Tag: Motley Fool

The new year has dawned and with it has come new opportunities. What better time is there to revisit your investing goals? There are thousands of reasons to invest, but the major intensive is to build passive income.

Perhaps kicking back over the holiday period reminded you how much you enjoy living life and relaxing without having to worry about pay slips, meetings, or emails.

Fortunately, I have a $5 a day plan to build a secondary income in 2023. Here’s how I might aim to put my money to work this year.

How I’d aim to turn $5 a day into a passive income this year

$5 a day might not sound like much. Indeed, it probably won’t get you a strong latte in most Aussie cities.

However, such a small amount can add up over the weeks, months, and years to come. Particularly when we consider compounding.

$5 a day adds up to around $152 a month, or $1,825 a year.

Over 10 years, investing my daily pocket change could see me boasting an $18,250 portfolio – enough to provide $861.40 of annual dividend income, considering the SPDR S&P/ASX 200 (ASX: STW)’s current 4.72% dividend yield. ­The SPDR ASX 200 Fund is an exchange-traded fund (ETF) tracking the S&P/ASX 200 Index (ASX: XJO).

However, 2022’s downturn has likely left some ASX 200 shares trading for bargain prices and, thereby, boasting decent dividend yields.

Thus, I might aim to build a portfolio boasting an average dividend yield of around 7% this year and compound my payouts into the future.

Taking advantage of 2022’s downturn

But first, I’d pick a diverse handful of stocks I believe offer reliable dividends, advantages over their peers, and future earnings potential.

The latter is important as dividends are derived from a company’s earnings. Therefore, I’ll be keeping my eye out for consistent cash flows and a strong balance sheet.

Some stocks that might be on my radar include Super Retail Group Ltd (ASX: SUL), Rio Tinto Limited (ASX: RIO), Incitec Pivot Ltd (ASX: IPL), and JB Hi-Fi Limited (ASX: JBH).

The four ASX 200 shares currently offer an average dividend yield of around 7.3%.

At such levels, the figurative $1,825 portfolio I could boast at the end of this year after investing $5 a day could offer $133.20 of passive income.

But if I compounded my dividends…

However, I wouldn’t take those dividends as cash. Instead, I would reinvest them into my passive income portfolio, thereby compounding my dividends.

Assuming I can continue to receive a 7.3% yield and my shares’ value doesn’t move, my portfolio could be worth $25,571 in 10 years thanks to the power of compounding. At that point, it would be capable of paying out $1,866 of dividend income each year.

Looking further into the future, in 20 years’ time my portfolio could be worth $77,292 – which could pay out $5,642 annually at a 7.3% dividend yield.

That’s certainly worth $5 a day, in my opinion.

The post My plan to turn $5 a day into a passive income in 2023 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s how I’d invest $5,000 in ASX 200 shares to earn a second income
• The 5 biggest threats to the stock market in 2023
• I think these are the 10 best ASX shares to buy for 2023
• Iron ore price in 2023: Bull vs. bear

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Jb Hi-Fi. 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 new to investing in ASX shares, then following Warren Buffett’s investment philosophy could be a great way to start your journey.

After all, the Oracle of Omaha has generated staggering returns over multiple decades.

For example, in his most recent annual letter, Buffett revealed that Berkshire Hathaway’s market value per share has increased by an average of 20.1% per annum from 1965 to 2021. This means that Berkshire Hathaway has returned 3,641,613% over the 56 years, which would have turned a single one dollar investment into over $3.5 million.

But can I invest like Warren Buffett?

Warren Buffett’s investment philosophy is centred on finding undervalued companies with strong competitive advantages and holding onto them for the long term. He looks for companies with steady and predictable earnings, strong balance sheets, and management teams that align with the interests of shareholders.

In addition, the legendary investors is known for being patient and disciplined in his approach to investing. Buffett is willing to wait for the right opportunities and is not swayed by market fluctuations like we’re experiencing today or short-term trends.

He famously quipped:

I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

Buffett also considers intangible factors when making investments. He looks for companies with strong brands and a track record of ethical behaviour. The Oracle of Omaha has a long-term horizon and believes that investing in companies with strong values and a commitment to their stakeholders will ultimately lead to better financial returns.

