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Wesfarmers Ltd (ASX: WES) shares may be one of the top S&P/ASX 20 Index (ASX: XTL) ASX dividend shares for income. It’s a leading ASX blue-chip stock with a market capitalisation of $54 billion according to the ASX.

The business is the owner of some of the country’s leading retail brands including Bunnings, Officeworks, Kmart, Target, Priceline, and Catch.

It also used to be the owner of Coles Group Ltd (ASX: COL), but it divested the supermarket business a few years ago. Owners of Wesfarmers shares received Coles shares when the split happened, so long-term shareholders are now getting dividends from both Wesfarmers and Coles.

Wesfarmers is committed to dividends

The blue-chip stock says that the primary objective of Wesfarmers is to provide a “satisfactory return to its shareholders through financial discipline and exceptional management of a diversified portfolio of businesses.”

Wesfarmers says that “as well as share price appreciation, Wesfarmers seeks to grow dividends over time commensurate with performance in earnings and cash flow“.

In the company’s FY22 result, despite the tricky trading conditions, Wesfarmers grew its total dividend per share by 1.1% to $1.80 per share.

For cash flow generation, the ASX 200 dividend share wants to employ “excellent management teams who are empowered to drive long-term earnings growth. This is achieved through deploying best practice principles in operational execution and maintaining a long-term focus in regards to strategy and results.”

Wesfarmers says it is constantly looking to improve the working capital efficiency of all its businesses while ensuring “strong discipline” for its capital expenditure.

Being prudent with its money and trying to achieve good results has played out well for the business and the Wesfarmers share price over the long term.

Approach to investments

One of the most compelling things about Wesfarmers’ dividend prospects is that its portfolio regularly evolves to be more future-focused.

For example, it recently acquired the business Australian Pharmaceutical Industries (API). This enables the business to start a new division called Wesfarmers Health which is exposed to long-term tailwinds, including Australia’s ageing demographic.

Within its chemicals, energy, and fertilisers business, it’s investing in a lithium mining operation called Mt Holland. This could produce good cash flow for the business in the future years.

The company says that it seeks to “invest in group businesses where capital investment opportunities exceed return requirements”.

It also looks to “acquire or divest businesses where doing so is estimated to increase long-term shareholder wealth”.

When reviewing the acquisition, it looks at a number of filters: megatrend exposure, industry structure, industry scale, competitive position, how it fits into Wesfarmers, the long-term investment horizon, discipline in financial projections, and risk-adjusted hurdle rates.

By combining a strong performance from its existing businesses, organic growth, and the occasional acquisition, Wesfarmers can hopefully grow its profit and dividend over the long term.

Expected future Wesfarmers dividends

Dividends and growth are not guaranteed from the blue-chip stock. But, Commsec numbers suggest that’s exactly what the business may achieve in the next two financial years.

According to Commsec, the business is going to pay an annual dividend per share of $1.825 in 2023 and $1.895 in 2024. This translates into forward grossed-up dividend yields of 5.5% and 5.75% respectively.

The post Why this blue-chip stock is a no-brainer buy for dividend growth investors appeared first on The Motley Fool Australia.

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More reading

• 2 reasons I think the Fortescue share price can keep rising (and 2 why it can’t)
• 5 things to watch on the ASX 200 on Monday
• Shopping spree: What happened to the Woolworths share price today?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Bought $1,000 of Wesfarmers shares 10 years ago? Here’s how much dividend income you’ve received

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 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 has been a relatively solid performer in 2023.

Since the start of the year, Australia’s largest bank’s shares have risen almost 3.5%.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 5.8% of its value during the same period.

And then let’s not forget the dividends that CBA has paid. If we add in its fully franked dividends of $3.85 per share, this increases its total return by a further 3.6% to approximately 7%.

Can the CBA share price keep rising?

Unfortunately, analysts across Australia are united in their belief that the CBA share price has peaked.

Among the most bearish brokers is Goldman Sachs, which has a sell rating and $90.98 price target on its shares.

Based on the current CBA share price of $105.98, this will mean potential downside of 14% for investors over the next 12 months.

Its analysts have concerns about CBA’s exposure to home lending in the current environment and don’t believe it deserves to trade on a larger than normal premium to the rest of the big four.

