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In morning trade, the Rio Tinto Ltd (ASX: RIO) share price is trading slightly lower at $106.40.

Though, shareholders aren’t likely to be too bothered given that the mining giant’s shares have risen almost 17% since this time last month.

Where next for the Rio Tinto share price?

The team at Goldman Sachs believes the Rio Tinto share price has room to climb higher from here.

According to a note, the broker has retained its buy rating and lifted its price target on the miner’s shares to $114.70.

Based on the current Rio Tinto share price, this implies a return of 9% for investors before dividends.

If you include the US$4.18 per share fully franked dividend Goldman expects in FY 2023, the total potential return stretches to 15%.

What did the broker say?

Goldman highlights that Rio Tinto has recently announced an agreement with Wright Prospecting to modernise the 50:50 joint venture covering the large Rhodes Ridge iron ore deposit in the East Pilbara.

Its analysts believe the development of Rhodes Ridge has “the potential to be significant for RIO’s Pilbara business as it could lift system capacity, utilise spare rail and port infrastructure and help close the FCF/t gap with BHP over the medium term.”

In respect to the latter, the broker commented:

BHP has a >US$10 FCF/t gap over RIO due to lower capital intensity (larger orebodies means less replacement mines) and higher grades/margins but Rhodes Ridge could help lower system unit costs and long run capital intensity, and close the FCF gap to BHP by US$6-8/t or by >50% by the end of the decade.

In light of the above and with the Rio Tinto share price trading at a “compelling” ~0.9x NAV, the broker believes it is a great option for investors in the resources sector right now.

The post The Rio Tinto share price is trading at a ‘compelling’ level: broker appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Rio Tinto share price lifts amid ‘exciting’ decarbonisation development
• Why is the Rio Tinto share price trailing the ASX 200 on Monday?
• Rio Tinto share price falls on Turquoise Hill takeover setback
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?

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

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The S&P/ASX 200 Index (ASX: XJO), unlike many global indices, didn’t fall into a bear market this year. But that doesn’t mean retirement-focused investors weren’t able to take advantage of its correction.

A market correction can provide an opportunity to buy many of the ASX 200’s greats for lower-than-typical prices. Such a downturn is often touted as a sale on shares.

Buying ASX 200 shares for cheap prices has the potential to speed up returns and help investors reach their goals sooner than they otherwise might.

Here’s how I would take advantage of the next market correction to grow my portfolio and, hopefully, set myself up for an early retirement.

Investing for retirement: Compounding

Let’s say I build an imaginary portfolio made up of three ASX 200 shares. Of course, in reality, I would prefer to create a far more diversified portfolio.

However, for the sake of simplicity, let’s imagine I’d invested $10,000 equally across shares in Telstra Group Ltd (ASX: TLS), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Woolworths Group Ltd (ASX: WOW). The market favourites currently offer respective dividend yields of 3.4%, 5.9%, and 2.6%, for an average of around 4%.

That would mean my investments would probably yield around $400 each year in dividends. Thus, it could take 25 years to recover my initial investment.

Though, future dividends can never be assured, and past performance doesn’t guarantee future performance. That’s also assuming the share prices of my investments stayed put for all that time.

However, if I reinvested my dividends, I could theoretically double my money sooner.

By employing a dividend reinvestment plan (DRP), I could harness the power of compounding. That means that, factoring in all the above, it would only take 18 years for my portfolio to double from my initial investment.

Assuming that’s my retirement goal, I would have reached it seven years earlier by employing compounding, rather than stashing away my dividends for a rainy day.

How I’d take advantage of an ASX 200 market correction

Now, an investor would likely receive those same dividends whether they bought each stock in a market correction or not.

Let’s say I invested $3,333 in each of the above-mentioned ASX 200 stocks at yesterday’s closing price. That would have seen me walking away with around 846 Telstra shares, 135 ANZ shares, and 95 Woolworths shares.

However, at the shares’ respective lowest points of 2022 – often falling amid June’s market correction – that same cash would have seen me boasting 920 Telstra shares, 160 ANZ shares, and 105 Woolworths shares.

