Tag: Motley Fool

The Xero Limited (ASX: XRO) share price suffered heavily last year. It was one of the worst performers in the S&P/ASX 200 Index (ASX: XJO) in 2022. Xero shares dropped by 52% and the ASX 200 only fell by 7.25%.

With such a significant decline, you’d think the cloud accounting software business saw a big turn in conditions. But, it didn’t. The company has continued to report double-digit growth, which I will outline later.

However, the biggest impact on the Xero share price may have been rising interest rates. A wide range of ASX growth shares suffered major sell-offs last year.

Why do interest rates matter for ASX growth stocks?

Warren Buffett explained how interest rates affect things:

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.

Investors may have an idea of what a business may look like in five or ten years, and potentially the valuation. But, to figure out how much an ASX growth share is worth today, an investor can ‘discount’ that value back through the years until the investor gets to today’s value. The higher the interest rate, the higher the discount rate.

So, with interest rates up so much, it is somewhat justified that the Xero share price is lower than it used to be. But, a decline of 50% may be too harsh.

Xero shares continue to see underlying growth

In the first half of FY23, the company reported that subscribers grew by 16% to around 3.5 million and the average revenue per user (ARPU) grew by 13% to $35.30. Operating revenue went up by 30% to $658.5 million and annualised monthly recurring revenue (AMRR) jumped 31% to $1.48 billion.

All of those statistics are what I’d want to see from a leading business, particularly with a high gross profit margin of 87%.

When a company has that strong of a gross profit margin, it means a vast majority of the new revenue that Xero generates can be turned into gross profit, which can then be spent on categories like software development, marketing, employees, and so on.

The business keeps over 99% of its subscribers each year, showing that loyalty is exceptionally high. Xero is taking advantage by implementing price increases in New Zealand, Australia, and the UK, which can boost its revenue and hopefully the margins.

In the long term, the business expects each of its major expense categories (eg marketing, and general administration) to be a smaller percentage of revenue. In other words, it’s expecting its profit margins to rise in the future.

Is the Xero share price a buy?

I think it is. There may be more volatility on the ASX in 2023, but there are few ASX businesses as high-quality as Xero in my opinion. It continues to grow its subscriber numbers globally, subscription prices are increasing and the business is still heavily focused on long-term growth. It’s a lot cheaper than it was before.

The post Growth stock crash: is now the time to buy Xero shares? appeared first on The Motley Fool Australia.

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More reading

• 23 ASX shares to buy in 2023 – brokers
• 5 things to watch on the ASX 200 on Friday
• 3 five-star ASX 200 shares I would buy in 2023
• Why are ASX 200 tech shares having such a stellar run on Thursday?
• 10 ASX shares I think are buys for 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 positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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Fortescue Metals Group Limited (ASX: FMG) shares saw plenty of volatility during 2022. But, unlike many ASX growth shares, the ASX mining share managed to finish the year higher. It rose by 3.3%.

This means that the iron ore ASX share managed to beat the return of the S&P/ASX 200 Index (ASX: XJO). The index fell by 7.25% over 2022.

Plus, don’t forget that Fortescue paid a very large dividend in 2022. The business paid an FY22 dividend per share of $2.07. Excluding franking credits, the Fortescue dividend amounted to an additional 10.8% return.

While the changes in the iron ore price may have had the biggest short-term impact on the Fortescue share price, the last price change is quickly forgotten as the next day of trading occurs.

Here are three of the most significant announcements during the year.

Decarbonisation plan announced

The business revealed its US$6.2 billion plan to eliminate fossil fuel use within the business and achieve ‘real’ zero terrestrial emissions (scope 1 and 2) across its iron ore operations. The investment will “eliminate Fortescue’s fossil fuel risk profile and enable it to supply customers with a carbon free product.”

Fortescue said that it expects to generate attractive economic returns from its investment arising from the operating cost savings due to cutting out diesel, natural gas and carbon offset purchases from its supply chain.

The ASX mining share, by 2030, will avoid 3 million tonnes of CO2 emissions per year, with net operating costs savings of US$818 million per year, at the prevailing market prices of diesel, gas and Australian carbon credit units.