Goldman explained:

While the 1Q23 update highlighted the strength of the CBA franchise (particularly deposits), reflected in its very strong NIM performance, we reiterate our Sell given: i) it does remain more exposed to the intense competition we are currently observing in mortgages (albeit CBA appears to be favouring NIM over volumes), ii) we expect that potential further macro downside is likely to more adversely impact the household this cycle, which CBA is more exposed to, and iii) domestic volume trends have tracked towards system levels. We therefore do not believe its fundamentals justify the 51% 12-mo fwd PER premium it is currently trading on versus peers, compared to the 20% historic average.

The post Is the CBA share price heading higher or lower from here? appeared first on The Motley Fool Australia.

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More reading

• CBA shares: 2 reasons to buy, and 2 to sell
• 2 ASX 200 dividend heavyweights to buy and hold until you retire
• Could the VAS ETF outperform the BHP share price in 2023?
• I’d aim for $1 million, buying just 10 cheap ASX shares
• Bought $1,000 of CBA shares 10 years ago? Here’s how much dividend income you’ve received

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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There are a handful of very promising S&P/ASX 200 Index (ASX: XJO) shares to look at, according to the fund manager L1 Capital.

In its recent monthly update for the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), the fund manager said it’s optimistic about the prospect of China reopening in 2023 and the portfolio is positioned to benefit from any progress on that front.

However, it’s also cautious about the outlook for the share market because of the “lagged impact of significant interest rate increases, deteriorating leading economic indicators, increasing pressure on corporate earnings into 2023 and tail risk from geopolitical tensions”.

With that in mind, L1 is currently maintaining a conservative portfolio. Here are three of the names that L1 likes:

Sandfire Resources Ltd (ASX: SFR)

The Sandfire share price performed strongly in November, rising by 45% thanks to the copper price going up by 11% along with expectations there is going to be a Chinese reopening.

L1 noted that China accounts for more than 50% of global copper demand, so its economic recovery is “critical to support copper prices”.

The fund manager noted that Sandfire did a capital raising for $200 million to strengthen its balance sheet as it completes the capital-intensive task of developing the Motheo copper mine in Botswana. Explaining its optimistic view, the fund manager stated:

We continue to see compelling valuation upside in Sandfire with the commencement of Motheo production in FY24 set to deliver a step-change in profits and cash flow for the company.

Boral Limited (ASX: BLD)

L1 describes Boral as one of the largest building and construction materials companies in Australia.

The fund manager notes that the ASX 200 share’s net profit after tax (NPAT) has been impacted by rising input costs and significant wet weather delays. However, the fund manager spies a turnaround for the company. L1 said:

Under new leadership, and in a normalised trading environment, we believe Boral has the potential to more than double earnings over the medium-term from current levels.

Qantas Airways Limited (ASX: QAN)

The Qantas share price rose by 7% in November with the airline upgrading its earnings expectations again. It increased the guidance by $150 million to a range of $1.35 billion to $1.45 billion, with a reduction of net debt by $900 million to between $2.3 billion to $2.5 billion by 31 December 2021.

The airline also noted that it is considering more shareholder returns with its low level of net debt.

L1 explained its optimistic case for the ASX 200 share:

We continue to view Qantas as having emerged from the pandemic even stronger than before, given its $1b cost-out program, improved market position and the massive pent-up demand for leisure travel, which we expect will persist despite macroeconomic headwinds. If Qantas management can achieve its FY24 targets, there is potential to deliver close to $1 of earnings per share, with Qantas currently trading on only around 6x price/earnings (P/E) ratio on that basis. We believe there is significant share price upside through earnings growth and a P/E re-rating as the company’s earnings mix shifts towards more predictable domestic earnings and loyalty business.

The post 3 ASX 200 shares that have ‘significant share price upside’: fund manager appeared first on The Motley Fool Australia.

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More reading

• Is Qantas stock a cheap ASX 200 buy right now?
• Why this one top fund manager is optimistic about 2023, and one little-known IPO that has hit it out of the park
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy today
• Goldman tips record copper prices in 2023. Which ASX shares have exposure?

Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. 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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Those who have held Woolworths Group Ltd (ASX: WOW) shares over the past decade have likely been pretty chuffed with their investment.

The Woolworths share price has gained 37% over the last 10 years. If an investor bought $1,000 of Woolies stock in December 2012, they likely would have walked away with 40 shares, paying $24.97 apiece.

Today, 40 Woolworths shares would be worth $1,372.40. Stock in the supermarket operator is currently trading at $34.31 per share.

However, the S&P/ASX 200 Index (ASX: XJO) has lifted around 56% over the same period, leaving the Woolworths share price’s performance in its dust.

But have the supermarket giant’s dividends levelled the playing field? Let’s take a look.