Overall, Warren Buffett’s investment style can be summarised as a combination of value investing, long-term thinking, and a focus on companies with strong fundamentals and good management.

Now could be the time to put this into practice with ASX shares.

The post How I can buy ASX shares like Warren Buffett in 2023 appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price bulls vs bears: Which will prevail in 2023?
• Buy these cheap ASX dividend shares: Goldman Sachs
• The Vanguard Australian Shares Index ETF (VAS) sank 9% in 2022. What’s the outlook for 2023?
• My best ASX 200 dividend shares for 2023
• What caused such wild swings in the Core Lithium share price in 2022?

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 Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. 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 Fortescue Metals Group Limited (ASX: FMG) share price went up and down like a rollercoaster last year. Will the bulls or the bears win in 2023?

Resource prices are notoriously difficult to predict, which makes it hard to guess how the share prices of ASX mining shares will perform.

At the moment, Fortescue’s earnings are highly linked to the iron ore price.

Mining costs don’t typically change much in the shorter term, so when the iron ore price increases it mostly adds to the company’s net profit after tax (NPAT), aside from paying more to the government.

But, the opposite can be said when the iron ore price goes down, which largely wipes off the company’s net profit.

Therefore, the direction of the iron ore price from here could have a big impact on things.

Which way will things go this year for the Fortescue share price?

Adrian Prendergast, senior mining and energy analyst from Morgans, suggests that while a Chinese growth recovery can be a positive for the demand for steel and iron, the ASX share market has already moved to price in the recovery before it has unfolded.

While he said it’s encouraging that the iron ore price is staying above US$100 per tonne, the Morgans rating is reduce on Fortescue as it trades to a premium to the price target – that’s where the broker thinks the Fortescue share price will be in 12 months.

But, the broker Citi has suggested that the iron ore price could rise to as high as US$150 per tonne by June, according to reporting by the Australian Financial Review. The suggestion is that the relaxation of COVID restrictions is expected to mean higher industrial output by China and that iron ore could do well if “China rolls out meaningful in the next three [to] six months”. The AFR reported that Citi wrote:

Policymakers appear determined to support debt-trapped property developers. This reduces the downside risk for iron ore.

The Fortescue share price has climbed more than 20% over the past six months, with the iron ore price at around US$118 per tonne, according to Commsec.

According to Commsec, the broker Goldman Sachs has a sell rating on the iron ore ASX share, with a target price of just $13.80.

Of the 18 analyst calls that Commsec is currently covering, 12 of them are sells and six are holds. So, predominately negative.

Foolish takeaway

While I believe in the long-term future of Fortescue shares, particularly the green energy plans of Fortescue Future Industries (FFI), I think that the Fortescue share price can only climb considerably higher from here (with the Fortescue share price being $21) if the iron ore price keeps going up.

I’m personally waiting for the share price to drop below $17 before considering buying more shares for a good margin of safety. It’s already a sizeable part of my portfolio.

The post Fortescue share price bulls vs bears: Which will prevail in 2023? appeared first on The Motley Fool Australia.

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More reading

• My 3 top-performing ASX shares of 2022, and why I’m still buying 2 of them for 2023
• 3 defining moments for Fortescue shares in 2022
• 2 ASX 200 shares I’m never selling
• Iron ore price in 2023: Bull vs. bear
• Better buy for 2023: BHP vs. Fortescue shares

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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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If you’re looking for some cheap dividend shares, then you may want to check out the two shares listed below that Goldman Sachs rates as buys.

Here’s why the broker thinks income investors should be buying their shares:

Adairs Ltd (ASX: ADH)

Goldman Sachs believes this leading furniture and homewares retailer is a dividend share to buy right now. 

This is based on its belief that the company’s core business is more resilient than the market realises. In light of this, the broker feels that its shares have been oversold and are trading at an unjustified discount to other retail shares.

And while this share price weakness has been disappointing, it has made the potential dividend yields on offer significantly more attractive.

For example, Goldman Sachs is forecasting fully franked dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.40, this will mean yields of 7.1% and 8.3%, respectively.

Goldman currently has a buy rating and $2.65 price target on its shares.