Discounting special offerings, the former portfolio would have returned $398.71 in dividends over the 12 months just been. Meanwhile, the latter would have returned $454.40 – representing an approximate 4.5% trailing yield.

If that rate were to remain stable, compounding means my imagined portfolio would have doubled in value in just 16 years, potentially allowing me to retire two years earlier than I otherwise might have.

All that for simply taking advantage of an ASX 200 market correction.

And, as we never know when the next correction will come, it could be a good idea to prepare a ‘best ASX dividend shares to buy now’ list today.

The post Use the ASX 200 market correction to retire early. Here’s how appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares Macquarie just recommended its clients buy
• Telstra is in strife again. Here’s why
• Could the stage now be set for Telstra shares to outperform?
• Macquarie is cooling off on its outlook for BHP shares. Should you?
• If you bought $15,000 worth of Woolworths shares this year, here’s how much dividend income you’d have

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 positions in and has recommended Telstra Corporation 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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There is a wide range of ASX dividend shares, from blue chips to ASX growth shares that pay solid dividends.

I think there are some names that are small enough to have a large growth runway but are already profitable enough to be paying good dividends.

In my opinion, it’s the businesses that are growing at a good pace that are the ones that can deliver the strongest returns over time thanks to compounding.

With that in mind, here are three of my leading ASX dividend shares ideas to achieve growth at the current prices.

Premier Investments Limited (ASX: PMV)

Premier Investments is one of the most compelling retailers on the ASX in my opinion. It has plenty of brands that you’d find in an Australian Westfield shopping centre, such as Just Jeans, Jay Jays and Peter Alexander.

But, there are two parts of Premier Investments that I’m particularly attracted to – Smiggle and Breville Group Ltd (ASX: BRG). Smiggle is a retailer focused on school children that sells a variety of branded products like bags, pencil cases and so on. The products have brand imagery from some of the most popular brands including Marvel and Minecraft.

Management is pleased by Smiggle’s performance since the COVID reopening. It’s looking to grow in regions like Europe and Asia. The business is looking to “maximise EBIT (earnings before interest and tax) growth”.

It owns 25.6% of Breville, a globally-growing kitchen appliance business. While this isn’t an article about Breville, I think this business is doing well at increasing its global addressable market and expanding into new countries.

Premier retail sales were up 42.8% year over year in the first 12 weeks of FY23.

The ASX dividend share is projected to pay a grossed-up dividend yield of 5.8% in FY23.

Universal Store Holdings Ltd (ASX: UNI)

Universal Store owns a “portfolio of premium youth fashion brands”, which it can sell through its retail stores, online and wholesale. It owns the businesses Universal Store and THRILLS, while also trialling the Perfect Stranger brand as a standalone retail concept.

It continues to open new stores. Universal Stores recently said it’s planning to open two new stores before Christmas, as well as another four to five stores in the second half of FY23.

In FY23 for the 21 weeks to 20 November 2022, total group sales (excluding THRILLS) had increased by around 40%, while it also reported a gross profit margin improvement.

The company expects that favourable trading conditions can continue in the post-lockdown environment.

Using the estimates on Commsec, the Universal Store share price is valued at 11 times FY24’s estimated earnings with a potential grossed-up dividend yield of 8.4%.

Beacon Lighting Group Ltd (ASX: BLX)

Beacon Lighting might not seem like a business with a lot of growth potential, but I think it is, particularly at this valuation starting point with the Beacon Lighting share price down 30% in 2022 to date.

The shorter term may be a bit volatile with a possible downturn of housing construction in Australia amid rising interest rates.

Beacon Lighting finished FY22 with 117 company stores and two franchised stores. Company research has identified the potential for 184 Beacon Lighting stores in Australia. That suggests a possible rise of over 50%.

It’s looking to grow trade sales. FY22 saw Beacon commercial sales increase by 15.8%. Trade club members went up by 7,800 to 52,000 members. It’s acquiring new trade products to create a comprehensive range of products for its trade customers.