Fortescue believes this will lead to a significant new green growth opportunity by producing a carbon-free iron ore product and through the commercialisation of decarbonisation technologies. This could be a useful boost for Fortescue shares.

This will involve zero emission trucks, zero emission trains and zero emission drill rigs and excavators. Within the overall expenditure, it will spend billions on renewable energy, battery storage and infrastructure.

E.ON

At the end of March 2022, Fortescue revealed its biggest potential green hydrogen partnership. As a reminder, Fortescue is looking to create a global portfolio of locations that produce green hydrogen through Fortescue Future Industries (FFI) as a fuel source to replace fossil fuels in heavy machinery, boats and planes.

E.ON, is one of Europe’s largest operators of energy networks and energy infrastructure, and a provider of innovative customer solutions for 50 million customers.

Fortescue revealed that it’s aiming to deliver “up to five million tonnes per annum” of green hydrogen to Europe by 2030. The two businesses signed a memorandum of understanding, with binding elements between the parties.

This deal could represent a third of FFI’s green hydrogen production by 2030. It could be generating meaningful earnings for the company, and potentially boost the Fortescue share price.

WAE acquisition

In January 2022, which seems like a very long time ago, Fortescue announced a sizeable acquisition. It bought Williams Advanced Engineering (WAE) for £164 million.

Fortescue has been working with WAE since early 2021 to design and build a prototype battery system to power an electric mining haul truck.

The deal provided Fortescue with “critical technology and expertise in high-performance battery systems and electrification”.

In the 2021 calendar year, WAE generated revenue of around US$84 million, with customers in sectors such as premium automotive and motorsport.

Fortescue wants WAE to become a major player in the growing global market for heavy mobile equipment and rail.

If this goes well, it could be a boost for Fortescue shares.

The post 3 defining moments for Fortescue shares in 2022 appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares I’m never selling
• Iron ore price in 2023: Bull vs. bear
• Better buy for 2023: BHP vs. Fortescue shares
• 25% of my retirement portfolio is in these 5 ASX shares: Here’s why I believe they’re winners for 2023 and beyond
• Can Fortescue stock maintain its dividend in 2023?

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

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On Friday, the S&P/ASX 200 Index (ASX: XJO) ended the week with a small gain. The benchmark index rose 0.25% to 7,038.7 points.

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

ASX 200 expected to rise

The Australian share market looks set to rise again on Tuesday following a decent night of trade in Europe. According to the latest SPI futures, the ASX 200 is poised to open the day 31 points or 0.5% higher. In Europe, the DAX rose 1.05% and the CAC climbed 1.9% amid upbeat economic data. Wall Street was closed for a public holiday.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 2.7% to US$80.51 a barrel and the Brent crude oil price is up to US$85.91 a barrel. Oil prices rose on demand optimism.

Lithium miners on watch

It could be a better day for lithium miners such as Mineral Resources Ltd (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS) on Tuesday. On Wall Street on Friday, US-listed lithium miners such as SQM had a decent session. This has been followed up with a positive showing for European listed lithium shares overnight.

Gold price rises

Gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price rose overnight. According to CNBC, the spot gold price is up 0.2% to US$1,830.1 an ounce. Optimism that rates may not rise as much as feared has boosted the precious metal recently.

No RBA meeting

Borrowers can breathe a sigh of relief today. It may be the first Tuesday of the month, but the Reserve Bank will not be meeting to discuss the cash rate. The central bank doesn’t hold monetary policy meetings in January, so rates will stay as they are until at least the start of February.

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

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More reading

• 23 ASX shares to buy in 2023 – brokers
• These were the best-performing ASX 200 shares of 2022
• With hardly any savings at 40, I’d use the Warren Buffett method for generating passive income
• Should I buy ASX 200 lithium shares for my portfolio in 2023?
• 3 steps to generating passive income with ASX 200 dividend 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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It’s no secret that inflation was one of the biggest concerns for investors over the 2022 investing year.

Rising inflation, as well as the higher interest rates that come with it, have shaken markets over the past 12 months and are probably almost single-handedly responsible for the sluggish performance we saw on the stock markets last year.