Universal Store Holdings Ltd (ASX: UNI)

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More reading

• Here’s how I’ll be investing my money in ASX shares in 2023
• 23 ASX shares to buy in 2023 – brokers
• How I’d invest $10,000 in ASX shares if I was starting from scratch in 2023
• 3 ASX shares under $5 with 7%+ dividend yields
• 2 ASX dividend shares to buy right now: Goldman Sachs

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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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 Vanguard Australian Shares Index ETF (ASX: VAS) didn’t have its best year in 2022. But can the exchange-traded fund (ETF) stage a turnaround in 2023?

In terms of the unit price, the Vanguard Australian Shares Index ETF declined by 8.5% last year, though the income distributions did offset some of that pain.

Investors should keep in mind that the return of an ETF like this is almost entirely decided by the performance of the underlying holdings in its portfolio, minus the cost of the annual management fee (which is 0.10% for this ETF).

This particular ETF tracks the S&P/ASX 300 Index (ASX: XJO) which represents 300 of the biggest businesses on the ASX.

What happened in 2022?

Rising interest rates and elevated inflation seemed to impact investor confidence and share prices quite significantly over the past year. Indeed, the Reserve Bank of Australia raised interest rates from 0.1% to 3.1%.

While some names saw positive returns, like BHP Group Ltd (ASX: BHP) and National Australia Bank Ltd (ASX: NAB), there were plenty of others that took a sizeable hit. Names like Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), Goodman Group (ASX: GMG), and Aristocrat Leisure Limited (ASX: ALL) all fell by around 20% or more over the year.

Legendary investor Warren Buffett once said about interest rates:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

Not only are valuations being hit but earnings of some economy-linked sectors may be impacted such as ASX retail shares, construction businesses, and so on.

How could the Vanguard Australian Shares Index ETF perform?

It’s impossible to know how things are going to go. But, however things pan out, the ETF’s return is likely to be heavily influenced by ASX bank shares and mining shares. At the end of November 2022, financial shares made up 28.3% of the Vanguard Australian Shares Index portfolio, with materials making up another 24.2%, for a combined total of 52.5%.

ASX banks could see stronger lending profitability on the back of a higher central bank interest rate as they pass on rate hikes to borrowers faster than to savers. Certainly, reporting higher profits could mean improving investor confidence. However, there is also a danger that as time goes on, arrears could increase if some borrowers can’t handle the higher interest payments.

As well, resource price movements are very hard to predict. On the one hand, there’s a risk that a possible global recession could lower demand for commodities. However, the reopening of the Chinese economy after COVID lockdowns may mean stronger demand from the Asian superpower.

I do believe that when interest rate increases are paused, this could lead to a boost in investor confidence once people see that there won’t be any further pressure on investor valuations.

If I had to guess, I think the Vanguard Australian Shares Index ETF unit price will go up this year as inflation calms and interest rate worries somewhat reduce. Economic conditions may worsen during the year, but share prices sometimes move ahead of the economic numbers showing the pain (or strength).

The post The Vanguard Australian Shares Index ETF (VAS) sank 9% in 2022. What’s the outlook for 2023? appeared first on The Motley Fool Australia.

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More reading

• Chasing the latest Vanguard Australian Shares (VAS) ETF payout? Don’t miss the cut-off
• Yields of up to 7%… 3 ASX dividend shares I’d buy to hold for 10 years
• Is the Vanguard Australian Shares Index ETF (VAS) worth buying for 2023?
• Over 30 with no investments? Use Warren Buffett’s wisdom to build your wealth with ASX shares
• Future-proofing: The ASX ETF Aussie parents were buying for their kids in 2022

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 Wesfarmers. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX share market is full of names that pay dividends to investors. But, there aren’t many S&P/ASX 200 Index (ASX: XJO) dividend shares that I’d bet on to keep paying solid dividends for the next five years. After all, dividends are not guaranteed payments.

Why dividend investing can work well

But, plenty of businesses can keep paying dividends during leaner times because they are still making a profit. A 10% reduction of profit for Telstra Group Ltd (ASX: TLS) would still mean it’s making a large amount of money that it can pay to shareholders.

Share prices tend to go through volatility. It’s possible for the share market to hit a bump every so often like it did in 2020 and 2022.