The ASX dividend share has launched a Beacon Lighting business-to-consumer website in the US to build a market presence in the USA. Beacon Lighting USA saw FY22 sales grow by 51.9%, though from a relatively small base.

FY22 Beacon international sales increased by 27.9% to $15.7 million. It has established a new online ceiling fan sales channel in China with Tmall Global. The company is expecting continued expansion of the Australian designed products into the USA, China, Asian and European markets.

According to Commsec, the Beacon Lighting share price is valued at 13 times FY23’s estimated earnings with a potential grossed-up dividend yield of 5.9% for the 2023 financial year.

The post 3 ASX dividend shares I think have supercharged growth potential appeared first on The Motley Fool Australia.

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More reading

• 4 ASX shares to buy in the sectors set to explode in 2023: expert
• I’d invest $100 a week in cheap ASX dividend shares for passive income in retirement
• 3 small-cap ASX shares to add to your portfolio right now: fundie
• Goldman Sachs names the ASX retail shares to buy in the current environment
• Top ASX dividend shares to buy in November 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 recommended Premier Investments 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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We’re well and truly past August reporting season but some companies in the S&P/ASX 200 Index (ASX: XJO) operate on different financial calendars to the rest.

As a result, some ASX 200 shares have released their full-year results this month. And in the process, they’ve also declared dividends.

With every dividend comes an ex-dividend date, which marks the day that a company’s shares no longer trade with rights to the recently-declared dividend.

In other words, investors who purchase shares on or after the ex-dividend date won’t be eligible for the upcoming payment. 

But since shares typically drop on the day they turn ex-dividend, investors may be able to pick up shares at a reduced price.

Without further ado, here are three ASX 200 shares going ex-dividend next week.

GrainCorp Ltd (ASX: GNC)

First up, GrainCorp handed in its full-year FY22 results last week and delighted shareholders by declaring a special dividend.

All up, the ASX 200 agribusiness announced a fully franked final dividend of 30 cents per share, which will be paid on 14 December.

GrainCorp shares will turn ex-dividend for this payment on Tuesday. So, to be eligible for this dividend, investors must be on GrainCorp’s share register by the closing bell on Monday.

FY22 was a record year for GrainCorp as net profit after tax (NPAT) rocketed by 173% to $380 million.

Each of the company’s business segments delivered an increase in activity and volumes. This was driven by more grain handled and exported, higher oilseed crush volumes, and stronger food sales.

The company noted that against a backdrop of operational challenges, global demand for Australian grains, oilseeds, and vegetable oils remained strong throughout the year.

This helped GrainCorp to dish up a three-fold increase in its annual dividends to 54 cents per share, fully franked. With GrainCorp shares last trading at $8.27, this spins up a trailing dividend yield of 6.5%.

Taking out the special dividend, this yield comes in at 4.6%, which grosses up to 6.6%, including franking credits. 

Aristocrat Leisure Limited (ASX: ALL)

The next cab off the rank is ASX 200 slot machine and casino game manufacturer Aristocrat, which also released its FY22 results last week.

Aristocrat shares will be going ex-dividend on Wednesday, trading without claims to the company’s fully franked final dividend of 26 cents per share.

Aristocrat doesn’t have a dividend reinvestment plan (DRP), so all eligible shareholders will receive this payment in cash on 16 December.

FY22 was another year of growth for Aristocrat. On the top line, revenue climbed 18% to $5.6 billion, while NPAT jumped 30% to $1.0 billion.

The company said this growth reflected sustained investment in top-performing product portfolios, differentiating capabilities, increased operational diversification, and business resilience.

Aristocrat’s North American gaming operations and global outright sales division were standouts.

Across the financial year, Aristocrat returned $660 million to shareholders through dividends and an on-market share buyback.

The ASX 200 gaming company dialled up its annual dividends by 27% in FY22, declaring total dividends of 52 cents. This puts Aristocrat shares on a trailing dividend yield of 1.5%, which grosses up to 2.1%.

