Tag: Motley Fool

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has risen strongly over the past month, up 13.66%.

The ANZ share price is in the green this morning, breaching $26 per share for the first time since May.

Top broker Citi reckons there is more growth ahead for the ANZ share price.

Why will the ANZ share price keep rising?

According to a report in The Australian today, top broker Citi thinks ASX shares related to housing are winners. The broker says ASX investors should “start to build positions now” in such companies.

The most obvious housing-related companies to invest in are ASX bank shares. This is because they are the biggest lenders to households and hold billions of dollars in mortgages on Australian property.

Citi expects the Reserve Bank of Australia to raise the official cash rate to a peak of 3.35% in early 2023. It expects an average fall in house prices of 23% from the peak to the trough — sometime late next year.

But here’s the clincher for ASX investors.

Citi’s own quantitative analysis indicates that housing-related shares tend to hit their floor six months before house prices.

They also begin to outperform the broader market about a year before the trough in house prices.

Citi says:

This suggests that investors should start to build positions now, with the added fillip near-term of several stock and sector nuances which underpin our view of more compelling value today.

These range from industry impacts like excess liquidity in banks and an elongated building cycle – to more stock specific (factors like) acquisitions.

Which ASX shares related to housing does Citi recommend?

Citi sees upside in the ANZ share price, along with the Westpac Banking Corp (ASX: WBC) share price.

The broker’s other housing-related ASX share picks outside banking are Harvey Norman Holdings Limited (ASX: HVN), Nick Scali Limited (ASX: NCK), Mirvac Group (ASX: MGR), CSR Limited (ASX: CSR), Fletcher Building Limited (ASX: FBU), and BlueScope Steel Limited (ASX: BSL).

ANZ released its full-year results last week and declared a final dividend of 74 cents per share.

This was a 2.8% increase on the FY21 final dividend.

The ANZ share price currently offers a trailing grossed-up dividend of 8%.

The post Up 14% in a month, why the ANZ share price can keep delivering: Citi appeared first on The Motley Fool Australia.

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More reading

• Experts name 2 ASX 200 dividend shares to buy now
• 5 things to watch on the ASX 200 on Tuesday
• Here’s how the NAB share price has fared in October
• The ANZ share price has had a strong run, rising 10% in October
• Buy Westpac shares now for EPS and dividend growth: experts

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Harvey Norman Holdings Ltd., Nick Scali Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 number of ASX dividend shares that managed to achieve dividend growth during the COVID-19 pandemic period.

Investors in those businesses certainly may have appreciated that level of consistency.

Dividends are not term deposits. They can be reduced or cut entirely if the board thinks that’s the best course for the business.

However, some ASX dividend shares that managed to keep growing their dividends have resilient business models and industries, and they could be interesting to look at in this new era of uncertainty.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is a large pathology business in Australia and in other Western countries. It has operations in Australia, the US, Germany, Switzerland, Belgium, and New Zealand.

Pathology is a vital part of the healthcare sector. People don’t decide to get sick based on economic cycles so demand is quite resilient in my opinion. And, obviously, staying alive and healthy is important to people — I think it’s likely that people will prioritise going to Sonic over other activities.

This business received a huge boost in earnings from COVID-19 testing. But, it has used those earnings to make acquisitions to fuel the future revenue of its base business, such as Canberra Medical Imaging.

In FY19, the base business generated $6.5 billion in revenue and in FY22, the base revenue grew to $6.9 billion.

In FY20, the ASX dividend share grew the dividend by 1.2% to 85 cents per share; in FY21, the dividend grew by another 7.1% to 91 cents per share, and finally, in FY22, it increased the dividend by 10% to $1 per share.

It has a trailing grossed-up dividend yield of 4.3%.

Coles Group Ltd (ASX: COL)

The supermarket giant saw a mixed performance for its businesses during the COVID years of FY20 to FY22.

Coles Express, the petrol station division, suffered as people’s overall mobility was reduced due to various COVID impacts, particularly lockdowns.

But the supermarkets (and liquor shops) saw elevated demand. Obviously, people still need to eat. And some of that discretionary spending money had to go somewhere.

Coles has managed to grow its revenue while investing for its future. The ASX dividend share is building some huge warehouses with significant automation features.

