metal whose shares have been trending up for five years now.

Let’s check out what happened:

When no one used the term ‘social distancing’

Capricorn Metals Ltd (ASX: CMM) is a gold miner with interests in Western Australia.

Cast your mind back to before anyone had even heard of COVID-19.

In 2019, interest rates around the world were near zero. Money was cheap and inflation was non-existent.

Gold, long considered a safe haven investment, was totally ignored. It was an old school, non-productive asset that no one wanted.

If you had the good fortune of buying Capricorn shares — let’s say $20,000 worth — you will have done pretty well.

Because in December 2019 the planet changed from Wuhan outwards.

A true black swan event, the coronavirus pandemic turned the global economy upside down.

Investors flock to gold mining stock

While the world may have moved on from lockdowns and even vaccinations, economically it’s now in a completely different place to what it was in 2019.

Inflation is cooling but still uncomfortably high. Interest rates are much higher than near-zero, and could stay that way for years.

Then just as the globe started moving past the pandemic, a war in eastern Europe broke out. Then another in the Middle East just 18 months after.

People have been reminded that anything can happen.

In such uncertain and frightening times, investors have flocked back to the comfort of gold. 

And among the gold miners, in Bell Potter’s words, Capricorn Metals sets the standard.

“Capricorn Metals is a sector-leading gold producer with a strong balance sheet and a management team with an excellent track record of delivery,” it stated in a memo to clients this month.

“Its costs are among the lowest in the sector and it consistently generates strong cash margins.”

So what about that $20,000 you invested in 2019?

After just five years, that nest egg is now $277,777.

Thank you, compounding.

The post If you’d put $20,000 in this ASX 200 mining stock 5 years ago, you’d have $278,000 now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• 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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The S&P/ASX 200 Index (ASX: XJO) is up 11.6% over the past year. Yet, I still believe there are top deals among ASX shares in this market. Yes, there are opportunities to discover even when the Australian share market is around all-time highs.

As April draws near (that was quick!), it’s as good of a time as any to trawl through what is on offer. Despite headlines of a ‘per capita recession’ and whispers of an ‘official recession’ on the horizon, I will continue putting my money to work in quality companies — letting long-term compounding outweigh any temporary instability.

Here are a few ASX shares that meet my criteria for buying ahead of April this year.

Wonderful company at a fair price

The top echelon of companies usually trade on lofty valuations — everyone already knows how great they are. It makes it incredibly challenging to scoop up shares in such companies at a price that provides a margin of safety.

Occasionally, something that shatters a company’s once-pearly perception — a rumour, a scathing report, or an innocent misstep — can occur. The reaction can be magnitudes greater than the actual issue, partially because the business loses that ‘golden ‘golden child’ sheen.

In my view, Resmed CDI (ASX: RMD) is one such company. At a price-to-earnings (P/E) ratio of 31, the medical device maker’s asking price is no tall order relative to its former glory.

The popularity of weight loss medications, such as Ozempic, has induced a slimming down of the Resmed share price. However, the market for sleep apnea treatments remains vast. Given the company’s track record for growth, I’d happily buy more of this ASX share before the month ends.

A top ASX share with pricing power

A sensational FY23 full-year result has put this growth share on my radar. In my opinion, the combination of rapid growth and pricing power makes Life360 Inc (ASX: 360) highly attractive.

Companies that aren’t yet generating profits can be hard to value. Nonetheless, the United States software maker appears to be heading in the right direction as it raises prices across its subscriber base.

For example, average revenue per ‘paying circle’ (essentially a family) rose 25% year-on-year amid the price increases. Positively, global paying circles still grew by 21% despite asking customers to pay more for the offering — evidence that Life360 wields some strong pricing power.

Furthermore, with 61 million global monthly active users, the runway for growth still seems lengthy. This ASX share is currently valued at a market capitalisation of $2.58 billion.

A winner from rate cuts

The third and final investment I’m contemplating this month is a bonafide value-style buy.

Famed value investor Benjamin Graham was known for his tendency to buy companies trading below their book value. This means the company’s market capitalisation is less than its net assets, and Rural Funds Group (ASX: RFF) is an ASX share meeting this criteria.

The real estate investment trust (REIT) holds $1.9 billion of farmland and other agricultural assets. To do so, Rural Funds has taken on $701 million worth of debt to fund the purchase and improvement of property.

Because of this, the company stands to benefit if interest rates begin to fall later this year. Approximately one-fifth of the REIT’s revenue was consumed by finance costs in the first half. Any reduction in interest expense will flow down to the bottom line of this ASX share.

The post My top 3 ASX shares to consider buying before April appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares that could help set you up for life
• Why these ASX 200 growth shares could be top buys now
• 1 ASX stock to consider buying that could be the next ResMed
• Here are the top 10 ASX 200 shares today
• Buy these ASX 300 dividend shares for 10% gains and 5% yields

Motley Fool contributor Mitchell Lawler has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and ResMed. The Motley Fool Australia has positions in and has recommended ResMed and Rural Funds 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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Are you searching for ASX dividend shares to buy?

If you are then you may want to check out these two listed below that analysts think are top buys at present.

Here’s what they are saying about them:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share that could be a buy for income investors is Accent. It is the footwear focused retailer behind a growing number of store brands such as Hype DC, The Athlete’s Foot, and Stylerunner.

The team at Bell Potter is feeling positive about the company. This is due to its strong market position and its “growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy.”

