Tag: Motley Fool

The Magellan Financial Group Ltd (ASX: MFG) share price sank deep into the red in early trade before recovering.

At the time of writing, the fund manager’s shares are flat at $9.63.

What’s going on with the Magellan share price?

Investors were hitting the sell button again at the open after Magellan announced that its co-founder, Hamish Douglass, had made a major share sale.

According to the release, Douglass informed Magellan that an entity associated with his family has sold approximately 13 million ordinary shares.

This was undertaken yesterday evening via an after-market block trade at a price of $9.10 per share. This represents a 5.5% decline to the Magellan share price at yesterday’s close and values the parcel of shares at approximately $118.3 million.

The release also highlights that the Douglass family entity has entered into an undertaking with a Barrenjoey Group entity that undertook the block trade, not to sell any additional shares in Magellan for 12 months.

Based on recent disclosures, this sale will have taken Douglass’ holding from 21.45 million shares to approximately 8.45 million shares.

Why did Douglass sell $118 million worth of shares?

The release notes that Douglass has further advised that the reason for the share sale was for family diversification purposes. He explained:

I have full confidence in the Magellan investment team including the global equities team led by Nikki and Arvid. Consistent with my confidence in the team I have not sold any of our investments in any Magellan funds.

It’s a shame he didn’t sell those shares earlier. At the start of 2022, the Magellan share price was fetching $19.00. This means that those 13 million shares would have had a market value of almost $250 million at that point.

The post Magellan share price flat after Douglass sells $118m of shares appeared first on The Motley Fool Australia.

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More reading

• Why A2 Milk, Bravura, Magellan, and Pendal shares are dropping
• This ASX 200 dividend share has a 19% yield right now. Why it’s a trap: experts
• Magellan share price hits multi-year low following $2.4b horror month for outflows
• Could something big be going down at Magellan?
• How to find wealth compounders inside the ASX 200 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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Insider buying is generally considered an indication that those working behind the scenes at a company believe in its future growth. Conversely, insider selling – such as that that took place at one S&P/ASX 200 Index (ASX: XJO) tech share last week ­– is often seen as a warning.

Though, there’s been no hint as to why WiseTech Global Ltd (ASX: WTC) founder, CEO, and executive director Richard White has been selling down his holding of the ASX 200 company’s shares.

The insider offloaded a near $6.5 million parcel on-market last week. That was just the latest in a string of sales.

Let’s take a closer look at the latest insider selling going down at WiseTech.

This ASX 200 insider is on a multi-year selling streak

The boss of ASX 200 tech share WiseTech continued selling his holding of the company’s register last week, offloading 111,994 shares between 28 October and 3 November.

The insider sold the stake on-market, garnering an average price of $57.67 per share – a total of $6.46 million.

That sees White, through his company RealWise Holdings, with a total of 121.9 million shares in the tech giant – around 37.3% of its register.

The WiseTech boss also sold a 113,796-strong parcel of the company’s stock between 21 October and 27 October for another $6.45 million.

He has been chipping away at his holding since June 2020. Then, White sold around 2.4 million shares, leaving him with a 46.9% stake. He commented at the time:

Since WiseTech’s listing on the ASX in 2016, I have released shares only once previously, in December 2017, to facilitate liquidity when WiseTech entered the ASX 200.

I remain a proud, long-term shareholder … and, as founder and CEO, deeply committed to WiseTech and its long-term growth strategy.

I reiterate that I intend to remain a substantial shareholder for the very long-term and remain, as ever, firmly committed to WiseTech.

Over the years since, White has sold shares in the ASX 200 tech favourite for as little as $18.40 and as much as $59.54. The WiseTech share price is currently $55.40.

The post Guess which ASX 200 director sold $6.5m worth of their company shares last week appeared first on The Motley Fool Australia.

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More reading

• Why I think Warren Buffett is right to always think a market crash is coming
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today 
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why is the De Grey Mining share price leaping 7% today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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Australia and New Zealand Banking Group Ltd (ASX: ANZ) wants to acquire the banking division of Suncorp Group Ltd (ASX: SUN).