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

Here are all the dividends Woolworths has offered over the decade just been:

Westpac dividends’ pay date	Type	Dividend amount
September 2022	Final	53 cents
April 2022	Interim	39 cents
October 2021	Final	55 cents
April 2021	Interim	53 cents
October 2020	Final	48 cents
April 2020	Interim	46 cents
September 2019	Final	57 cents
April 2019	Interim	45 cents
October 2018	Final	50 cents
October 2018	Special	10 cents
April 2018	Interim	43 cents
October 2017	Final	50 cents
April 2017	Interim	34 cents
October 2016	Final	33 cents
April 2016	Interim	44 cents
October 2015	Final	72 cents
April 2015	Interim	67 cents
October 2014	Final	72 cents
April 2014	Interim	65 cents
October 2013	Final	71 cents
April 2013	Interim	62 cents
Total:		$10.69

As the above chart shows, Woolworths shares have paid out $10.69 per share in dividends over the last 10 years.

That means someone holding 40 stocks in the ASX 200 supermarket operator likely would have received $427.60 of dividends in that time.

Thus, our figurative $1,000 investment a decade ago has yielded $372.40 in capital gains and $427.60 in passive income – a total of $800. That leaves Woolworths shares boasting an 80% return in that time.

And that’s before considering franking credits. All Woolies dividends in that time have been fully franked, potentially bringing additional benefits at tax time.

Finally, a savvy investor who reinvested their dividends, potentially through the company’s dividend investment plan (DRP), likely would have realised an even larger gain through the magic of compounding.

Woolworths shares are currently trading with a 2.68% trailing dividend yield.

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

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More reading

• Brokers name 2 ASX dividend shares to buy next week
• Shopping spree: What happened to the Woolworths share price today?
• Brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Friday
• 3 ASX shares to buy for a possible recession next year

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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With Christmas less than a week away, the team at Morgans has been busy looking at which ASX shares it would like Santa to leave under the tree this year.

On this occasion, the broker is focusing on the retail sector and has picked out three shares that it wants to unwrap on Christmas morning. It said:

Perhaps you’re super organised this year and have bought all your presents already. If so, reward yourself by writing a note to Santa with a wish list of stocks you’d like to see in your stocking on Christmas morning. We have, and this year we’d love to receive share certificates in BLX, SUL and UNI.

An ASX share that is too cheap

The first ASX share that Morgans wants to find under the tree is speciality retailer Beacon Lighting Group Ltd (ASX: BLX). The broker currently has an add rating and $2.60 price target on its shares. It said:

We think retail demand for BLX’s lighting products will remain resilient through 1H23 and into 2H23, but even when consumer demand inevitably softens, we believe its strategy to develop its Trade (and International) business will offset and outweigh the cyclical downturn. At an FY24F PE of just 13.0x, we think BLX is too cheap for the growth it offers over the longer term.

A Super pick for 2023

The next ASX share for investors to buy is Super Retail Group Ltd (ASX: SUL). It is the retail conglomerate behind brands such as Super Cheap Auto and Rebel Sport. Morgans has an add rating and $13.00 price target on its shares. It said:

Though not a growth story as such, we see SUL as a well-run retailer that is well placed to surprise positively on earnings. Consumer demand is holding up well across most of its brands, while its investment in inventory is likely to allow it to hold gross margins. SUL has more than $250m in franking credits and we wouldn’t be surprised to see a special dividend at some point.

A retailer with a strong customer base

A final ASX share that Morgans wants for Christmas is youth fashion retailer Universal Store Holdings Ltd (ASX: UNI). Its analysts have an add rating and $6.50 price target on its shares. The broker commented:

UNI is benefiting from robust demand from its youthful (and fully employed) core customer. It has displayed excellent discipline around pricing and it has attractive growth opportunities across three channels: retail, online and now wholesale too.

The post Morgans has put these ASX shares on its Christmas wishlist appeared first on The Motley Fool Australia.

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More reading

• If I was 40 and had never invested, here’s how I’d aim to build a $500,000 ASX share portfolio
• Top ASX dividend shares to buy in December 2022
• I’d aim for $1 million, buying just 10 cheap ASX shares
• Rebound: I’m finding cheap ASX shares to buy before it’s too late!
• Growth is back: 3 ASX shares to buy now for a 2023 re-rate

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 Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail 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 Fortescue Metals Group Limited (ASX: FMG) share price has outperformed the S&P/ASX 200 Index (ASX: XJO) since the end of October 2022.