Pendal Group Ltd (ASX: PDL)

Rounding out this trio of ASX 200 shares going ex-dividend next week is investment management business Pendal.

As of Thursday, Pendal shares will be trading without rights to the company’s fully franked final dividend of 3.5 cents per share. 

Like GrainCorp and Aristocrat, Pendal isn’t running a DRP for this payment. So, shareholders will have no choice but to receive this dividend in cash on 15 December.

It’s been a busy year for Pendal, with its proposed takeover by Perpetual Limited (ASX: PPT) currently awaiting shareholder approval.

Perpetual first lobbed a bid for Pendal in April this year and there’s been plenty of back and forth between the two parties since. 

Just last week, the terms of the offer were revised again, changing the split between cash and scrip.

If the deal proceeds, Pendal shareholders will receive one Perpetual share for every 7 Pendal shares, plus $1.65 cash. However, this cash component will be reduced by 3.5 cents to account for Pendal’s FY22 final dividend.

Based on Perpetual’s last closing price, this currently values Pendal at around $5.28 per share. In comparison, Pendal shares last swapped hands on-market for $4.83.

Pendal shareholders are set to vote on the proposal next month on 23 December.

The post 3 ASX 200 shares trading ex-dividend next week appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares analysts are tipping for stellar growth
• Buy this ASX 200 share now while the market’s distracted: expert
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy next week
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Cathryn Goh 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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When it comes to analysing ASX shares, one big tick for me is a founder-led business.

Founders are passionate, driven, hold a wealth of unrivalled knowledge, and often treat the business as their legacy or baby. 

Add to that what’s usually a sizeable amount of skin in the game and it’s often a recipe for success, with numerous studies showing that founder-led businesses tend to outperform the rest.

Earlier this week, I profiled three ASX 200 shares with enormous insider ownership. Only one of those companies is technically founder-led.

So, today, let’s take a look at five ASX 200 shares with founders sitting at the helm.

WiseTech Global Ltd (ASX: WTC)

Kicking things off, logistics software provider WiseTech continues to be led by its founder Richard White.

A former musician, White used to repair guitars for the likes of AC/DC and The Angels.

Then, in the 1990s, he ran a computer consulting business, and after doing some work for logistics companies, he realised how disjointed their systems were.

So, in 1994, with the help of WiseTech’s current chief technology officer, Brett Shearer, he created the first generation of the company’s flagship CargoWise One solution.

Today, CargoWise is a leading all-in-one logistics platform used by 10 of the top 25 global freight forwarders, including Toll and DHL.

White continues to head up the company as CEO and holds nearly 122 million WiseTech shares. This represents roughly 37% of the business, worth a whopping $6.7 billion at current prices.

White’s fellow co-founder, Maree Isaacs, is also still involved with the business. She’s currently the head of licensing and is an executive director on the board.

Pro Medicus Limited (ASX: PME)

Pro Medicus holds one of the greatest acquisition tales I’ve heard of. In the depths of the global financial crisis, it acquired US radiology imaging company Visage for around $5 million.

Three years later, Pro Medicus offloaded some unwanted pieces of the Visage business for $15 million. But that’s just the beginning.

What remained formed the backbone of Pro Medicus’ success, propelling the ASX 200 share to a market capitalisation that currently stands at $6 billion.

Driving this success have been co-founders Dr Sam Hupert and Anthony Hall. Hupert has long held the reins as CEO, while Hall heads up the company’s technology efforts and sits as an executive director on the board.

The pair hold roughly 27 million Pro Medicus shares each, representing a combined 52% of the business.

Block Inc CDI (ASX: SQ2)

Next up, we have a dual-listed payments giant led by none other than Jack Dorsey, the highest-profile founder so far.

Dorsey started the payments company in 2009, armed with an ambition to find an easy way for small businesses to accept card payments.

In what was then known as Square, the company created a square-shaped card reader that plugged straight into a smartphone’s headphone jack.

Today, Square forms one formidable half of the booming payments business, which also operates the uber-popular peer-to-peer payments platform Cash App.