The leadership of Suncorp may have already agreed to the deal. However, there are other hurdles that ANZ has to pass before the deal is complete.

For starters, ANZ needs to convince the governments involved that it wouldn’t be a negative thing for the two businesses to merge.

Government asks Suncorp and ANZ questions

According to reporting by the Australian Financial Review, the Queensland government wants ANZ to explain how Suncorp’s banking division would be allowed to run independently for several years before it allows the deal.

ANZ will also need federal and Treasurer clearance as well.

Queensland’s laws, which reportedly date back to Suncorp’s formation in 1996 as a combined insurance and banking business, requires the Suncorp managing director to reside in the state and that the company’s headquarters must be based there.

After an information request, the AFR learned that in a letter to Queensland Treasurer Cameron Dick, Suncorp CEO Steve Johnston and Chair Christine McLoughlin said they welcomed the opportunity to discuss the deal, maintained the sale was in the best interests of Queensland and the national interest, and committed that the Suncorp Group head office will remain in Queensland.

The newspaper also reported that notes from Dick regarding a meeting with ANZ leadership show the Treasurer was “not opposed to the transaction however the transaction must deliver an outcome in the best interests of Queensland” and that there were merger documents that have additional requirements including “branch presence in specific towns and certain rural lending requirements”.

The Queensland Treasury has asked a number of different questions regarding whether Suncorp’s bank will have a separate CEO and governance structure, and what sorts of decisions Suncorp Bank will be able to make independently.

Questions were also asked about the end of the transition period regarding customers, the bank licence, and branding.

Concerns about branch numbers

While ANZ has committed that it won’t close any Suncorp branches within the first three years, nor will there be net job losses, there is speculation that ANZ could decide to close ANZ branches sooner than expected.

The AFR quoted Finance Sector Union Queensland secretary Wendy Streets, who said:

There are currently around 40 suburbs [or] towns where there are both Suncorp and ANZ branches and we believe these ANZ’s will be targeted to close during the three-year moratorium.

At the conclusion of the three-year commitment, it is our view that the savings will come from back office synergies between the two which ultimately will mean a significant amount of Queensland job losses as the work transfers to ANZ Melbourne departments.

The FSU wants caveats on the sales about job security from both ANZ and Suncorp.

Benefits of the deal for ANZ shares

ANZ said that as the smallest major bank, it thinks a stronger ANZ will be able to compete more effectively in Queensland, offering better outcomes for customers.

The purchase price is $4.9 billion, representing 9.3x earnings post-acquisition, full run-rate synergies.

It’s expected to add low single digits to ANZ’s earnings per share (EPS) on a pro forma FY23 basis, including the full synergies.

Annual ‘cost synergies’ are expected at around $260 million before tax.

The post Are storm clouds gathering over ANZ’s Suncorp bid? appeared first on The Motley Fool Australia.

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More reading

• Analysts say these ASX dividend shares are buys this week
• ‘Undemanding’ valuation: Morgans tip 17% upside for the Suncorp share price
• Are ASX 200 bank shares a no-brainer buy in an inflationary environment?
• Why ANZ, Coronado Global, Eclipx, and Westpac shares are dropping
• Why is the ANZ share price sinking 4% today?

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

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The James Hardie Industries plc (ASX: JHX) share price is falling heavily today.

In morning trade, the building products company’s shares are down 11% to $28.49.

Why is the James Hardie share price falling?

Investors have been selling down the James Hardie share price today after the release of the company’s half year update.

For the six months ended 30 September, the company reported a 14% increase in sales to US$1,998.5 million and a 22% jump in net profit to US$330.5 million.

While strong on paper, its sales and profit growth has slowed from 19% and 34%, respectively, during the first quarter.

Nevertheless, James Hardie’s CEO, Aaron Erter, was pleased with the second quarter. He said:

I am proud to report that the James Hardie team has continued to deliver strong execution of our global strategy that produced record Q2 results. The team’s performance is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +14%, Asia Pacific Price/Mix growth of +11% and Europe Price/Mix growth of +12%.