That was true for both here on the ASX and overseas on the US markets.

And while inflation might ease this year, it’s likely that it won’t be getting down to the passive levels that were ubiquitous for the decade preceding 2022.

So how does an investor put $1,000 to work if they are concerned about rising inflation?

Investing $1,000 in a high-inflation world

Well, there are a few things to keep in mind. Inflation is the process of currency debasement. In other words, high inflation rates make our dollar weaker. This increases the cost of pretty much everything. And if wages don’t keep up (which they haven’t been), it results in a falling standard of living for most Australians.

So what does this mean for ASX shares? Well, it means that the bar for providing real returns is higher. If inflation is running at 6% per annum, and an ASX share gives an investor a 2% dividend yield alongside a 3% capital appreciation, then it is still going backwards.

That’s because although its nominal rate of return is 5%, its actual rate of return (accounting for inflation ) is -1%.

So with this in mind, I would aim for ASX 200 shares that have the potential to provide both a mix of capital growth and dividend returns. Preferably with franking credits too, which boost returns even further. Potential candidates for these criteria could include Brickworks Ltd (ASX: BKW) or Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Shares that can thrive with rising prices

But I would also look to companies that have a structural advantage in times of high inflation. One option is ASX 200 bank shares like Westpac Banking Corp (ASX: WBC). Banks can quite quickly adapt to higher inflation because they can simply raise their loan rates alongside rising interest rates.

Higher customer rates on term deposits and savings accounts that stem from higher interest rates can boost the capital that banks have at their disposal too.

Another sector that tends to prosper during high inflation periods is ASX 200 resources shares. Commodities like iron ore, coal, gold and oil tend to keep up with, or even exceed, the rate of inflation.

Thus, miners like BHP Group Ltd (ASX: BHP) and drillers like Woodside Energy Group Ltd (ASX: WDS) could also be potential inflation winners. Just look at the share prices of BHP or Woodside over 2022 if you want proof that these companies can thrive when prices are rising.

Finally, consumer staples shares are in another sector with a reputation for being an effective inflation hedge. Higher inflation can reduce consumer spending.

But we all have to spend money on food, drinks and household essentials, pretty much regardless of how expensive they are. So another potential path for our $1,000 is in ASX 200 consumer staples shares like Coles Group Ltd (ASX: COL) or Metcash Ltd (ASX: MTS).

The post How I’d invest $1,000 in ASX 200 shares for rising inflation appeared first on The Motley Fool Australia.

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More reading

• 23 ASX shares to buy in 2023 – brokers
• How I’d use a stock market crash to boost my passive income
• 3 pivotal moments you might have missed for BHP shares in 2022
• How I’d invest $10,000 in ASX shares if I was starting from scratch in 2023
• These were the best-performing ASX 200 shares of 2022

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Metcash 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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The Core Lithium Ltd (ASX: CXO) share price has soared in 2022, but will it keep climbing higher in 2023?

Core Lithium shares have surged 75% in the year to date. In today’s trade, Core Lithium shares are surging 6%.

So what will impact the Core Lithium share price next year?

Finniss Project

Core Lithium is exploring the Finniss Lithium Project in the Northern Territory. A key factor that could impact the Core Lithium share price is production from this project. The Mineral Resource Estimate for the Finniss project lifted by 28% to 18.9 Mt at 1.32% lithium oxide in 2022. The company says first spodumene concentrate production is on track for the first half of 2023. Core Lithium plans to commence lithium concentrate sales in H1 2023.

If Core Lithium can deliver on its production targets, this may be a positive for the company’s cash flow and the Core Lithium share price. The team at Macquarie is tipping Core Lithium to deliver sold free cash flow in FY24 and FY25. Any new offtake agreements could also be a positive for Core Lithium.

Price of lithium

Lithium prices and electric vehicle (EV) demand could also weigh on Core Lithium shares. Lithium is an essential component of EV batteries. The price of lithium can impact investor sentiment about the company’s ability to generate profit from lithium at the mine.