Remarkably, Dorsey also co-founded Twitter in 2006 and led the social media platform until 2021. He remains the CEO of Block and owns around 8% of the ASX 200 tech share.

Flight Centre Travel Group Ltd (ASX: FLT)

The man behind Australia’s largest travel agency group is Graham ‘Skroo’ Turner, whose nickname comes from the Turner brand of screwdrivers. 

His entrepreneurial streak began in the 1970s when he and a friend bought a double-decker bus to start the tour group company now known as Topdeck Travel. 

In 1982, he opened the first Flight Centre retail store in Sydney, quickly expanding to nine stores by the end of that year. The brand spread its wings to London first before venturing into South Africa, Canada, and the US in the 1990s. 

Today, Flight Centre is one of the world’s largest travel agency groups, with many different brands under its banner. 

Turner continues to lead Flight Centre to this day, and it seems his entrepreneurial spirit rubbed off on his son, Matt. 

Matt followed his father into business by co-founding 99 Bikes, Australia’s largest bicycle retailer, which is 50%-owned by Flight Centre.

In terms of skin in the game, Turner holds around 8% of Flight Centre. This stake is currently worth $263 million, which is equivalent to roughly 390x his annual salary.

Mineral Resources Limited (ASX: MIN)

Finally, Mineral Resources came to life in 2006 through the acquisitions of three different mining businesses. 

Two of these businesses provided contracting services to the resources industry. Meanwhile, the other was a minerals processor and marketer of industrial minerals.

The man behind all three of these businesses was Chris Ellison, who took over the managing director reins in 2012 and has been leading Mineral Resources ever since. 

Today, Mineral Resources provides mining services to some of the world’s largest mining companies. 

But it’s no longer just a mining services company. It’s also growing its own portfolio of iron ore and lithium operations.

Mineral Resources is the fifth-largest iron ore producer in Australia. And it jointly owns two of the world’s largest hard rock lithium mines, Mt Marion and Wodgina.

Leading from the front, Ellison retains a 12% stake in Mineral Resources. This shareholding is currently valued at a monstrous $1.9 billion.

The post 5 ASX 200 shares with founders steering the ship appeared first on The Motley Fool Australia.

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More reading

• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200
• What $10,000 in ASX lithium shares a year ago would be worth today
• Sell the big four banks and buy this ASX lithium share: broker
• 3 ASX 200 shares hitting new 52-week highs on Wednesday
• Macquarie is cooling off on its outlook for BHP shares. Should you?

Motley Fool contributor Cathryn Goh has positions in Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., Pro Medicus Ltd., and WiseTech Global. The Motley Fool Australia has positions in and has recommended Block, Inc., Pro Medicus Ltd., and WiseTech Global. The Motley Fool Australia has recommended Flight Centre Travel Group 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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The CSL Limited (ASX: CSL) share price has been a strong performer in recent weeks.

Since this time last month, the biotherapeutics company’s shares have risen over 8% to $299.00.

Can the CSL share price keep climbing?

The good news for investors is that it may not be too late to snap up CSL shares.

According to a note out of Citi, its analysts have retained their buy rating and $340.00 price target on its shares.

Based on the current CSL share price, this implies potential upside of almost 14% for investors over the next 12 months.

What did the broker say?

Citi was pleased, but not surprised, to learn that the US Food and Drugs Administration (FDA) has approved CSL’s HEMGENIX (EtranaDez) gene therapy for haemophilia B.

The broker expects this to have a neutral impact on a short term basis due to the company already being the market leader for haemophilia treatments. However, it does cement CSL’s position in the market, which is good news for the long term. Citi commented:

As expected, CSL received FDA approval for its gene therapy for haemophilia B, HEMGENIX (EtranaDez), the first and only one-time gene therapy approved for haemophilia B.

Whilst an exciting new treatment option for patients, we expect HEMGENIX to be neutral on an NPV basis for CSL given 1) the cannibalization of Idelvion sales (~$650m/~6% of CSL total sales): CSL Idelvion is the current standard of care in haemophilia B with ~47% market share across key markets, and 2) in a defensive move, the therapy was licensed from uniQure in 2021 at a cost of ~US$750m (acquisition+pre-launch costs) + royalties and milestones.