In FY20, Coles grew its total dividend per share by 62% to 57.5 cents, up from 35.5 cents. In FY21, it grew its dividend by 6.1% to 61 cents per share. In FY22, Coles increased its dividend by another 3.3% to 63 cents per share.

In the first quarter of FY23, its total revenue went up by another 1.3%.

APA Group (ASX: APA)

The business owns a national gas pipeline which is more than 15,000km in size, connecting sources of supply with markets across mainland Australia. It owns, or has interests in, gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). The company delivers half of Australia’s natural gas usage.

The ASX dividend share is steadily investing in new pipelines and projects which can unlock more cash flow, which then funds higher distributions.

In FY20, it grew the total distribution by 6.4% to 50 cents per security. Then, in FY21, the total distribution increased by 2% to 51 cents per security. In FY22, it increased the distribution by 3.9% to 53 cents per security. The FY23 distribution is expected to grow by 3.8% to 55 cents per security.

The FY23 expected yield is 5.2%.

The post Dividends beasts: 3 ASX shares that kept the funds growing even during COVID appeared first on The Motley Fool Australia.

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More reading

• These are the ASX 200 dividend shares to buy: analysts
• Bell Potter names 9 ‘champion’ ASX 200 shares to buy for the next five years
• Brokers name 2 ASX dividend shares to buy
• Broker says the Coles share price is great value post-Q1 update
• Here are the top 10 ASX 200 shares 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 positions in and has recommended APA Group and COLESGROUP DEF SET. The Motley Fool Australia has recommended Sonic Healthcare 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 Vulcan Energy Resources Ltd (ASX: VUL) share price is edging higher on Wednesday morning.

At the time of writing, the lithium developer’s shares are up slightly to $7.51.

At one stage, the Vulcan share price was up as much as 4.5% to $7.85.

Why is the Vulcan share price rising?

Investors were buying the company’s shares this morning after the company announced plans to expand its operations.

According to the release, Vulcan is expanding its activities to the French side of the Upper Rhine Valley Brine Field (URVBF). This accounts for roughly one third of the Upper Rhine Graben, containing both geothermal energy and lithium-rich brine.

Vulcan notes that it previously collected a bulk (10,000 litres) brine sample from the French side of the border and conducted test work on it. The sample returned a high grade of 214 mg/L Li and low impurities.

In addition, historical data and sampling coming from existing geothermal operations in the region indicate that the brine composition in the Alsace region is materially the same as the brine composition across the border at Vulcan’s operations in Germany. Management believes that this means Vulcan’s sustainable lithium production process is applicable across the whole field.

Management also highlights that Vulcan already has a strong connection to the French market with France’s largest automakers Renault and Peugeot-Citroen. These brands are owned by Stellantis, which is Vulcan’s second largest shareholder.

Vulcan’s chief commercial officer, Vincent Ledoux-Pedailles, commented:

Vulcan is aiming to increase the future supply of our sustainable lithium product in response to significant customer demand, as we leverage our extensive experience in lithium extraction from heated brines to have a materially decarbonising effect on global electric vehicle supply chains.

An extension of our core operating area, the Upper Rhine Valley Brine Field, expanding into France is a natural next step for Vulcan as we can apply the same expertise and technology to extract lithium sustainably. We look forward to supporting our French customers and working with local communities and companies to decarbonise their energy mix.

The post What’s going on with the Vulcan share price today? appeared first on The Motley Fool Australia.

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More reading

• ‘Well positioned’: Why the Vulcan share price is climbing today
• 3 ASX 300 shares off to the races on Wednesday
• Why Life360, Novonix, Pilbara Minerals, and Vulcan shares are storming higher today
• 4 ASX lithium shares surging more than 10% today
• Vulcan share price rockets 12% on lithium update

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

Shares of Amazon.com (NASDAQ: AMZN) were falling hard on Tuesday, down 5.4% as of 12:45 p.m. ET.

There wasn’t much company-specific news today. Indeed, the only announcement from Amazon was a press release announcing that it was expanding Amazon Music’s ad-free offerings for Prime members, who will now get 100 million songs and top podcasts ad-free with their Prime membership.