However, the company notes that over the past 45 days, it has seen a significant change to the outlook of housing market activity for the second half. As a result, management has downgraded its guidance for FY 2023. It explained:

Based on the challenging macro-economic conditions, and housing market uncertainty, management has adjusted the fiscal year 2023 Adjusted Net Income guidance range. The updated 2023 Adjusted Net Income guidance range is US$650 million to US$710 million, changed from the prior range of US$730 million and US$780 million, due to a decline in volume expectations. The comparable prior year Adjusted Net Income for fiscal year 2022 was US$620.7 million.

Share buyback announced but dividend scrapped

This morning James Hardie also announced a major share buyback. However, it will come at the expense of its dividend.

As part of its continued focus on deploying excess capital to shareholders, the company announced the replacement of its unfranked dividend with an on-market share buyback program to acquire up to US$200 million (A$309 million) of shares.

James Hardie CFO, Jason Miele, explained why the company is scrapping its dividend. He said:

Today we adjusted our Capital Allocation Framework to better match who we are: a growth company. The number one and primary focus of our Capital Allocation Framework is to invest in organic growth; our 5-year average Adjusted ROCE of 36% is proof that investing in our growth should be our number one use of capital.

Returning excess capital to shareholders via a share buyback rather than a dividend provides a growth company the optimal flexibility to ensure investment in organic growth is prioritized while maintaining financial strength and flexibility through cycles. Through these cycles we will target an average leverage ratio below 2.0x. Finally, today, we announce the replacement of our unfranked ordinary dividend with a share buyback program, which was approved by our Board of Directors for an amount up to US$200 million from today through 31 October 2023.

The post Why is the James Hardie share price crashing 11% today? appeared first on The Motley Fool Australia.

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More reading

• ‘Potentially bottomed’: 2 ASX shares experts reckon can’t get any cheaper
• 5 ASX shares to buy for the Christmas rally: expert
• 3 ASX 200 shares I’d pounce on when the clouds clear: expert
• 3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys

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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Qantas Airways Limited (ASX: QAN) shares could get another boost if analysts at Macquarie are correct.

Airlines had a really tough time during the COVID-19 pandemic. There was a lot less demand for air tickets, so the airlines had to be supported with a lot of money.

But now things are looking a lot better for the sector, including Qantas.

Domestic travel is now back to pre-COVID levels, which is leading to airline profits jumping back towards 2019 levels. International travel is still recovering.

What’s Qantas going to do with all of the extra earnings that it has suddenly has? Macquarie may have the answer.

Share buyback?

According to reporting by The Australian, Macquarie believes the quicker-than-expected return to profit could mean that Qantas buys back up to $800 million of its shares through a share buyback. Dividends would then return, and it would begin paying tax again in the second half of FY24.

Macquarie thinks the ASX airline share can fund both its fleet renewal while also carrying out capital management for shareholders, meaning the buyback.

The newspaper reported that the broker said:

The operating conditions for Qantas are accommodating higher RASK (revenue per available seat kilometre) than we had anticipated considering tight capacity, in particular within international.

Whilst this operating environment is likely as good as it gets, with more capacity expected to see a RASK impact, it does mean that the near-term snap-back in earnings is much sharper than we had anticipated.

When will profit return to normal?

Qantas has already said that its domestic demand has returned to normal. However, the broker has projected that profit will normalise in FY24, though there will be economic issues for the airline to deal with.

Macquarie wrote:

At this point, we forecast the overall business to generate a 12.5% earnings before interest and taxes (EBIT) margin, which… supports around a $600m earnings benefit.

The broker noted that it won’t be until the second half of FY24 that Qantas starts paying tax again because of carried-forward tax losses.

Broker rating on the Qantas share price

Macquarie rates Qantas as outperform, with a price target of $7.05. That implies a possible rise of close to 17% on the current price of $6.04.

Even though the Qantas share price is up 15% over the past month, I believe there is more recovery in store for the airline, despite the higher oil price.