CSL plans to launch HEMGENIX in the US & EU in Q1’23, but it will be a slow and gradual process as the payment models are yet to be finalized (likely to be upfront, with variations in payment models in the EU). Maintain Buy, $340 TP.

Elsewhere, Macquarie responded to the news by retaining its outperform rating and lifting its price target by 4.1% to $343.00. The broker expects the therapy to have a positive impact on its earnings over the long term and has boosted its valuation to reflect this.

The post Here’s what Citi is saying about the CSL share price appeared first on The Motley Fool Australia.

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More reading

• Why did the CSL share price just crack $300 for only the third time in 2022?
• 3 dividend-paying ASX growth shares I would buy to retire rich
• 4 ASX 200 shares to buy in an unmissable sector: expert
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• To $300 and beyond! Why this top broker says CSL shares are a buy right now

Motley Fool contributor James Mickleboro has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. 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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Wesfarmers Ltd (ASX: WES) shares are a leading contender for dividend income, in my opinion. It has a long record of paying dividends to shareholders, and long-term investors are getting quite a lot more in dividends than they were a decade ago.

In FY22, the business paid an annual dividend per share of $1.80. In FY09, it paid a full-year annual dividend per share of $1.10. But, that growth misses the returns of capital over that time, such as $2 per share during FY22. It has also paid special dividends.

Wesfarmers also distributed one Coles Group Ltd (ASX: COL) share for each Wesfarmers share that a Wesfarmers shareholder owned when the company de-merged the supermarket business.

Including the 63 cents annual dividend per share paid by Coles in FY22, that amounts to a total dividend of $2.43 (63 cents from Coles plus $1.80 from Wesfarmers) of dividends for long-term Wesfarmers shareholders in FY22 – a compound annual growth rate (CAGR) of 6.3% between FY09 and FY22.

Growth can continue

Not only is the distant future unknowable, it’s particularly difficult to estimate what a company’s future will look like.

But, I think the way that Wesfarmers is set up is promising for long-term success.

It has a diversified portfolio across a number of sectors. I think Bunnings and Kmart are two of the best retailers in Australia and I think they can lead the respective segments for a long time to come.

Wesfarmers is also in other areas such as chemicals, energy and fertilisers (WesCEF), which is seeing good earnings growth. Within this division, the company is involved with a developing lithium project called Mt Holland. The current lithium price is promising for long-term earnings for Mt Holland.

The company has also invested in a new healthcare division after its purchase of the Priceline and Clear Skincare Clinics businesses.

Wesfarmers sees healthcare as an “important, large sector with long-term growth tailwinds”, with “increasing demand for health, beauty and wellbeing products and services”.

The company says that with “strong fundamentals” and “the ability to leverage group capabilities”, management expects the healthcare division can “deliver superior returns over the long-term”.

I believe this segment could be an important driver of long-term value.

It’s useful that Wesfarmers can change its portfolio as it wants, so that it’s always future-focused.

The potential for Wesfarmers to pay big dividends in the future

Commsec numbers suggest Wesfarmers could pay a grossed-up dividend yield of 5.7% in FY24. Someone would need to have just over $175,000 of Wesfarmers shares to generate $10,000 using that 5.7% yield.

Depending on the size of a retirement portfolio, that may be too much invested in a single company. Having a portfolio of at least ten positions (for diversification purposes), but each position being capped at 10% of the portfolio, means the portfolio would need to be at least $1.75 million in size.

Of course, it’d be quite possible to invest a smaller amount into Wesfarmers shares and benefit from compound growth over time. Without a working crystal ball, it’s hard to say how well Wesfarmers shares will perform for the next 20, 30 or 40 years.

I certainly think it would be possible for a $20,000 investment to grow into $175,000 (and then pay attractive dividends), but an investor would likely need to give Wesfarmers at least a couple of decades to achieve attractive long-term growth.