That all sounds great for Prime members, but investors may be more concerned with Amazon’s bottom line, and probably macroeconomic factors to a larger extent. It appears large funds may be continuing to lower their positions in Amazon and other large-cap tech names following last week’s earnings reports, which disappointed many investors.

Another likely reason for the decline today was a hotter-than-expected job openings number that came out this morning. More open jobs translate to a stronger economy, which means the Federal Reserve may have to continue hiking rates aggressively to bring inflation under control.

So what

As long as inflation and interest rates are the overwhelming focus of investors, it appears as though we will be in a “good news is bad news” market. Since inflation has remained surprisingly high throughout the year, and since the Federal Reserve has embarked on an aggressive path of interest rate hikes, investors actually would like to see things cool down. If the economy cools, inflation should come down, and the Fed won’t have to continue its aggressive tightening to the same extent.

Yet this morning, the September Job Openings and Labor Turnover Survey (JOLTS) came out, showing that job openings actually increased to 10.72 million, an increase over the August figure, and well above estimates of 9.85 million. That still signals a very strong economy and many more openings than unemployed people, which is not a great data point for wage inflation.

All things being equal, the JOLTS data likely means the Federal Reserve won’t waver from its path of higher interest rates. That could especially harm less-profitable growth stocks like Amazon, with the bulk of their earnings well out into the future. Higher interest rates will discount future earnings by a greater amount, making them worth less in present-dollar terms, all else being equal.

A rapid rise in interest rates would also raise the risk of the Fed making a policy error and going too far, sending the economy into recession next year. That probably wouldn’t be good for Amazon either. While some parts of Amazon, such as groceries and consumer staple item sales, will probably make it through a recession just fine, parts of its business, such as advertising and cloud computing, are somewhat sensitive to economic conditions.

Additionally, a strong dollar, brought on by the US Fed hiking at a more aggressive pace than the rest of the world, is wreaking havoc on Amazon’s international business. Amazon’s international sales saw a stunning 17-point negative growth swing in the third quarter, logging a 5% revenue decline, while it would have been 12-point growth in constant currency.

In last week’s earnings report, Amazon Web Services did see a bigger deceleration than analysts had anticipated. On the post-earnings conference call with analysts, CFO Brian Olsavsky noted cloud customers were looking for ways to limit spending in anticipation of leaner times, by moving some cloud workloads to cheaper tiers of compute and storage.

The AWS slowdown combined with conservative fourth-quarter guidance is likely what sent Amazon stock down following the report, despite some other bright spots. Now, a continued aggressive Federal Reserve may keep consumer and enterprise spending in check. Thus, Amazon investors are seeing a follow-through on last week’s disappointment. 

Now what

Many investors are hoping for the Federal Reserve to signal a slowdown in the pace of its rate increases, or ‘pivot’, at the Federal Open Market Committee tomorrow. That could explain some of the recent rally in stocks over the past few weeks.

However, today’s JOLTS data may dispel that hope, with economically sensitive growth stocks vulnerable to a more hawkish Fed posture. Investors will have to see what Chair Jay Powell says tomorrow, but hotter jobs data combined with last month’s disappointing inflation report seem likely to keep the Fed on its current course.

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

The post Why Amazon is plunging today appeared first on The Motley Fool Australia.

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More reading

• Does the Vanguard International Shares ETF contain ‘good’ quality companies?
• Amazon stock just tanked. Could this be a canary in the coal mine for ASX 200 retail shares?
• Why are ASX 200 tech shares getting bashed around today?
• Why were Meta and Amazon stocks falling today?
• Here’s how I allocate my ASX share portfolio and why

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Billy Duberstein has positions in Amazon. His clients may own shares of the companies mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. 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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The Lake Resources NL (ASX: LKE) share price is rocketing after the company revealed its Kachi Project’s demonstration plant has already produced at-spec lithium product.

The Lake Resources share price is soaring 10.38% on the back of the news. It’s currently trading at $1.17.

Let’s take a closer look at today’s news from the S&P/ASX 200 Index (ASX: XJO) lithium developer.

Lake Resources share price surges on Kachi update

The Lake Resources share price is rocketing on news of a major milestone at the company’s Kachi Project.

It’s now processing Kachi brines and has already delivered at-spec product in initial test work as optimisation continues.