A recent Industry Department report is tipping spodumene prices to rise from an average of US$2,700 a tonne in 2022 to US$4,010 in 2023 before pulling back to US$3,130 in 2024. The report states world demand for lithium demand is “forecast to rise by over 40%” in the next two years to reach 1,091,000 tonnes by 2024. The report adds:

Despite the spread of new battery manufacturing capacity into Europe and the US, Asia remains the major source of demand for lithium.

Core Lithium share price snapshot

Core Lithium shares have soared 78% in the last year. However, Core Lithium shares have descended 21% in the last month

For perspective, the ASX 200 has lost 6% in the last year.

The post Here’s what I think could impact the Core Lithium share price in 2023 appeared first on The Motley Fool Australia.

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More reading

• These were the best-performing ASX 200 shares of 2022
• What would it take for the Core Lithium share price to explode in 2023?  
• Why is the Core Lithium share price soaring 6% today?
• Why Appen, Core Lithium, Paradigm, and Sayona Mining shares are racing higher
• Why are ASX 200 lithium shares charging higher today?

Motley Fool contributor Monica O’Shea 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 the ASX 200 index falling 5.5% over the last 12 months, it’s fair to say that 2022 was a difficult year for investors. The good news is that this has left many ASX shares trading at very attractive levels in 2023.

Ahead of the market reopening on Tuesday, I thought I would look at which ASX shares are being tipped as buys for the year ahead.

Listed below are 23 ASX shares that have been named as buys by brokers for 2023:

Accent Group Ltd (ASX: AX1)

Goldman Sachs has a buy rating and $2.20 price target on this footwear and fashion retailer’s shares. It likes the company due to its exposure to younger consumers.

Adairs Ltd (ASX: ADH)

This furniture and homewares retailer could be an ASX share to buy according to Goldman Sachs. The broker believes its business model is more resilient than the market appreciates. The broker has a buy rating and $2.85 price target on its shares.

Allkem Ltd (ASX: AKE)

Goldman Sachs is also a fan of this lithium miner and has a buy rating and $15.20 price target on its shares. It points out that Allkem has the “strongest 5-yr lithium production growth [and trades] at a discount to peers.”

Arafura Rare Earths Ltd (ASX: ARU)

Bell Potter has a speculative buy rating and 64 cents price target on this rare earths developer’s shares. It notes that the company’s Nolans project is “anticipated to feed potentially 8% of global supply directly into the permanent magnet market servicing expansion of electric vehicles and wind turbines.”

Aristocrat Leisure Limited (ASX: ALL)

Citi has a buy rating and $41.20 price target on this gaming technology company’s shares. Its analysts see the “land-based business as well positioned and remain optimistic on the RMG opportunity.”

BHP Group Ltd (ASX: BHP)

Macquarie is positive on this mining giant and has an outperform rating and $50.00 price target on its shares. The broker expects the Big Australian to benefit greatly from favourable commodity prices.

CSL Limited (ASX: CSL)

Another ASX share to consider is CSL. Analysts at Citi have a buy rating and $340.00 price target on the biotherapeutics giant’s shares. It is forecasting earnings per share growth greater than 20% in both FY 2023 and FY 2024.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Morgans has an add rating and $90.00 price target on this pizza chain operator’s shares. The broker believes that “now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time.”

Goodman Group (ASX: GMG)

Citi has a buy rating and $23.50 price target on this industrial property company’s shares. “[We] continue to favour industrial exposure, and remain attracted to GMG’s best-in-class balance sheet. We continue to see potential for upside to guidance.”

IDP Education Ltd (ASX: IEL)

The team at Morgan Stanley has an overweight rating and $36.80 price target on this language testing and student placement company’s shares. It believes China’s reopening from COVID-19 could be a big boost to its business.

Life360 Inc (ASX: 360)

Analysts at Bell Potter are bullish on this location technology company and have a buy rating and $9.00 price target on its shares. It expects that “recent price rises in the core business [are] likely to drive strong top line growth” in FY 2023.

Mineral Resources Ltd (ASX: MIN)

Morgans has an add rating and $94.00 price target on this mining and mining services company’s shares. It is a fan due to its transformation “from being primarily leveraged to high-cost/short-life iron ore operations to low-cost/long-life iron ore and lithium assets.”