Demand remains strong, after a few years of COVID-19 and lockdowns. It’s not a very defensive business, but I think it’s still a buy thanks to the elevated demand.

The post Macquarie tips $800m buyback for Qantas shares appeared first on The Motley Fool Australia.

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More reading

• Qantas boss says ‘we’re back’, but should you buy the ASX airline share?
• Planes, rains and automobiles: Fund names 3 ASX shares to back right now
• How is the Qantas share price avoiding today’s carnage?
• Why did the Qantas share price fly 16% higher in October?
• Qantas shares are up 13% this year, but could the CEO’s pay still be in jeopardy?

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 Macquarie 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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Thanks to sky high coal prices, owners of New Hope Corporation Limited (ASX: NHC) shares have been rewarded handsomely with big dividends this year.

Will this trend continue and should you buy the ASX 200 coal miner’s shares?

Should you buy New Hope shares for the dividends?

According to a note out of Morgans, its analysts believe New Hope shares offer a lot of value at current levels.

This morning the broker has retained its add rating with a trimmed price target of $7.00. Based on the current New Hope share price of $6.45, this implies potential upside of 8.5% for investors.

However, that isn’t even half of the story! In fact, it’s less than a third of the story when it comes to potential returns.

The note reveals that Morgans expects the New Hope dividend to come in at $1.20 per share in FY 2023. This represents a massive fully franked 18.6% dividend yield for investors, which stretches the total potential return to 27%.

What else did the broker say?

Morgans believes New Hope may not stop at a $1.20 per share dividend. It also sees potential for an on-market share buyback to boost capital returns even further thanks to its ballooning cash balance. It explained:

We forecast accumulation of ~$1.75bn of net cash by end FY23 pre dividends. If we exclude $250m as a balance sheet buffer, then plausibly +$1.5bn ($1.59ps) is available for distribution via the announced onmarket buyback (up to $300m) and dividends. We think our current $1.20ps FY23 dividend forecast is fair given on-market buying is now in play, though it’s possible the on-market will wait/rank behind potential notes re-purchases.

NHC currently offers a ~27% 12-month base case total return, but with clear upside leverage to higher-than-expected coal prices, driving upside risk to excess cashflows and fully franked dividends.

The post Morgans expects a fully franked 17% dividend yield from this ASX 200 share in 2023 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Could China be about to rain on the ASX 200 coal share parade?
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• New Hope share price jumps on $300m buyback plans

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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Tesla (NASDAQ: TSLA) is already dealing with COVID-19-related issues at its most productive facility in Shanghai, China. But other factors are weighing on the stock today, too. That has led to a decline in the shares this morning, with the stock reaching its lowest level in 18 months. As of 11:43 a.m. ET Monday, Tesla shares were down 5%.

So what

Tesla’s China plant recently was upgraded for the ability to produce an annual capacity of about 1.1 million vehicles. But last week, Barron’s reported that the facility shipped 71,704 electric vehicles in October, down from the record 83,135 delivered the previous month. China’s strict COVID-19 policies, which have resulted in lockdowns throughout the region, have negatively affected productivity.

That has also impacted consumer demand in China, and it might be partly why Tesla recently lowered prices for Chinese customers. But another factor could be weighing on Tesla shares today, too, and it doesn’t have to do with the business itself.

Now what

Now that Tesla CEO Elon Musk has taken Twitter private, the entrepreneur has one more major item on his plate. But that might not be the biggest concern for Tesla investors. Musk used some debt to buy Twitter, and interest payments will need to come from either the business’s cash flow or some other source. Several companies have announced a suspension in advertising on Twitter until the new direction of the social media site is more clear. That could mean lower cash flow, and Musk might need to service the debt interest payments from his own funds.  

The problem for Tesla shareholders is that Musk might have to sell more Tesla stock if he needs to raise short-term cash. That could be what is now impacting Tesla stock, or it could be other shareholders trying to game that potential.