Construction of the plant, as well as wet and dry commissioning, took place in September and October.

The ASX 200 lithium favourite is partnering with Lilac Solutions to provide the tech used by the demonstration plant.

The first samples of lithium chloride from the project should be shipped for conversion into lithium carbonate within a fortnight.

Commentary from the partners

Lilac CEO David Snydacker commented on the “excellent early results” released today, saying:

Just one month after the start of wet commissioning, we are already achieving 80% lithium recoveries even as we complete the commissioning process and increase recoveries.

We are excited to expand our collaboration with the Lake team as we work to fast-track commercial-scale production of lithium carbonate.

Lake expects that, following the samples’ conversion into lithium carbonate, the product will be qualified by a tier one battery maker to validate its specifications.

Lake CEO David Dickson was “delighted” by the early success and is now focused on future steps. Dickson said:

We look forward to seeing the test work move into to steady state and then for the process to be validated by Hatch so that work on the DFS can be completed.

Meanwhile, Lake Resources chair Stu Crow heralded Lilac’s technology as one that will disrupt the battery materials industry. That’s due to its scalability, low cost, ESG benefits, and consistent product quality.

Today’s gain sees the Lake Resources share price 15.84% higher than it was at the start of 2022. It has also gained 25.8% since this time last year.

Comparatively, the ASX 200 has fallen 6% year to date and 4.4% over the last 12 months.

The post Lake Resources share price leaps 10% on ‘excellent early results’ appeared first on The Motley Fool Australia.

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More reading

• Which ASX 200 mining shares managed to dig up gains in October?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most traded ASX 200 shares on Tuesday
• Why is the Dreadnought share price struggling despite successful drill program

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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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

Shares of Tesla (NASDAQ: TSLA) were up by more than 3% soon after the market opened Tuesday, but as of 1 p.m. ET, the shares were up by about 0.8%. The stock moved higher after a Reuters article reported that the electric vehicle leader could begin mass production of its Cybertruck by the end of 2023. 

Also boosting Tesla’s stock price was a report Monday from JPMorgan Chase‘s top market strategist predicting that the Federal Reserve could be nearly finished with its interest rate hikes. Rising interest rates have weighed on tech stock valuations throughout 2022, and Tesla is down 35% year to date. 

So what

CEO Elon Musk previously said that the Cybertruck could be the company’s “best product ever.” He originally unveiled the vehicle in 2019, but delays have pushed back its production. On the third-quarter earnings call in October, Musk said the company was in the “final lap” with the Cybertruck. 

The matter of securing enough batteries had been one concern as the company looked to manufacture the truck at production scale, but Musk said in January that batteries likely wouldn’t be the limiting factor. Instead, he noted, the main issue was that it would “take some time to work through” all the advanced technology going into it. He also pointed to the challenge of making the vehicles available at affordable prices. It appears Tesla may have solved those issues.

Now what

Musk wants his company to manufacture at least 250,000 Cybertrucks per year, but it will take time to bring production up to that level. For perspective, Tesla produced more than 1.2 million vehicles over the last four quarters across its four currently available models. 

The arrival on the market of perhaps the most highly anticipated vehicle in years, along with plateauing interest rates, could be huge catalysts for the top electric vehicle maker in the near term. 

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

The post Why Tesla stock was up this morning appeared first on The Motley Fool Australia.

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More reading

• Does the Vanguard International Shares ETF contain ‘good’ quality companies?
• The Core Lithium share price surged 25% in October. Here’s why
• 2 Elon Musk quotes from Tesla’s earnings call that investors should see
• Musk finally swoops on Twitter and casts CEO out of the nest. What now?
• Why Tesla stock topped the market on Thursday

John Ballard has no position in any of the stocks mentioned. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase and 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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The Rio Tinto Limited (ASX: RIO) share price is having a decent start to the day on Wednesday.

In morning trade, the mining giant’s shares are up 2% to $92.20.

Why is the Rio Tinto share price pushing higher?

As well as getting a boost from a recovering iron ore price, the Rio Tinto share price is pushing higher today after the company announced a potentially positive development in its quest to acquire Turquoise Hill.