National Australia Bank Ltd (ASX: NAB)

Analysts at Goldman Sachs are positive on this big four bank. The broker has a buy rating and $35.41 price target on its shares. Goldman’s analysts “see volume momentum over the next 12 months as favouring commercial volumes over housing volumes and NAB provides the best exposure to this thematic.”

Newcrest Mining Ltd (ASX: NCM)

Morgan Stanley is bullish on this gold miner and has an overweight rating and $23.40 price target on its shares. It feels the current environment is positive for the gold price.

Novonix Ltd (ASX: NVX)

Morgans has a speculative buy rating and $3.11 price target on this battery technology company’s shares. It notes that “NVX offers ASX investors an opportunity to get direct exposure to the North American battery market.”

Nufarm Ltd (ASX: NUF)

Bell Potter is positive on this ASX share. It currently has a buy rating and $7.50 price target on the agricultural chemicals company’s shares. It expects a strong result in FY 2023 thanks to “crop protection demand in the US and Europe and a growing contribution from new revenue streams in Omega-3.”

Pilbara Minerals Ltd (ASX: PLS)

Morgans currently has an add rating and $4.70 price target on this lithium miner’s shares. It believes recent share price weakness has created a buying opportunity.

Qantas Airways Limited (ASX: QAN)

This airline operator could be a buy according to Goldman Sachs. Its analysts have a conviction buy rating and $8.20 price target on its shares. The broker said: “Against the backdrop of substantially improved earnings capacity, we believe the stock is not even priced for a generic recovery.”

Telstra Group Ltd (ASX: TLS)

Morgan Stanley has an overweight rating and $4.75 price target on this telco giant’s shares. It believes the potential offloading of infrastructure assets could unlock value for shareholders.

Webjet Limited (ASX: WEB)

Analysts at Morgans are positive on this online travel agent and have an add rating and $7.20 price target on its shares. It feels that “WEB hasn’t wasted a crisis and will come out of COVID with a materially lower cost base, consolidated systems and a large business in the US.”

Westpac Banking Corp (ASX: WBC)

Goldman Sachs is very bullish on Australia’s oldest bank. It has a conviction buy rating and $27.60 price target on its shares. The broker believes “double digit total shareholder returns remains achievable over the next three years.”

Whitehaven Coal Ltd (ASX: WHC)

Strong coal prices make this an ASX share to buy according to Macquarie. It has an outperform rating and $12.50 price target on coal miner’s shares.

Xero Limited (ASX: XRO)

Finally, Citi sees a lot of value in this cloud accounting platform provider’s shares and has a buy rating and $97.90 price target on them. It expects “digitisation to be a bigger driver than macro for online accounting.”

The post 23 ASX shares to buy in 2023 – brokers appeared first on The Motley Fool Australia.

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More reading

• Bought $1,000 of Qantas shares 10 years ago? Here’s how much dividend income you’ve received
• How I’d use a stock market crash to boost my passive income
• 3 pivotal moments you might have missed for BHP shares in 2022
• How I’d invest $10,000 in ASX shares if I was starting from scratch in 2023
• With hardly any savings at 40, I’d use the Warren Buffett method for generating passive income

Motley Fool contributor James Mickleboro has positions in Allkem, CSL, Domino’s Pizza Enterprises, Life360, Westpac Banking, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, CSL, Idp Education, Life360, and Xero. The Motley Fool Australia has positions in and has recommended Adairs, Telstra Group, and Xero. The Motley Fool Australia has recommended Accent Group, Domino’s Pizza Enterprises, 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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The Commonwealth Bank of Australia (ASX: CBA) share price hasn’t done that well compared to some other ASX bank shares.

Looking at the returns, in 2022 the CBA share price has gone up 0.40%.

Let’s put this into context. The S&P/ASX 200 Index (ASX: XJO) dropped around 7% over the year.

It has certainly done better than the ASX 200. The bank has also outperformed some of the other bank shares.

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has dropped around 14%.

But, the Westpac Banking Corp (ASX: WBC) share price has risen by 8% and the National Australia Bank Ltd (ASX: NAB) share price has gone up 2.2%.