The broker expects this to underpin the payment of fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. Based on the latest Accent share price of $2.03, this represents dividend yields of 6.4% and 7.2%, respectively.

Bell Potter has a buy rating and $2.50 price target on its shares.

Coles Group Ltd (ASX: COL)

Over at Morgans, its analysts think income investors should be buying this supermarket giant’s shares.

It was impressed with Coles’ first-half performance, noting that its earnings were ahead of expectations. The broker was also pleased that its trading update revealed second half growth that is outperforming its bitter rival.

Morgans expects this to underpin fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $16.50, this implies yields of approximately 4% and 4.2%, respectively.

Morgans has an add rating and $18.70 price target on its shares.

QBE Insurance Group Ltd (ASX: QBE)

Finally, over at Goldman Sachs, its analysts think that this insurance giant is an ASX dividend share for income investors to buy.

The broker likes QBE due to it having “the strongest exposure to the commercial rate cycle” and notes that its “valuation [is] not demanding.”

Goldman also expects some generous yields from its shares in the near term. The broker is expecting dividends per share of 62 US cents in FY 2024 and 61 US cents in FY 2025. Based on its current share price of $17.38, this equates to dividend yields of 5.45% and 5.4%, respectively.

Goldman has a buy rating and $18.65 price target on its shares.

The post Why these excellent ASX dividend shares have been named as buys appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares predicted to pay yields of 10%
• Buy Rio Tinto and these ASX dividend shares now
• Analysts say these ASX dividend shares are strong buys
• Top brokers name 3 ASX shares to buy today
• Why the Accent share price has jumped 5% and more gains are predicted

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 Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Accent 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) had a good session. The benchmark index rose 0.35% to 7,703.2 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set to rise again on Wednesday following a decent session in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 18 points or 0.2% higher. In late trade on Wall Street, the Dow Jones is up 0.7%, the S&P 500 has risen 0.5%, and the Nasdaq is 0.4% higher.

Oil prices continue to rise

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have another good session after oil prices rose again overnight. According to Bloomberg, the WTI crude oil price is up 1.1% to US$83.62 a barrel and the Brent crude oil price is up 0.7% to US$87.46 a barrel. Russian supply concerns gave oil prices a boost.

Buy Woolworths shares

The Woolworths Group Ltd (ASX: WOW) share price is great value according to analysts at Goldman Sachs. The broker believes that concerns over inquiries into price gouging and anti-competitive behaviour claims are unnecessary. That’s because Goldman sees limited valuation and earnings risks from the inquiries. As a result, the broker has retained its conviction buy rating and $40.40 price target on the supermarket giant’s shares.

Gold price edges lower

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued session on Wednesday after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.2% to US$2,160.6 an ounce. A stronger US dollar weighed on the precious metal. In addition, traders appear nervous ahead of the release of a speech from the US Federal Reserve tonight.

Inghams rated as a buy

The Inghams Group Ltd (ASX: ING) share price is good value according to the team at Bell Potter. This morning, the broker retained its buy rating and $4.35 price target on the poultry producer’s shares. This implies potential upside of almost 24% for investors from current levels. It commented: “Feed cost drivers have weakened materially in CY24 and this is likely to manifest in COGS in FY25e. The upside from lower feed costs in our view mitigates the ongoing risk of channel shifts.”

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

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More reading

• Here are the top 10 ASX 200 shares today
• ASX 200 lifts as RBA keeps interest rates steady
• Down 12% over the past year, is the Woolworths share price a dead duck?
• 1 Australian dividend stock quietly crushing the ASX today
• 3 Australian shares to buy and hold forever in your ASX portfolio

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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Anyone who owns Medibank Private Ltd (ASX: MPL) shares today and has held them since 28 February 2024 is getting a useful boost today.

A few weeks ago the company reported its FY24 half-year result, which came with a number of pleasing positives.

One of the main things shareholders can take from the half-year report is a nice, big dividend.

Medibank pays its dividend

The board of directors for Medibank decided to declare a fully franked interim dividend of 7.2 cents, which is being paid today. That represented an increased payout that was 14.3% bigger than last year.

Medibank’s payment equated to a dividend payout ratio of 75.5% of underlying net profit after tax (NPAT). This measure ‘normalises’ for investment market returns. The company has an annual target payout range of between 75% to 85% of underlying NPAT.

At the current Medibank share price, this payout represents a grossed-up dividend yield of 2.7%.

Growth reported

The HY24 result was solid enough – group revenue from external customers increased 3.3%, while health insurance operating profit rose 4.3% to $317 million. Underlying NPAT rose 16.3% to $262.5 million and statutory net profit grew 103.2% to $343.2 million. Part of the profit increase was because of a 49.6% jump in net investment income.

Medibank reported its net resident policyholders grew by 3,400 (or 0.2%), while net non-resident policies grew by 33,800 (or 12.3%).

Future profitability will be key for ensuring the Medibank dividend can keep rising. It’s expecting a “moderation in resident industry growth” in FY24 compared to FY23. The business is aiming to achieve between 1.2% to 1.5% resident policyholder growth in FY24. It’s expecting a return to market share growth in the second half of FY24.

Projected Medibank dividend yield

According to the estimate on Commsec, owners of Medibank shares could get a grossed-up dividend yield of 6% in FY24.

The post Own Medibank shares? Here’s why it’s a rewarding day for you appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up this week
• Why Medibank and NIB shares are outperforming today
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• If I were entering retirement tomorrow, I’d buy these ASX shares
• What’s going on with the Medibank share price today?

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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