For long-term investors, however, that shouldn’t be a concern. In fact, for those wanting to hold Tesla stock for years, this could be a good chance to start a position at a better price. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares dropped below $200 on Monday appeared first on The Motley Fool Australia.

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More reading

• Forget Dogecoin, this crypto could be the even bigger winner from Elon Musk’s Twitter takeover
• Tesla sees a China slowdown, but this Nasdaq stock is faring much worse
• Why Tesla shares dropped Wednesday
• Could ‘no deal’ with Tesla actually be good news for Core Lithium shares?
• Why Tesla stock was up this morning

Howard Smith has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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If you’re an income investor, then read on! Listed below are two ASX dividend shares that have just been rated as buys by analysts.

Here’s what they are saying about these top ASX 200 dividend shares:

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The first ASX 200 dividend share that could be a buy is big four bank ANZ Bank.

The team at Citi appear to believe the banking giant would be a great option to an income portfolio. Its analysts currently have a buy rating and $29.25 price target on the company’s shares.

Citi was pleased with ANZ’s FY 2022 results and particularly its exit net interest margin (NIM). Combined with core earnings momentum, it believes the bank is well-positioned for the future. As a result, it has boosted its earnings and dividend estimates accordingly. The broker commented:

[T]he exit NIM of 1.80% is likely to drive material consensus revenue upgrades, and we think the street upgrades core earnings. We retain our Buy call, with core earnings momentum and benign asset quality.

In respect to dividends, Citi is forecasting fully franked dividends of $1.66 per share in FY 2023 and $1.76 per share in FY 2024. Based on the current ANZ share price of $24.33, this will mean yields of 6.8% and 7.2%, respectively.

Deterra Royalties Ltd (ASX: DRR)

Another ASX 200 dividend share to look at is Deterra Royalties.

It operates a royalty business model which involves the management and growth of a portfolio of royalty assets across a range of commodities. These are primarily focused on bulks, base and battery metals, and include the Mining Area C (MAC) iron ore operation, which is co-owned with BHP Group Ltd (ASX: BHP).

Goldman Sachs is very positive on Deterra. Last month its analysts upgraded the company’s shares to a buy rating with a $4.70 price target. It explained:

Upgrade royalty company DRR to Buy (from Neutral) on valuation (~0.85xNAV), 6.5-8% dividend yield, upside at BHP’s South Flank mine with the ramp-up ahead of schedule, and no exposure to escalating industry opex and capex.

As for dividends, it is expecting fully franked dividends per share of 31.5 cents in FY 2023 and 26.2 cents in FY 2024. Based on the current Deterra Royalties share price of $4.17, this will mean yields of 7.5% and 6.3%, respectively.

The post Analysts say these ASX dividend shares are buys this week appeared first on The Motley Fool Australia.

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More reading

• Are ASX 200 bank shares a no-brainer buy in an inflationary environment?
• Why ANZ, Coronado Global, Eclipx, and Westpac shares are dropping
• Why is the ANZ share price sinking 4% today?
• 5 things to watch on the ASX 200 on Monday
• Brokers name 3 ASX shares to buy 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 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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Warren Buffett – broadly heralded as the world’s greatest investor – often admits he doesn’t watch the market closely. However, it’s safe to say he takes advantage of market crashes.

Major downturns are an inevitable part of investing in the stock market. They can be disappointing, if not devastating, for the unprepared, and their timing is nearly impossible to predict.

But they don’t concern Buffett. As the ‘Oracle of Omaha’ oh so confidently told investors in 1994:

Stock prices will continue to fluctuate – sometimes sharply ­– and the economy will have its ups and downs. 

Over time, however, we believe it highly probable that the sort of businesses we own will continue to increase in value at a satisfactory rate.

Indeed, the billionaire’s company, Berkshire Hathaway Inc (NYSE: BRK), has consistently delivered major returns. Its stock has gained more than 2,000% since 1994.

So, how does Buffett thrive through market crashes? Keep reading to find out.

Buffett wisdom on market crashes

Buffett not only believes a market crash is always coming, but he is also generally ready at the wheel to take advantage.