Over the longer term though, businesses can reinvest some of the profits that it makes back into the business to grow profit in the future. With the rest of the profit, it can pay dividends to shareholders.

It’s this combination of dividends and long-term profit growth that can lead to pleasing dividend income payments as well as capital growth over time.

I’m going to cover three of my favourite ASX 200 dividend shares in this article.

There are plenty of smaller ASX dividend shares that offer larger dividend yields, but I think there is a higher chance of a dividend cut from names like Adairs Ltd (ASX: ADH) and Best & Less Group Holdings Ltd (ASX: BST) than the blue chip ASX shares I’m about to outline.

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

In terms of dividend payment longevity, I think Soul Pattinson has the best record on the ASX.

It has been listed on the ASX since 1903, and it has paid a dividend every year since then. The ASX 200 dividend share has also grown its ordinary dividend every year since 2000, which is the longest dividend streak of consecutive annual growth.

This business operates as an investment house. Its investments are spread across a range of industries including both ASX shares and private businesses. For example, it owns a lot of shares of TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

In terms of unlisted businesses, it’s involved in sectors like agriculture, electrical parts, swimming schools and luxury retirement living.

According to Commsec, it could pay a grossed-up dividend yield of 4% in FY23.

Sonic Healthcare Limited (ASX: SHL)

The Sonic Healthcare share price is close to its 52-week low, which has had the impact of boosting the prospective dividend yield for new investors.

For investors that haven’t heard of this ASX healthcare share before, its core service is providing pathology services in a number of western countries including Australia, the UK, Germany and the US.

Its non-COVID testing revenue has continued to steadily grow, which I think can help grow its underlying profit over the long term. The company has a progressive dividend policy, meaning that it wants to grow its payment to shareholders.

The business has processed millions of COVID tests over the past three years, which gave it a temporary earnings boost. It was generating millions of dollars in revenue each month from COVID tests, as of October, though this seems to be steadily winding down. The company has used the cash flow boost to make acquisitions, locking in an increased scale.

The ASX 200 dividend share is investing in an AI partnership that could help improve pathology in the future.

According to Commsec, the Sonic Healthcare grossed-up dividend yield for FY23 could be 4.7%.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the parent business of a number of leading Aussie retailers like Bunnings, Kmart, Officeworks and Priceline.

The company wants to grow dividends for shareholders over time alongside earnings and cash flow. FY22 saw the business grow its total dividend per share by 1.1%.

Even if retail does suffer a bit in 2023, I think its earnings are resilient. Customers may be more motivated to shop at stores like Bunnings and Kmart because they are among the national leaders in providing good value products. At least, that’s what management would say.

I like that the business is open to expanding its business portfolio by making acquisitions, such as the Priceline business. Another example is the lithium project Mt Holland, in which Wesfarmers is a partner.

According to Commsec, Wesfarmers could pay a grossed-up dividend yield of 5.6% in FY23.

The post My best ASX 200 dividend shares for 2023 appeared first on The Motley Fool Australia.

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More reading

• These are the ASX dividend shares to buy now: brokers
• 2022 was brutal for Wesfarmers shares. What now?
• Here’s how I’ll be investing my money in ASX shares in 2023
• How I’d invest $1,000 in ASX 200 shares for rising inflation
• How I’d use a stock market crash to boost my passive income

Motley Fool contributor Tristan Harrison has positions in Brickworks 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 Adairs, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Adairs, Brickworks, Telstra Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Macquarie Group, Sonic Healthcare, and Tpg Telecom. 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 Core Lithium Ltd (ASX: CXO) share price gained an impressive 72.9% in 2022.

But the ASX lithium stock certainly didn’t deliver those gains smoothly.

The Core Lithium share price ranged from lows of 60 cents in January to highs of $1.88 in November. The miner closed the year trading for $1.02 per share.

And as you can see in the chart below, there was plenty of volatility in the company’s march higher over the course of the year.

So, why were investors faced with such wild swings in 2022?

Why all the volatility?

Throughout the year gone by, the Core Lithium share price alternately rocketed higher or was pushed lower largely based on investor expectations of lithium prices.

The lightweight, conductive metal is a critical element in most electric vehicle and home storage batteries. The global EV market, in particular, expanded rapidly in 2022 and is expected to continue on a strong growth trajectory over the coming years.