Rio Tinto is currently trying to acquire the 49% stake in the copper miner that it does not already own for C$43.00 per share. If successful, it will increase Rio Tinto’s stake in the massive Oyu Tolgoi copper and gold project in Mongolia to 66%.

According to the update, the company has entered into agreements with Pentwater Capital Management and SailingStone Capital Partners that will see the two parties withhold their votes at next week’s special meeting and exercise their dissent rights in respect of the arrangement.

Rio Tinto has also agreed to increase the dissent condition under the arrangement agreement from 12.5% to 17.5% of Turquoise Hill shares outstanding.

In addition, the mining giant revealed that the parties have agreed that the dissent proceedings and certain other claims shall be conducted by arbitration, and the securityholders will be paid C$34.40 of the consideration following the completion of the arrangement. The remaining consideration will be payable following the final determination of the arbitration.

Finally, Rio Tinto once again stressed that its offer of C$43.00 per share for Turquoise Hill is its best and final offer.

The post Why Rio Tinto share price pushing higher today? appeared first on The Motley Fool Australia.

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More reading

• Which ASX 200 mining shares managed to dig up gains in October?
• Could ASX 200 iron ore shares be heading for more pain?
• Why CBA is much more upbeat on Rio Tinto shares than the government
• Why is the Rio Tinto share price in the doldrums today?
• Why is the Fortescue share price surging 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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We’re nearly at the end of 2022. October saw heightened volatility as investors came to grips with the latest economic numbers. What did it mean for S&P/ASX 200 Index (ASX: XJO) mining shares?

Miners can be impacted by a number of different things, including changes in the relevant commodity price, sentiment about what direction the prices are headed, the company’s ability to maintain or grow its production, and so on.

General market volatility can also hurt the valuation of businesses in the mining sector.

Iron ore miners

The iron ore ASX shares make up the biggest resource position in the ASX 200, so I’ll focus there.

Over October, the BHP Group Ltd (ASX: BHP) share price fell by 3%.

Next, the Rio Tinto Limited (ASX: RIO) share price dropped by 5.6%.

The Fortescue Metals Group Limited (ASX: FMG) share price declined by 12.6%.

The Champion Iron Ltd (ASX: CIA) share price retreated 3%.

Interestingly, the Mineral Resources Limited (ASX: MIN) share price went up by 11.2%. However, this may have been due to the lithium side of the business rather than the iron ore side.

The iron ore price has continued to head lower as demand from China continues to be dampened by various factors with lower steel demand, an uncertain housing (including construction) situation and ongoing COVID-19 lockdowns.

Quarterly production reports were released for the three months to September 2022, including Fortescue, BHP and Rio Tinto. Of the three, Fortescue’s may have been the strongest because it delivered a record for production.

Lithium

ASX lithium shares continue to benefit from strong (and strengthening) lithium prices.

For example, Pilbara Minerals Ltd (ASX: PLS) revealed that it sold two different cargoes of lithium during the month.

On 18 October it sold 5,000 dry metric tonnes (dmt) for $7,100 per dmt. Then, a week later on 24 October it sold another 5,000 dmt for $7,255 per dmt.

It may be no surprise to learn that the Pilbara Minerals share price increased by 11.6% over October.

Looking at some of the other names for the month, the Allkem Ltd (ASX: AKE) share price climbed 4.3% and the Core Lithium Ltd (ASX: CXO) share price rose by 25%.

Other miners

Let’s also look at some of how the other largest ASX 200 mining shares performed.

Over the month, the Newcrest Mining Ltd (ASX: NCM) share price rose by 2.5%.

The South32 Ltd (ASX: S32) share price declined by 0.8% in October.

The Lynas Rare Earths Ltd (ASX: LYC) share price went up by 10%.

Last month, the IGO Ltd (ASX: IGO) share price climbed by 11.6%.

The Northern Star Resources Ltd (ASX: NST) share price also went up by 11.6%.

Overall it was a good month for most miners, except the iron ore miners.

The post Which ASX 200 mining shares managed to dig up gains in October? appeared first on The Motley Fool Australia.

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More reading

• Why Rio Tinto share price pushing higher today?
• Here’s the Fortescue dividend forecast through to 2027
• Brokers name 2 ASX 200 dividend shares to buy
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. 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 Whitehaven Coal Ltd (ASX: WHC) share price has tumbled in recent times, hitting its lowest point in nearly a month on Monday.

