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How bad was the first quarter for the Woodside share price?
The Woodside Energy Group Ltd (ASX: WDS) share price has seen considerable volatility in 2022. The last few months have seen the rollercoaster ride continue.

While Woodside shares have gone up 58% in 2022 so far, the oil and gas ASX share fell by 0.6% between 30 June 2022 to 30 September 2022. That compares to a 1.4% decline for the S&P/ASX 200 Index (ASX: XJO).

Interestingly, since the end of the last quarter, the Woodside share price has gone up 10%. That compares to a gain of ‘only’ 4.5% for the ASX 200.

What’s the latest for the Woodside share price?

From the start of the year, energy prices have increased significantly. Woodside has benefited from this because it’s selling its production at a materially higher price than it was last year.

The big news over the last few months from the business was its half-year report for the period ending 30 June 2022. It said that in HY22 operating revenue went up by 132% to US$5.81 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) increased to 165% to US$3.97 billion, and underlying net profit after tax (NPAT) increased 414% to US$1.82 billion.

Free cash flow surged 688% to US$2.57 billion and the interim dividend jumped 263% to US$1.09 per share. Keep in mind that the returns I quoted earlier don’t include the payments of the dividend either.

Woodside Energy CEO Meg O’Neill said:

Our first results since the completion of the merger with BHP’s petroleum business highlight the increased financial and operational strength delivered by our larger, geographically diverse portfolio of high-quality operating assets.

Production for the half year was 19% higher at 54.9 million barrels of oil equivalent, benefiting from the contribution in the month of June of the former BHP assets and improved reliability at our LNG facilities.

Shareholders benefited from the rise in energy prices and the Woodside share price has already risen to reflect that. Investors are now benefiting from the strong dividend payments.

But, the oil price has been going backwards in the last few months, likely because investors are worried about what a global recession may mean for oil demand.

What could happen next?

Woodside’s boss pointed to positives in both the short term and long term for the business:

The upheavals in global and Australian energy markets witnessed over the course of the past six months have shone a spotlight on the importance of gas in the world’s energy mix and underscores our confidence in the longer-term demand outlook for gas, which makes up 70% of Woodside’s portfolio.

Safe and reliable supplies of gas are not only critical to global energy security but will play a key role as our customers seek to decarbonise, alongside new energy sources such as hydrogen and ammonia that Woodside is investing in.

Our strategy to thrive through the energy transition as a low-cost, lower-carbon energy provider continues to progress through recently announced initiatives across hydrogen refuelling, carbon capture and storage and carbon to products technologies.

Some brokers have a view on the business. Morgan Stanley has an overweight rating and a price target of $37 on the business. That implies a mid-single-digit rise over the next year.

Citi rates it as a buy, with a price target of $36.50. That’s a potential rise of around 5% over the next 12 months.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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10 October 2022
3 ASX dividend shares proving they can handle inflation
Inflation is having a rough impact on different parts of the economy. Some valuations have plummeted and many companies are warning that inflation will affect their cost of doing business. However, there are some ASX dividend shares that are managing to handle it well.

Some businesses have revenue linked to inflation, so these names could be ones to consider.

Despite recent share price movements, the following companies could be opportunities.

APA Group (ASX: APA)

APA is one of the largest infrastructure businesses in Australia. It owns a network of gas pipelines around the country, transporting half of the nation’s natural gas usage. APA also owns various gas-related assets (such as energy generation and storage), as well as renewable energy assets.

Interestingly, it is working on a way for hydrogen to be transported in its pipelines. This could be an effective way to future-proof the ASX dividend share and extend the life of its assets.

So how does inflation come into the picture? A “significant portion” of its revenue is linked to inflation – a large majority of it. The company benefits because its contracts have built-in revenue growth in line with inflation. As an example, the Wallumbilla Gas Pipeline in Queensland saw a 7.5% increase in contracted revenue with its annual reset in January 2022.

In FY23, the distribution per security is expected to grow by 4% to 55 cents. This translates into a forward grossed-up dividend yield of 5.6%.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a globally-growing ASX retail share that sells affordable jewellery focused on younger shoppers.

FY22 saw strong performance. On a comparable 52-week basis, revenue went up 55.6% and net profit after tax (NPAT) grew 110.3%. Lovisa also added 85 net new stores to end the financial year with 629 shopfronts.

The company said that in the third quarter of FY22, it implemented price increases that helped deliver sales growth with “minimal impact” experienced in volumes.

In FY23, the first seven weeks saw total sales growth of 66.1% on the same period in FY22. The ASX dividend share had opened another 22 stores in the new financial year to date.

In FY22, Lovisa paid a dividend per share of 74 cents. That means it has a trailing grossed-up dividend yield of 3.5%.

The Lovisa share price is almost 20% higher than when it started 2022.

Propel Funeral Partners Ltd (ASX: PFP)

Propel is one of the largest funeral providers in Australia and New Zealand.

The business saw a recovery from COVID-19 impacts in FY22. Excluding one-off items, Propel said that its FY22 revenue increased 20.6% to $145.2 million and operating earnings per share (EPS) increased by 31.1% to 15 cents.