With lithium supplies in 2022 initially falling below demand, the price more than doubled last year and is up more than 10-fold since early 2021.

That drove investor exuberance for most lithium stocks, driving up the Core Lithium share price.

Investors are also enthusiastic about the miner’s Finniss Lithium Project, located in the Northern Territory. Finniss is scheduled to commence production this year.

However, not everyone believes that the sky-high lithium prices have been warranted. Indeed, prices have retraced by more than 3% since the mid-November peak.

As for the Core Lithium share price, it fell 45% from its 14 November highs by 30 December.

While the longer-term outlook for lithium demand remains strong, analysts, including those from Goldman Sachs, believe the medium term could see increased supply hitting the market just as some of the demand comes off.

Goldman’s commodity experts are among those who forecast that lithium prices will come off the boil in the second half of 2023.

Part of the recent concerns stems from China, the world’s biggest manufacturer of EVs. Alongside the government’s plans to eliminate subsidies for new EV sales, rocketing COVID cases could throw up some major headwinds for the Chinese economy.

As in 2022, bearish forecasts on lithium prices are likely to send the Core Lithium price lower this year while bullish news could see the miner again charging higher.

How has the Core Lithium share price performed longer-term?

Volatility or not, you’re unlikely to hear any long-term investors complaining up their holdings.

Over the past five years, the Core Lithium share price has rocketed 1,030%. Boom!

The post What caused such wild swings in the Core Lithium share price in 2022? appeared first on The Motley Fool Australia.

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More reading

• These were the 3 best performing ASX lithium shares of 2022
• The 3 best performing ASX 200 mining shares of 2022
• Why are ASX 200 lithium shares running on empty today?
• Why has the Core Lithium share price fallen 26% in a month?
• Here are the 10 most shorted ASX shares

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

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It’s certainly been a rollercoaster for ASX investors in 2022. But now, it’s time to disembark and begin a whole new ride!

Will rising inflation and recession fears derail the carriage again in 2023? Or will China fully reopen and central banks turn dovish to prevent any major big dippers?

Stay tuned! But in the meantime, we asked our Foolish contributors for their thoughts on which are the best shares to bring joy to your ASX ride in 2023.

Here is what the team came up with:

7 best ASX shares for January 2023 (smallest to largest)

• Mach7 Technologies Ltd (ASX: M7T), $164 million
• Elders Ltd (ASX: ELD), $1.58 billion
• Deterra Royalties Ltd (ASX: DRR), $2.43 billion
• Metcash Limited (ASX: MTS), $3.75 billion
• iShares Global Consumer Staples ETF (ASX: IXI), $4.06 billion
• Allkem Ltd (ASX: AKE), $7.18 billion
• Qantas Airways Limited (ASX: QAN), $10.99 billion

(Market capitalisations as of 4 January 2023)

Why our Foolish writers love these ASX shares

Mach7 Technologies Ltd

What it does: Mach7 Technologies provides and develops image management and viewing solutions in the healthcare sector. The core of these offerings is its Mach7 Enterprise Imaging Solution.

By Bernd Struben: Mach7 is on the smaller end of the investment spectrum with a market cap of some $165 million. Yet it has a global reach into the large and growing medical imaging markets.

In the first quarter of FY23, the company reported annual recurring revenue (ARR) of $17.9 million, up 3.2% from the prior quarter. While cash receipts were down from the prior quarter, Mach7’s balance sheet was solid, with $21.5 million in cash and no debt.

The company kicked off 2023 announcing the largest customer contract in its history. The 10-year deal with NASDAQ-listed Akumin Inc has a total contract value of approximately $16.7 million. The Mach7 share price surged 18% on the day of the announcement. But I believe there could be more gains in the months ahead.

Motley Fool contributor Bernd Struben does not own shares in Mach7 Technologies.

Elders Ltd

What it does: Elders is an agribusiness company providing services for those in industries such as livestock, wool, and grain. It also offers real estate services, home loans, and insurance products, among other various avenues.

By Brooke Cooper: A new year has dawned, and it’s likely brought plenty of new investing opportunities. Alas, I’ve got my eye on an old one.

Elders has been around for more than 180 years, but the last one has been particularly rough on its share price. It’s fallen 16% over the last 12 months.