Fortescue shares have gone up by 37% while the ASX 200 has only risen by 4.2%.

I don’t think that Fortescue is going to rise by another 30%, but it’s possible that Fortescue shares could deliver outperformance in the coming months.

Certainly, no one knows what’s going to happen next. But, I believe there are compelling reasons why Fortescue shares can generate stronger returns than the market, yet it’s just as possible that the company could see problems. I’ll outline my thoughts on both sides.

Case for outperformance

The Fortescue share price has done well on the projection that the Chinese economy could open and rebound. If and when China’s COVID settings are ‘open’, then the nation could see a strong economic rebound like many other countries did after the Omicron wave a year ago.

Confirmation of China’s return to full economic activity could be another boost for the iron ore price. It would be wildly optimistic to think the iron ore price could get back to US$200 per tonne. But, it’s possible that it could rise another US$10 or US$20 per tonne within the next six months if China reopens in March.

The Australian Financial Review reported an analyst at Commonwealth Bank of Australia (ASX: CBA) Vivek Dhar thinks the outlook for steel is good. CBA is forecasting that Chinese policymakers will change to ‘living with COVID’ at China’s upcoming ‘Two Sessions’ policy meeting in March 2023.

I also believe the dividend can help Fortescue shares can deliver strong returns.

According to Commsec, Fortescue could pay an annual dividend per share of $1.43 in 2023. That would translate into a grossed-up dividend yield of 10%. The dividend alone could help deliver outperformance.

Case for underperformance

This may be about as far as the iron ore price is going to go if the bounce-back isn’t as strong as the optimists are thinking.

The Chinese people may well want to avoid busy places as the population has largely sought to avoid the virus over the past three years. A reopening in China may be quite different compared to the experience in Australia and the US.

Plus, it was reported that China’s central resources buyer, the China Mineral Resources Group, could start its operations next year. The new entity will reportedly make purchases on behalf of around 20 of the largest Chinese steelmakers. This could give the business “unprecedented negotiating power”. According to reports:

There was no fanfare when CMRG was established in July, but people familiar with the matter told Bloomberg at the time that its creation was encouraged and closely monitored by top leaders in Beijing. They see a consolidated platform for buying resources as a way to strengthen the country’s negotiating position in an unfriendly international environment.

We’ll have to see how this plays out. I wouldn’t want to buy more shares at the current Fortescue share price. I’d rather wait until investors are pessimistic about the iron ore price again.

The post 2 reasons I think the Fortescue share price can keep rising (and 2 why it can’t) appeared first on The Motley Fool Australia.

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More reading

• Why did the iron ore price just hit a 6-month high?
• 5 things to watch on the ASX 200 on Monday
• Shopping spree: What happened to the Woolworths share price today?
• What’s going on with the Fortescue share price on Friday?
• Here are the 3 most heavily traded ASX 200 shares on Friday

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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Telstra Group Ltd (ASX: TLS) shares will be under the spotlight this week as it’s announced whether the telco is allowed to enact its regional sharing agreement with TPG Telecom Ltd (ASX: TPG).

According to reporting by The Australian, the Australian Competition and Consumer Commission (ACCC) will, three days before Christmas, hand down its final determination on the Telstra and TPG agreement.

Preliminary views

The ACCC released its The Australian at the end of September 2022.

It said a number of things including:

The ACCC considers that a healthy secondary market for spectrum licences allows spectrum to move to its highest value use and allows for the deployment of new and innovative services over time. This includes situations in which the ACMA (Australian Communications and Media Authority) has imposed allocation limits on the auction of a band on the advice of the ACCC.

However, the ACCC is concerned that very concentrated holdings of spectrum create a disincentive for incumbent licensees to dispose of licences surplus to their technical or commercial requirements and create an incentive to ‘lock up’ this scarce resource. The ACCC is considering the ways in which the proposed transaction increases the concentration of spectrum holdings through the third-party authorisation, and the impacts this may have over the longer term on industry structure.

Optus suggests that there will be “considerable public detriment flowing from a lessening of price tension in the mobile market as a consequence of TPG’s prices being dictated by access costs set by Telstra.”

What are Telstra and TPG actually trying to do?

The deal could affect both Telstra shares and TPG shares.

If approved, Telstra would “obtain much of TPG’s mobile spectrum” in outer-suburban and regional areas, where approximately 17% of Australians live. Telstra will also obtain 169 of TPG’s mobile sites in that area.

TPG would shut down its remaining 556 mobile sites in those areas and acquire mobile network services from Telstra for mobile coverage.