It has been a mixed bag for other ASX bank shares as well. The Bank of Queensland Limited (ASX: BOQ) share price has fallen more than 16%, the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has climbed around 6% and the MyState Limited (ASX: MYS) share price has fallen 22%.

2022 was a mixed year

In the first half of the 2022 calendar year, CBA was having to deal with sinking profit margins. The bank reported that in FY22, its net interest margin (NIM) had fallen to 1.9%, after an 18 basis point drop. This was due to a “large increase in low yielding liquid assets and lower home loan margins” amid the record low interest rate.

Despite that, the bank was able to report an 11% increase in cash net profit after tax (NPAT) to $9.6 billion thanks to “operational performance and volume growth in core businesses”.

Impressively, the business reported 7.4% growth of home lending and 13.6% growth of business lending.

The profit growth enabled a 10% increase of the annual dividend to $3.85 per CBA share.

Rising interest rates

In the bank’s outlook statement in the FY22 result, it said that Australian households and businesses are in a “strong position given low unemployment, low underemployment, and strong non-mining investment”.

While it warned of the negative impact of higher interest rates on consumer confidence, the business told investors that it expected its lending profit margins to increase in the rising interest rate environment.

Indeed, in the FY23 first quarter, the largest ASX bank share was able to tell investors that its income rose 9%, which was helped by higher margins and volume growth. However, cash net profit only grew by 2%.

In that quarter, CBA saw home lending grow by 6.3%, while business lending jumped 12.6%.

How could 2023 go?

I think that CBA is going to report a sizeable increase in profitability in 2023. The rising interest rates could be a very helpful boost to profit.

CBA noted in its FY23 first quarter update that “portfolio credit quality remained sound, with favourable trends in key credit quality indicators”.

I believe that CBA shares will be able to grow its dividend again for investors in 2023.

Based on (independent) numbers on Commsec, CBA shares could offer a FY23 grossed-up dividend yield of 6.2%.

However, I also think it’s quite possible we could see an increase in the loan arrears. If some borrowers can’t absorb the higher interest rates, then this could lead to worsening arrears and then higher bad debts.

While I think the CBA profit will improve in FY23, I’m not sure whether the CBA share price will show as much improvement from here.

The post The CBA share price was nowhere near the best performing ASX bank share in 2022. What now? appeared first on The Motley Fool Australia.

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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 Bendigo And Adelaide Bank. The Motley Fool Australia has recommended 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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The Qantas Airways Limited (ASX: QAN) share price has had a turbulent existence on the ASX over the last decade.

The national carrier was hit hard by the global financial crisis, only managing to regain its footing a few years before the onset of the COVID-19 pandemic.

Still, long-term investors have likely been happy with their holding. The Qantas share price has taken off over the last decade, lifting a whopping 287% since 28 December 2012.

Back then, $1,000 likely would have seen an investor buy 632 shares in the airline, paying $1.58 apiece.

Today, that parcel would command a value of $3,861.52. The Qantas share price closed Friday’s session at $6.11.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted around 55% over the last 10 years.

Less fortuitous have been dividend-focused Qantas investors. Here’s how much passive income a long-term shareholder has likely received from the airline share.

How much have Qantas shares paid in dividends in 10 years?

Here are all the dividends Qantas has offered since December 2012:

Qantas dividends’ pay date	Type	Dividend amount
September 2019	Final	13 cents
March 2019	Interim	12 cents
October 2018	Final	10 cents
April 2018	Interim	7 cents
October 2017	Final	7 cents
April 2017	Interim	7 cents
October 2016	Final	7 cents
Total:		63 cents

As the above chart alludes, Qantas didn’t pay dividends between 2009 and 2016. It then halted its offerings amid the emergence of the pandemic.

Meanwhile, the company hasn’t operated in the green since the financial year 2020, wherein its underlying profits tumbled 91%.

Over the last decade, Qantas shares have paid out 63 cents per share to investors.

That means our figurative $1,000 investment would have yielded $398.16 in dividend income over its life. That’s on top of a significant capital gain.