Recent selloffs in the company have been excessive, in the eyes of both myself and broker Goldman Sachs.

The broker believes Elders is “very well-positioned to grow through the cycle”, slapping it with a buy rating and an $18.40 price target. This represents a potential 82% upside.

Motley Fool contributor Brooke Cooper does not own shares in Elders Ltd. 

Deterra Royalties Ltd

What it does: Deterra Royalties collects a fee from royalty assets it holds in its portfolio. The main contributor to the company’s financials is its royalty over the Mining Area C iron ore mining operation in the Pilbara region.

By Mitchell Lawler: Inflationary pressures have shone a light on businesses with low operational costs. Companies with minimal employee expenses, material costs, and debt could be well situated this year. 

Deterra Royalties appears to be one such company thanks to its royalty business model. Due to the lack of capital-intensive operations, Deterra touted a 97% gross profit margin in FY22 and a net income margin of 67%. 

The risk to this company’s bottom line is iron ore demand. There is concern stemming from China’s challenging exit from a zero-COVID policy. However, I’d expect China will find its feet eventually, much like the rest of the world. 

Motley Fool contributor Mitchell Lawler does not own shares in Deterra Royalties Ltd.

Metcash Limited

What it does: Metcash operates three different divisions. It is a food supplier for independent supermarkets around Australia, namely IGA, and a liquor supplier for brands such as Cellarbrations, The Bottle-O, IGA Liquor and Thirsty Camel. The company also owns hardware brands, including Mitre 10, Homeware Timber & Hardware and Total Tools.

By Tristan Harrison: Investors looking for stability during this uncertain time could do well with Metcash, in my opinion. I think its food and liquor earnings can be resilient, as we saw during the COVID-19 period. The Australian population’s continued growth could be a boost, particularly for the food division.

I’m excited by the potential of the hardware division as it expands its number of locations and grows profitability. The hardware division is now making the most profit and saw 8% sales growth in the first four weeks of the FY23 second half.

According to Commsec, Metcash could pay a grossed-up dividend yield of 7.7% in FY23, which would boost total returns.

Motley Fool contributor Tristan Harrison does not own shares in Metcash Limited.

iShares Global Consumer Staples ETF

What it does: This exchange-traded fund (ETF) represents a basket of global companies specialising in consumer staples products like food, drinks, vices and household essentials.

By Sebastian Bowen: Happy New Year! Like 2022 before it, 2023 is shaping up to be a year of unknowns and risks. Rising interest rates have led to predictions of another recession this year.

 With all of this uncertainty, I think it’s a good time to turn to companies that can thrive in all economic climates: consumer staples. No matter what the economy is doing, we all need to eat drink and keep our homes running.

As such, I believe that the iShares Consumer Staples ETF, housing top-notch names like McDonald’s, Kellogg and Colgate-Palmolive, provides a solid foundation for an ASX share portfolio in the new year.

Motley Fool contributor Sebastian Bowen owns shares in McDonald’s.

Allkem Ltd

What it does: Allkem is a speciality lithium products company with a global portfolio of diverse and high-quality lithium chemicals.

By James Mickleboro: My first pick this year is lithium miner Allkem. The lithium industry has been going through a tough period in recent weeks amid concerns that prices have peaked. And while a peak was inevitable eventually, this doesn’t mean the end of the road for Allkem. Far from it!

Thanks to its plan to grow production four times over in the coming years, it remains well-placed to continue generating bumper profits even as prices ease.

In fact, even Goldman Sachs, which is extremely bearish on lithium prices, believes Allkem shares are a buy. It currently has a buy rating and $15.20 price target on them.

Motley Fool contributor James Mickleboro owns shares in Allkem. 

Qantas Airways Limited

What it does: Qantas is Australia’s leading operator of international and domestic air transportation services. It also provides freight services and has a lucrative frequent flyer loyalty program.

By James Mickleboro: Another ASX share that I would buy this month is Australia’s flag carrier airline, Qantas. Despite its shares smashing the market in 2022, I still believe they are attractively priced. Especially given how the airline has come out the other side of the pandemic as a significantly stronger business.