Indeed, it’s dumped 11.7% since this time last week. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 2.6%.

The Whitehaven share price closed Tuesday’s session at $9.15.

So, what might be going wrong with the ASX 200 coal share? Let’s take a look.

What might be weighing on Whitehaven shares?

The Whitehaven Coal share price has been struggling over the last week amid falling coal prices, bearish experts, the company’s annual general meeting (AGM), and earnings from fellow coal producers.

Let’s start with the Whitehaven AGM, hosted last Wednesday.

There, shareholders and management welcomed further on-market share buybacks – aiming to snap up an extra 25% of the company’s outstanding stock. That’s on top of the 10% already secured through a previous buyback.

But optimism from such capital return activities might have been balanced by the quarterly earnings of coal peer Coronado Global Resources Inc (ASX: CRN), released on Monday. While the ASX 200 coal miner is enjoying a record year, falling commodity prices appear to be kicking in.

Coronado’s revenue fell 15% quarter-on-quarter as its average realised coal price dropped 21% to US$253 per tonne.

Coal prices have come off their September record high – which saw it reach approximately US$450 a tonne – to trade near US$350 right now. And that’s tipped to continue dropping, though experts’ opinions differ when it comes to how fast it might fall.

And some appear to wonder if the Whitehaven share price will follow the path worn by the commodity’s value.

Alto Capital’s Tony Locantro tips the stock as a sell, saying, courtesy of The Bull:

The coal sector has outperformed the market … [Whitehaven] shares have risen from $2.75 on January 5 to close at $9.83 on October 27. Investors may want to consider locking in a profit.

Not all are so bearish, however. Goldman Sachs recently upped its price target on the stock to $9.70, slapping it with a neutral rating.

The broker tips demand for coal to continue in the near term, driving volatility in the Whitehaven share price.

The post Down 12% in a week, why Whitehaven shares are losing their steam appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most traded ASX 200 shares on Tuesday
• Why the Whitehaven Coal share price could outperform this government forecast
• 5 ASX shares that have crushed the market this year
• If CBA is right, ASX 200 coal shares should keep the good times rolling
• Why is the Whitehaven Coal share price rebounding strongly 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 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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Over the last few years, the Fortescue Metals Group Limited (ASX: FMG) dividend has been among the most popular on the Australian share market.

And it isn’t hard to see why. Thanks to booming iron ore prices, the mining giant has been in a position to reward its shareholders handsomely.

However, with iron ore prices softening and the company planning to spend billions of dollars to decarbonise its Pilbara operations, will the Fortescue dividend outlook become ugly?

What is the Fortescue dividend outlook?

According to a note out of Goldman Sachs, its analysts believe the good times will be over for the Fortescue dividend after FY 2023.

After paying a 150 US cents per share dividend in FY 2022, the broker is expecting this to reduce to a relatively attractive 97 US cents (A$1.51) in FY 2023. Based on the current Fortescue share price of $15.50, this will mean a fully franked yield of 9.7%.

However, in FY 2024, Goldman is expecting the company’s decarbonisation spending to kick in and lead to a dividend cut to 40 US cents (62 Australian cents). This represents a fully franked 4% dividend yield.

With the company’s decarbonisation spending due to go up another level in FY 2025, Goldman expects the Fortescue dividend to drop again. This time the broker is expecting a dividend of 33 US cents (52 Australian cents) for the year. This will mean a yield of 3.35% for investors.

Finally, Goldman Sachs is forecasting the Fortescue dividend to then ease to 32 US cents (50 Australian cents) in both FY 2026 and FY 2027. This will mean a modest 3.2% dividend yield for investors in both years.

In light of this, based on these forecasts, there are two things that could happen to the Fortescue share price. One is that investors accept lower yields and its shares continue to trade at current levels. The other is the Fortescue share price retreats to lower levels in the coming years to maintain its current above-average yield.

Time will tell which happens.

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

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Why did the Fortescue share price crash 13% in October?
• Could ASX 200 iron ore shares be heading for more pain?
• Why Brainchip, Bubs, EML, and Fortescue shares are falling 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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