Telstra said that this deal would provide “significant value to Telstra’s wholesale mobile revenue, while providing TPG Telecom group’s subscribers with 4G and 5G services”.

It would allow Telstra to grow its network and increase capacity.

The Telstra CEO at the time, Andy Penn, said:

Similar to monetising our passive infrastructure, it allows Telstra to have an innovative way of monetising some of our active mobile infrastructure, in areas where the population coverage is much smaller and more challenging in terms of returns and further investment and where there are already a number of competitors.

Additional scale from this agreement therefore supports return on invested capital in these areas and makes ongoing investment in the network and innovation more sustainable.

Snapshot of the share prices 

Over the last month, the Telstra share price has gone up around 3% and the TPG share price has gone down 1%.

The post Why all eyes will be on Telstra shares this week appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why is the Telstra share price lagging the ASX 200 today?
• Why Bendigo Bank, Endeavour, TPG, and Zip shares are dropping today
• This ASX 200 company has just become the latest victim of a cyber attack, and its share price is diving
• 3 top dividend payers of the ASX 200

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 Telstra Group. The Motley Fool Australia has recommended 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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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share with short interest of 14.4%, which is up slightly week on week. Short sellers have been adding to their positions since the release of a disappointing trading update.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise slightly to 13%. This betting technology company was quizzed by the ASX last week in relation to a $15 million payment to entrepreneur Matthew Tripp.
• Perpetual Limited (ASX: PPT) now has 11.7% of its shares held short, up slightly week on week. Short sellers have continued to increase their positions in this fund manager after it was pressured into completing its acquisition of Pendal Group Ltd (ASX: PDL).
• Megaport Ltd (ASX: MP1) has seen its short interest rise slightly to 10.6%. This network as a service operator’s shares trade on sky high multiples. Short sellers appear to see scope for these multiples to narrow given the prospect of higher interest rates.
• Sayona Mining Ltd (ASX: SYA) has 9.5% of its shares held short, which is down slightly week on week. Concerns that lithium prices could have peaked appear to be weighing on this developer.
• Lake Resources N.L. (ASX: LKE) has short interest of 8.8%, which is up week on week. One short seller claims that Lake is having issues producing battery grade lithium at scale from its Kachi operation.
• Zip Co Ltd (ASX: ZIP) has seen its short interest rise to 8.5%. Short sellers may be doubting this buy now pay later provider’s ability to achieve profitability if a global recession causes a spike in bad debts. Its high debt could be another cause for concern.
• Nanosonics Ltd (ASX: NAN) has short interest of 8.4%, which is down week on week. The jury is out on this medical device company’s sales model change in the key United States market.
• Breville Group Ltd (ASX: BRG) has seen its short interest slide again to 7.8%. Fears that spending on household goods could suffer in 2023 due to the cost of living crisis appear to be behind this short interest.
• Brainchip Holdings Ltd (ASX: BRN) has entered the top ten with 6.8% of its shares held short. Short sellers seem to believe that this semiconductor company is all show and no go. And with a $1.2 billion market capitalisation and less sales revenue than some cafes, it’s no wonder short interest is creeping up.

The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why did the Sayona Mining share price dive 7% on Thursday?
• Why Australian Ethical, Breville, Iluka, and Pilbara Minerals shares are tumbling today
• Here are the old and new energy ASX 200 shares that investors were buying last month
• Why Bendigo Bank, Endeavour, TPG, and Zip shares are dropping today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group, Megaport, Nanosonics, and Zip Co. The Motley Fool Australia has positions in and has recommended Nanosonics. The Motley Fool Australia has recommended Betmakers Technology Group, Flight Centre Travel Group, and Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re searching for ASX dividend shares to buy for a passive income, then the two listed below could be worth looking at.

Both have been tipped as buys with meaningful upside potential and attractive future yields.

Here’s what you need to know about them:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share that has been named as a buy is Baby Bunting. If you’re a parent, there’s a good chance you’ll have shopped at one of this baby products retailer’s superstores. And with management intent on growing its network further in the coming years, more and more parents will be following suit in the future.

While FY 2023 has been tough for Baby Bunting, Morgans believes investors should stick with the company. It has add rating and $3.60 price target on its shares.

The broker believes that Baby Bunting’s margin pressures in FY 2023 are transitory and highlights its “compelling opportunities to grow its share of a growing market.”

As for dividends, Morgans is forecasting fully franked dividends per share of 14 cents in FY 2023 and then 16 cents in FY 2024. Based on the current Baby Bunting share price of $2.66, this will mean yields of 5.25% and 6%, respectively.