Long-term investors also likely benefited from a capital return – worth $505 million, equalling 23 cents per share – undergone by Qantas in 2015, as well as numerous on-market share buybacks conducted over the years.

And there’s apparently good news on Qantas’ horizon. The airline expects to return to profit in the first half of financial year 2023.

The post Bought $1,000 of Qantas shares 10 years ago? Here’s how much dividend income you’ve received appeared first on The Motley Fool Australia.

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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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Stock market crashes are events that most investors don’t find pleasant. There’s a part of human nature that simply abhors seeing the value of one’s investments drop substantially outside the investors’ control. But if there is a stock market crash this year, I’ll be champing at the bit to boost my passive income.

Why? Well, stock market crashes typically send the value of all shares, not just weak ones, down the gurgler. Just take a look at what happened to the S&P/ASX 200 Index (ASX: XJO) during the COVID crash of 2020. Or the global financial crisis of 2008.

But this can be a massive buying opportunity, especially for dividend investors.

Stock market crashes are dividend blessings in disguise

See, the dividend yield an investor can expect is a function of two different inputs. The first is how much in dividends per share a company pays out. The second is the share price. Put simply, the lower a company’s share price is, the higher its dividend yield will be.

There are plenty of ASX shares that don’t tend to cut their dividends even in a recession or stock market crash. Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL), Washington H. Soul Pattinson and Co Ltd (ASX: SOL)… These are all ASX dividend shares that didn’t cut their payouts in 2020 or 2021.

But buying them during the COVID crash of 2020 could have been enormously beneficial to a dividend investor. Let’s look at why.

So in 2019 and 2020, Telstra paid out an annual dividend of 16 cents per share. In early 2020, Telstra shares were trading at $3.90 apiece. A 16 cents per share annual dividend would have given Telstra investors a dividend yield of 4.1% at this share price. But by May 2020, Telstra shares had crashed to around $2.99.

If an investor bought Telstra shares then, they would instead enjoy a dividend yield of 5.35%.

Telstra has since upped its annual dividends to 16.5 cents per share in 2022. That would boost the yield on cost of our investor who bought Telstra shares for $2.99 to 5.52% today.

So this is how a dividend income investor can boost their passive dividend income in a stock market crash. It’s certainly the strategy I’ll be trying to employ if there is a stock market crash in 2023.

The post How I’d use a stock market crash to boost my passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra 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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Coles Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. 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 certainly was an eventful and successful year for BHP Group Ltd (ASX: BHP).

The Big Australian’s shares recorded a 10% gain over the 12 months.

But, as you can see below, it certainly wasn’t a smooth ride for the BHP share price.

Here are three pivotal moments impacting BHP shares last year.

BHP scraps UK listing

The first pivotal moment in 2022 was in January when BHP shareholders voted overwhelmingly in favour of its unification.

The BHP board believed that unification was in the best interests of shareholders as it would result in a corporate structure that is simpler and more efficient, reduce duplication, and streamline governance and internal processes.

It also expected the unified structure to improve flexibility for portfolio reshaping to maximise shareholder value over the long-term. This leads us onto pivotal moment two.

Petroleum demerger

Following the unification, BHP decided to push ahead with the demerger of its petroleum business to Woodside Energy Ltd (ASX: WPL).

BHP’s CEO, Mike Henry, explained the rationale for the divestment. He said:

Merging our petroleum business with Woodside creates a large, more resilient company, better able to navigate the energy transition and grow value while doing so. Through the merger we will provide value and choice for BHP shareholders, and unlock synergies in how these assets are managed.

The fact that the BHP share price still outperformed the market despite divesting a large portion of its business demonstrates just how successful its year was.

OZ Minerals acquisition

A final pivotal moment came at the end of the year when the mining giant announced an agreement to acquire OZ Minerals Ltd (ASX: OZL) for $9.6 billion.

While the deal is yet to complete, if it does, BHP’s CEO, Mike Henry, expects it to unlock opportunities that wouldn’t otherwise be possible. He commented:

The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development.

Here’s hoping that 2023 will be equally successful for BHP shares and shareholders.

The post 3 pivotal moments you might have missed for BHP shares in 2022 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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