The investing great’s strategy of buying shares in quality companies for cheap prices and holding them over the long term is arguably best executed during a market crash.

Competitive, well-managed businesses often trade at prices well below their worth during downturns.

Berkshire Hathaway snapped up around US$9 billion of shares over the September quarter, selling just US$5 billion worth, The Motley Fool reports.

That’s despite the S&P 500 Index (SP: .INX) slumping another 5% over the period, leaving it down 25% year to date at the end of September – firmly in bear market territory.

Thus, I encourage investors to think of a market crash as a sale on quality shares.

Need an example? Just look at the 2020 COVID-19 crash, wherein the S&P/ASX 200 Index (ASX: XJO) tumbled 32% in a matter of weeks before reaching a new record high just months later.

Of course, that was a notably quick crash and an extremely fast recovery, but the point stands. Many of the market’s highest-quality businesses likely took a brief tumble over those months, leaving them ripe for the picking.

Thus, long-term investors will be hard-pressed not to experience a market crash, but I wouldn’t let the next one bother me.

The market has historically always returned to, and surpassed, its previous highs. Perhaps no one knows this better than Buffett.

The post Why I think Warren Buffett is right to always think a market crash is coming appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today 
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why is the De Grey Mining share price leaping 7% today?
• Why is the Telstra share price trailing the ASX 200 on Monday?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares). 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 BHP Group Ltd (ASX: BHP) dividend is one of the most popular options on the Australian share market for income investors.

And it isn’t hard to see why! BHP traditionally shares a good portion of its free cash flow with investors, leading to above-average fully franked dividend yields.

But will this remain the case in the coming years? Let’s look to see what analysts at Goldman Sachs are predicting for the BHP dividend in the coming years.

Where is the BHP dividend heading?

Firstly, as a reminder, in FY 2022 the Big Australian rewarded shareholders with total fully franked dividends of US$3.25 (A$5.02) per share.

However, due to weakness in the iron ore price, the petroleum demerger, and a softer copper price, Goldman Sachs is expecting a sizeable reduction in the BHP dividend in FY 2023.

Its analysts are currently forecasting a US$1.60 (A$2.47) per share dividend for the 12 months. Based on the current BHP share price of $40.48, this implies a fully franked 6.1% dividend yield for investors.

The following year, in FY 2024, the broker is forecasting a fully franked US$1.33 (A$2.05) per share dividend. This will mean a yield of almost 5.1% for investors that year.

Another cut is expected in FY 2025. This is being driven by its expectation for further weakness in iron ore prices. Goldman Sachs is forecasting a US$1.14 (A$1.76) per share dividend for the period, which represents a 4.35% fully franked dividend yield.

Unfortunately, the unwelcome trend continues in FY 2026, with the broker expecting another cut to the BHP dividend. It is forecasting a US$1.02 (A$1.57) per share dividend, which implies a 3.9% yield. The good news, though, is that Goldman is calling a bottom to the BHP dividend this year and expects a long-awaited increase to follow in FY 2027.

The broker has pencilled in a fully franked US$1.06 (A$1.63) per share dividend for that year, which equates to a 4% yield.

All in all, this breaks down as follows:

• FY 2023 – 6.1% yield
• FY 2024 – 5.1% yield
• FY 2025 – 4.35% yield
• FY 2026 – 3.9% yield
• FY 2027 – 4% yield

Though, it is worth remembering that a lot can change in a short period in the resources sector. Just look at the coal price. Nobody wanted to touch the stuff a year ago and now it is commanding sky high prices and underpinning huge dividend payments for coal miners.

The post Here’s the BHP dividend forecast through to 2027 appeared first on The Motley Fool Australia.

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More reading

• Why Arafura Rare Earths, BHP, Capricorn Metals, and Newcrest shares are rising today
• Why are ASX 200 mining shares bolting out the gates on Monday?
• Why is the BHP share price charging 4% higher?
• BHP share price tumbles with ASX 200 despite renewables deal
• What’s the forecast for the iron ore price 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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