For example, Goldman Sachs forecasts FY 2023 earnings per share almost 60% higher than FY 2019’s pre-COVID levels. And that’s despite the company operating with a group capacity 20% lower than 2019 levels. Yet despite this, Qantas shares have closed out the year notably lower than where they ended 2019.

Goldman currently has a conviction buy rating and an $8.20 price target on its shares.

Motley Fool contributor James Mickleboro does not own shares in Qantas. 

The post Top ASX shares to buy in January 2023 appeared first on The Motley Fool Australia.

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• The Qantas share price soared 20% in 2022. Can it maintain altitude in 2023?
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• Mach7 signs $17 million contract – share price jumps 20% at open
• How I’d invest $1,000 in ASX 200 shares for rising inflation

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Mach7 Technologies. The Motley Fool Australia has positions in and has recommended iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Elders, Mach7 Technologies, and 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and raced higher. The benchmark index rose 1.6% to 7,059.2 points.

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

ASX 200 expected to edge higher

The Australian share market looks set to rise on Thursday despite a mixed night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 11 points or 0.15% higher this morning. In late trade in the United States, the Dow Jones is down 0.1%, the S&P 500 has risen 0.1% and the NASDAQ has climbed 0.1%.

US Federal Reserve minutes

It has been a volatile night of trade on Wall Street. After starting the day in the red and then rebounding strongly, investors have started to hit the sell button again late in the session in response to the release of the US Federal Reserve’s minutes from its December meeting. The Fed said: “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”

Oil prices sink again

Energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have another difficult day after oil prices sank again on Wednesday night. According to Bloomberg, the WTI crude oil price is down 4.5% to US$73.48 a barrel and the Brent crude oil price is down 4.6% to US$78.37 a barrel. Oil prices fell on global economic growth concerns.

Mining giants rise

It could be a positive session for mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) after their shares rose on Wall Street and the London Stock Exchange, respectively, overnight. Both miners have risen 1.5% at the time of writing, which bodes well for this morning’s session.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good day after the gold price rose again overnight. According to CNBC, the spot gold price is up 0.6% to US$1,857 an ounce. Gold rose after the US dollar softened.

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

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

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Exchange traded funds (ETFs) don’t just provide investors with access to indices, countries, or sectors. They also allow investors to achieve different investment goals.

For example, if you’re wanting to build an income portfolio, you could buy the ETFs named below that have been designed to provide investors with exposure to a collection of dividend shares.

Here’s what you need to know about them:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The first ETF for income investors to look at is the BetaShares S&P 500 Yield Maximiser.

This ETF has been designed to provide income investors with attractive quarterly income and low volatility.

BetaShares aims to do this via an equity income investment strategy over a portfolio of shares comprising the S&P 500 Index on Wall Street. This clever strategy allows the ETF to generate a greater than average yield from the constituents of the index.

In fact, at the last count, the BetaShares S&P 500 Yield Maximiser’s units were offering investors an 8.7% distribution yield.

Among the shares listed on the S&P 500 index are dividend-paying giants such as Apple, Bank of America, Exxon Mobil, Home Depot, and Walmart.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

If you’re wanting to invest locally then income investors might want to look at the Vanguard Australian Shares High Yield ETF.

This ETF focuses on investing in a collection of ASX shares that have higher forecast dividends relative to the rest of the market.

And it does this with diversification in mind. The Vanguard Australian Shares High Yield ETF restricts the proportion invested in any one industry to 40% and 10% for any one company.

At the last count, there were 70 ASX shares included in the portfolio. These include giants such as Rio Tinto Ltd (ASX: RIO), Telstra Corporation Ltd (ASX: TLS), and Westpac Banking Corp (ASX: WBC).

The Vanguard Australian Shares High Yield ETF currently trades with an estimated forward dividend yield of 5.4%.

The post Here are the ASX ETFs to buy for a passive income boost in 2023 appeared first on The Motley Fool Australia.

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More reading

• 2 excellent ETFs for ASX investors in January
• 2 of the best ETFs for ASX investors to own in 2023
• The ASX-listed ETFs to buy for a passive income in 2023
• How I’d build passive income with just $20 a week

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 BetaShares S&p 500 Yield Maximiser Fund and Telstra Group. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF and Westpac Banking. 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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