In the first six weeks of FY23, total and comparable funeral volumes were “materially higher” than the prior corresponding period. In the month of July 2022, the average revenue per funeral was around 6% higher than FY22.

Over the long term, it’s expecting volume growth because of “favourable demographics” in Australia and New Zealand.

Commsec estimates suggest that the ASX dividend share is going to pay an annual dividend of 12.4 cents per share in FY23. That would be a grossed-up dividend yield of 3.6%.

The Propel share price has gone up 10% in 2022, showing its resilience.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. The Motley Fool Australia has recommended Lovisa Holdings Ltd and Propel Funeral Partners Ltd. 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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10 October 2022
Why is the Block share price in free fall today?
The Block Inc (ASX: SQ2) share price is falling hard on Monday, down 6.2% in morning trade.

Block shares closed on Friday trading for $94.94 and are currently trading for $89.07 apiece.

So, what’s driving today’s sell-off of the global buy now, pay later (BNPL) stock?

Why the big sell-off?

There are two primary drivers pushing the Block share price lower today.

And both stem from the United States.

First, Block is dual-listed, on the ASX and the NYSE. The global payments company started trading on the ASX on 20 January this year after acquiring Afterpay.

As you’d expect, shares on the ASX trade in close correlation with those on the NYSE. And on Friday the Block share price tumbled 7.3% in the US markets.

Which brings us to the second factor putting the company under renewed pressure today. The same reason Block tumbled on the NYSE.

Namely, a surprisingly strong labour market in the US.

The September jobs report saw the world’s largest economy add more jobs than consensus expectations, driving the unemployment rate down to 3.5%. That’s the lowest unemployment rate recorded in the US in half a century. Alongside the tight labour market, wages are marching higher, up some 5% year on year.

You might think a strong US labour market and rising wages would be something to celebrate, particularly for investors in a BNPL stock. But that’s not the case in markets that rise and fall in lockstep with the Federal Reserve’s interest rate intentions.

Rising wages and low unemployment have again upped the odds that the Fed will continue to tighten aggressively. Which, alongside the tumbling Block share price, saw the tech heavy NASDAQ fall a precipitous 3.8% on Friday.

Block share price snapshot

With today’s intraday falls factored in, the Block share price is down 50.7% since listing on the ASX on 20 January.

For some context, the S&P/ASX 200 Index (ASX: XJO) is down 12.1% over that same period.

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Motley Fool contributor Bernd Struben 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 Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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10 October 2022
Core Lithium share price lower despite big news
The Core Lithium Ltd (ASX: CXO) share price is falling on Monday despite the release of a positive announcement.

In early trade, the lithium miner’s shares are down slightly to $1.14.

What’s going on with the Core Lithium share price?

The Core Lithium share price has dropped today after broad market weakness offset the release of an announcement on the Finniss Lithium Project near Darwin.

According to the release, Core Lithium has awarded a five-year operations and maintenance (O&M) contract for the Dense Media Separation (DMS) plant at the Finniss Lithium Project.

This contract has been awarded to Primero, which is a wholly owned subsidiary of NRW Holdings Limited (ASX: NWH).

The release notes that the scope of the O&M contract not only includes the DMS processing facilities, but also related Tailing Storage Facilities (TSF) infrastructure at the project. Management estimates that the contract has a value of $60 million over the five years.

What’s next for Core Lithium?

This is a key contract award and brings the commencement of production a huge step forward.

And the good news is that Primero has the majority of key personnel on hand for deployment into the contract commencing from this month. It expects to complete all remaining recruitment and operational readiness activities by December, ready for first spodumene concentrate production in the new year.

Core Lithium’s CEO, Gareth Manderson, was pleased with this latest development. He said:

The O & M contract award to Primero extends the relationship Core has with Primero from beyond the Engineering, Procurement & Construction (EPC) contract. Significantly Primero are not only building the projects DMS facility, they now back their workmanship through the O & M.

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

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10 October 2022
Why did the Dubber share price just crash 35%?
The Dubber Corp Ltd (ASX: DUB) share price has returned from its suspension and crashed deep into the red.

In early trade, the cloud-based call recording software provider’s shares are down 35% to 36 cents.

This means the Dubber share price is now down almost 90% since the start of the year.

Why is the Dubber share price crashing today?

Investors have been selling down the Dubber share price in a panic today after the company released a shocking update on its audited results for FY 2022.

In August, Dubber released its unaudited full year results and reported a 75% increase in revenue to $35.6 million.

However, after finally getting its accounts audited, this figure has been revised lower by $10.3 million to $25.3 million. Management commented:

The revenue figure has been adjusted because the Company’s interpretation of accounting standards relating to particularly, Platform Fees and Foundation based revenues has been modified following consultation with the Company’s auditors.

But it gets worse. Dubber has also revised its costs higher following the audit. Total costs are now $8 million more than previously stated, bringing its loss after tax to $83.2 million. This compares to its previously stated loss of $64.7 million.

CFO out

Unsurprisingly given the above, Dubber’s chief financial officer, Peter Curigliano, is leaving the business.