But, if I were to put my hopes on an ASX share to deliver that growth over two or so decades, I think Wesfarmers could be one of the most likely S&P/ASX 200 Index (ASX: XJO) shares to do it due to its long-term focus.

The post Could buying Wesfarmers shares give you $10,000 in annual dividend income by retirement? appeared first on The Motley Fool Australia.

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• Markets are nervous. Why waiting to buy these ASX 200 shares could prove expensive
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• If you’d bought $10,000 worth of Wesfarmers shares in January, this is how much you’d have earned in dividends

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 COLESGROUP DEF SET and Wesfarmers 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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Regular readers of The Motley Fool would be well aware of how badly technology shares have fared this year.

So it might surprise you to find that there is one tech stock that’s going so well that one expert is urging investors to wait until there’s a dip to buy in.

Yet that’s exactly what Morgans senior analyst Nick Harris is saying about Brisbane’s TechnologyOne Ltd (ASX: TNE):

Recurring revenue target about to hit 12 months early

Harris wrote on the Morgans blog that TechnologyOne’s full-year report this week was “another high quality result”.

“Assuming trends remain, [the result] positions TechnologyOne to hit $500 million annual recurring revenue 12 months ahead of their stated FY26 target.”

The market agreed with Harris, sending the TechOne share price 5% up in just a few minutes on Tuesday morning.

Pleasingly, customer churn also halved, representing a 99% retention rate. Revenue grew 18% on a year-on-year basis.

“In our view, revenue growth (including contractual CPI escalators) combined with lower churn and higher net revenue retention shows the strength of TechnologyOne’s value proposition,” said Harris.

“It offers great value which makes for happy and sticky customers. This in turn builds a strong competitive position and over time large barriers to entry for TechnologyOne.”

‘One of the highest quality stocks on the ASX’

So the business is excellent quality and is rocketing in the right direction.

The only trouble for potential buyers is the share price.

In a year in which most tech stocks have struggled, TechOne is now in the green, trading at 0.6% higher than where it started 2022.

In fact, the stock has risen 24% since the end of September.

Harris, therefore, recommends keeping an eye on it and pouncing when there’s a dip.

“TechnologyOne is one of the highest quality stocks on the ASX and we continue to rate the outlook,” he said.

“We would see any weakness as a buying opportunity.”

Harris’ peers also seem to be taking a wait-and-watch approach. According to CMC Markets, seven out of nine analysts are currently rating TechOne as a hold, while the other two are saying strong buy.

The post The ASX 200 tech share to pounce on as soon as it has a dip: expert appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
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• Here’s how I’d invest $20,000 in ASX shares today to double my money
• TechnologyOne share price races 5% higher on strong FY22 growth

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended TechnologyOne 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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The BHP Group Ltd (ASX: BHP) share price has been in sensational form this month.

Since the start of November, the mining giant’s shares have smashed the market by storming 19% higher to $44.55.

Can the BHP share price keep rising?

Unfortunately, one leading broker is calling time on the BHP share price rally.

According to a note out of Goldman Sachs, its analysts have just downgraded the Big Australian’s shares to a neutral rating with an improved price target of $42.90.

Based on the current BHP share price, this implies potential downside of just under 4% for investors.

What triggered the downgrade?

Firstly, Goldman notes that BHP is looking to acquire OZ Minerals Limited (ASX: OZL) and feels it “could improve returns from Olympic Dam.” However, as this takeover is a long way from completion, it isn’t included in its estimates.

In light of this, for the time being, the broker believes BHP’s shares are now trading ahead of fair value and has thus downgraded them on valuation grounds. Its analysts explained:

Despite a lift in our BHP group NAV [net asset value] to A$41.8/sh after incorporating the 2-stage smelter at Olympic Dam in our base case and some nominal value for Oak Dam, we downgrade BHP to Neutral (from Buy) based on: (1) Valuation vs. global peers and no upside to revised PT of A$42.9/sh (from A$42.3; ~4% downside vs. our global Mining coverage at ~15% upside), (2) Lower production growth vs. peers, even with +US$20bn copper pipeline optionality, (3) Lower FCF vs. peers.