South32 Ltd (ASX: S32)

Another ASX dividend share that has been named as a buy is South32. It is a diversified mining and metals company with exposure to a range of commodities including aluminium, copper, manganese, and nickel.

Morgans is also feeling positive on South32. So much so, it has an add rating and $5.30 price target on the mining giant’s shares.

Its analysts like South32 largely due to its portfolio transformation, which has given it exposure to the decarbonisation megatrend. It also believes the transformation is “substantially boosting group earnings quality, as well as S32’s risk and ESG profile”

In respect to dividends, Morgans is expecting South32 to pay fully franked dividends per share of 22.9 cents in FY 2023 and 21.5 cents in FY 2024. Based on the current South32 share price of $4.10, this will mean yields of 5.6% and 5.25%, respectively.

The post Buy these ASX dividend shares for a passive income: analysts appeared first on The Motley Fool Australia.

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More reading

• Experts say these strong blue chip ASX 200 shares are buys for 2023
• Bell Potter says these are some of the best ASX shares to buy for 2023
• Here’s why the South32 share price is shooting north today
• Morgans says these ASX 200 resources shares have almost 30% upside
• The cheap ASX shares to buy for dividends: broker

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 Baby Bunting Group. The Motley Fool Australia has recommended Baby Bunting 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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Legendary investor Warren Buffett has managed to build a massive amount of wealth through the power of investing and compound interest. Certainly, ASX shares can help grow our own wealth using the same principles.

Businesses have a powerful ability to reinvest in themselves and potentially make more profit than the year before.

For example, Coles Group Ltd (ASX: COL) can open another supermarket and then generate earnings from that new location.

There is no ‘right’ age to start investing. People can invest in themselves with education or learning a new skill that can unlock far more earning potential than what shares can do in the short term. Also, the goal of life isn’t necessarily to accumulate as much money as possible.

I think there is a balance between putting money towards building wealth and spending money to enjoy life now.

ASX shares can help build wealth

The great thing about ASX shares is that they can help grow wealth over a long period of time. While there are invariably some periods of volatility, the ASX share market’s historical return is an average of 10% per annum with dividends reinvested. But, past performance is not a guarantee of future performance and sometimes the market does go backward.

However, Warren Buffett’s advice is to keep investing “through thick and thin, and especially through thin”.

It’s the interest that earns interest that can make the biggest difference to wealth-building over time.

Imagine a $1,000 investment that grows at an average of 10% a year. In year one, it grows to $1,100, adding $100. In year two, if it goes up 10% to $1,210 – that’s an increase of $110. In year three, another 10% increase turns into $1,331 – a rise of $121. Of course, the actual performance of the share market doesn’t go like that. It isn’t consistent each year.

How much wealth an investor can build depends on multiple factors, including how much they put in, the amount of time they leave the investments to compound, and the rate of return.

But, if an investment were to make an average of 10% per annum over 20 years, investing $500 a month would turn into just under $344,000.

Which investments to consider?

There are a number of different ways to invest in ASX shares. One of the increasingly popular ways is through exchange-traded funds (ETFs) which allow investors to invest in a whole group of businesses at once, enabling diversification.

The biggest ETF on the ASX is the Vanguard Australian Shares Index ETF (ASX: VAS) which tracks the S&P/ASX 300 Index (ASX: XKO) – 300 of the biggest businesses on the ASX.

Investors can also build a portfolio themselves. ASX blue chip shares are seen as highly reliable. These include Telstra Group Ltd (ASX: TLS), National Australia Bank Ltd (ASX: NAB), CSL Limited (ASX: CSL),  and Wesfarmers Ltd (ASX: WES).

Small-cap ASX shares may have more growth potential, but many are riskier, so it could be worthwhile having an expert assist in the choosing of those opportunities.

The post Over 30 with no investments? Use Warren Buffett’s wisdom to build your wealth with ASX shares appeared first on The Motley Fool Australia.

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More reading

• Future-proofing: The ASX ETF Aussie parents were buying for their kids in 2022
• Is now really the time to buy ASX 200 shares?
• Could the VAS ETF outperform the BHP share price in 2023?
• Can the Vanguard Australian Shares ETF deliver more outperformance in December?
• It took me years to realise I’m no investing genius like Warren Buffett

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 CSL. The Motley Fool Australia has positions in and has recommended Coles Group, Telstra Group, and Wesfarmers. 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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