Goldman currently prefers rival mining giant Rio Tinto Ltd (ASX: RIO) and is recommending it as a buy with an improved price target of $114.70.

The post BHP share price has ‘no upside’: Goldman Sachs appeared first on The Motley Fool Australia.

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• ‘Rare opportunity’: Expert explains why he just added this ASX 200 share
• 5 things to watch on the ASX 200 on Friday
• Is Macquarie still recommending Pilbara Minerals shares as a buy?
• If I’d invested $20,000 in BHP shares at the start of 2022, here’s how much I’d have now
• How I’d aim for $1,000 in monthly income by buying ASX 200 dividend shares

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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When a professional investor shies away from a particular sector yet admits to buying a particular stock as an exception to that rule, it’s worth paying attention.

Because that means that the tailwinds behind that particular business are so compelling that the expert had to ignore his or her own dislike for that industry.

A memo from the Wilsons team this week revealed exactly such a situation:

This is my new purchase, says expert

Wilsons equity strategist Rob Crookston told clients that his focus portfolio is underweight resources.

That was especially so after OZ Minerals Limited (ASX: OZL) was removed from the portfolio last week as news hit that it accepted BHP Group Ltd (ASX: BHP)’s takeover bid.

But guess how Crookston’s team used the cash from the sale?

“We have used the proceeds from Oz Minerals to add Lynas Rare Earths Ltd (ASX: LYC) to the portfolio at 2%.”

While the Wilsons team took profits from the Oz Minerals sale, the Lynas share price is down 21.3% year to date, presenting a low entry point.

Why is Lynas so attractive?

Lynas produces rare earths, which are used to make NdFeB permanent magnets.

And these magnets are seeing rising demand from clean energy producers.

“NdFeB magnets are currently used in the drive mechanism for electric vehicles (EVs) and wind turbines, and this is expected to drive a two to three times increase in demand by 2030,” said Crookston in his memo to clients.

“It is estimated that a standard model EV will require around five times the rare earth magnets that a traditional petrol vehicle requires.”

Even though the Wilson portfolio is underweight in mining, the electric vehicle narrative remains the exception.

“We are overweight EV minerals with our weighting at 8% versus the market at 4%,” said Crookston.

“The positive growth outlook of rare earths and other EV minerals is in contrast to the outlook for the traditional ASX miners, such as iron ore, where we expect earnings to fall over the next two to three years.”

Buying opportunity for long-term investors

Of course, like any mining stock, Lynas is vulnerable to commodity prices dropping.

Rare earths are no exception to this cyclicality, as they’re also used for more traditional products like home appliances, air conditioning, elevators, and electronics.

But for Crookston’s team, this merely presents an attractive entry point for a long-term investor.

“We think rare earth minerals have an inherent degree of cyclicality to broader macroeconomic conditions in the short-term (much like copper and nickel),” said Crookston.

“However, we believe the shift to renewables and EVs will be a key driver of NdPR demand over the medium-term and this period of soft demand presents an opportunity to buy into weakness.”

Another ace up Lynas’ sleeve is that China currently dominates 60% of the global supply of rare earths and 90% of the refining capacity.

Due to this geopolitical risk, US, European, and Australian governments are supporting domestic rare earths production.

“There is upside risk for rare earth miners that governments help fund growth projects, which would support miners’ cash flows,” Crookston said.

“We have already seen this for Lynas… Lynas received US$150 million for two funding grants from the US government to develop a light and heavy rare earths separation plant in the US.”

The post ‘Rare opportunity’: Expert explains why he just added this ASX 200 share appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Is Macquarie still recommending Pilbara Minerals shares as a buy?
• If I’d invested $20,000 in BHP shares at the start of 2022, here’s how much I’d have now
• Move over Lynas! This new Chris Ellison-backed rare earths company is set to hit the ASX
• How I’d aim for $1,000 in monthly income by buying ASX 200 dividend shares

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

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