A separate release, which doesn’t even mention Curigliano by his name, states: “The current chief financial officer will step down from that position with immediate effect and assist the Company in the transition of the role.”

Commenting on this disastrous update, Dubber’s non-executive chair, Peter Clare, said:

I would like to sincerely apologise to shareholders, on behalf of the Board and CEO, for the delayed lodgment. A full review is underway and any necessary changes or improvements to avoid such an event occurring again will be implemented with the Board’s full support.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dubber Corporation. The Motley Fool Australia has positions in and has recommended Dubber 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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10 October 2022
3 cryptocurrencies that could be set to explode
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.

Staying current with trends is one of the most important facets of successful investing. Being quick to recognize those that will eventually turn into the status quo is one way to build a portfolio that beats the market.

Imagine investing in some of the most high-profile tech stocks a decade ago. Today, companies like Meta Platforms (NASDAQ: META), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and many others are intertwined with our daily lives. An investor aware of trends a decade ago could have foreseen that and capitalized on those opportunities. In the last 10 years, the tech-heavy Nasdaq Stock Market increased nearly 250% in value.

Now, hindsight is always 20/20, but there is one trend today that presents a similar opportunity to that of a decade ago.

The new age of the internet

Our reliance on the internet seemingly increases every year. Some companies capitalized on this and now have an omnipresent role in our daily lives. These companies provide technology, track your every move on the internet, and generate an absurd profit from their centralized business models. But it looks like that might be coming to an end thanks to new technology with the potential to upend the current status quo of the internet.

Known as Web3, this new age of the internet aims to be everything that our current internet, referred to as Web2, isn’t. In Web3, things such as social media, finance, gaming, and the metaverse have the potential to mark a break from today’s centralization. With Web3, decentralized blockchains would be the backbone for an internet that’s open source, offers secure interoperability between apps, and is entirely trustless — meaning no third party, like Google, is needed for the system to function.

A recent report by Vantage Market Research on the current standing of Web3 valued the sector at just under $3 billion. But the same report says it has the potential to grow to roughly $23 billion by 2028. That’s an increase of more than 700%. So how can investors capitalize on this opportunity?

Well, because blockchains are the foundation of Web3, owning the cryptocurrencies native to those blockchains is one simple way to gain exposure to the new age of the internet. Based on current developments, I believe there are three that are rising to the task of supporting Web3’s future growth: Ethereum (CRYPTO: ETH), Polygon (CRYPTO: MATIC), and Arweave (CRYPTO: AR).

Ethereum

Ethereum is slowly becoming the foundation of Web3. To be straightforward, there is no possibility of Web3 without Ethereum. With its smart contracts, developers can program decentralized apps (dApps) to replace third-party entities, allow user data to flow seamlessly between applications without any collection, and (the best part) be highly secure and execute automatically when conditions are met. There are other smart-contract-based blockchains like Solana (CRYPTO: SOL) and Cardano (CRYPTO: ADA), but Ethereum has risen to the top as one of the most used blockchains. Its popularity has caused it to become the home of the most development for Web3 use cases. It could help to think of Ethereum as the base layer or code that allows Web3 to function, as JavaScript or HTML is for Web2. Any investor interested in Web3 should make sure they have a substantial amount of Ether in their portfolio.

Polygon

This network is positioning itself to become a powerhouse of Web3 as the new age of the internet continues to advance. Polygon is unique because it makes the shortcomings of Ethereum (namely slow transaction speeds and high fees) a thing of the past without sacrificing the security and decentralization that make Ethereum so desirable. To do this, Polygon offloads transactions from Ethereum’s blockchain and then adds them back later. The technology that Polygon uses makes transactions lightning fast at a cost of less than a penny.

Polygon co-founder Mihailo Bjelic might have said it best when talking about what Web3 needs. For a blockchain to become the “holy grail of Web3 infrastructure” it must have “scalability, security, and Ethereum compatibility.” If Web3 is to support all the internet users of the world, it must remain fast and cheap. With Polygon, that now becomes possible.

Arweave

Last but not least is Arweave. In a world full of data, that data needs a home. Arweave is a data storage solution that uses blockchain technology to provide a simple way to retain information — forever. The best part about Arweave is that no central authority oversees the data, no one can alter the data once it’s on the blockchain. In addition, Arweave is compatible with smart contracts, which means Web3 developers can customize dApps to use the data on Arweave’s blockchain. And, in keeping with Web3 principles, that data can’t be used to generate profits because it’s anonymous, and it can never be altered because it’s secure on a blockchain.

To understand how Arweave could benefit investors, we must first understand how Arweave works. We will keep it simple, but to store data on Arweave’s blockchain, users must purchase storage space with the AR coin. A user could be a regular person wanting to save a cherished photograph or another blockchain wanting to store its transaction history to free up space. The thinking is that as Arweave’s blockchain grows and supports more data storage for Web3, the AR coin should rise in value as demand for it grows.

Imagine entering the metaverse through glasses or virtual reality goggles and, as on the home screen on your phone, seeing all your favorite apps and games there waiting for you. Those apps and games all communicate with each other seamlessly to provide a unique experience just for you without the need of any Big Tech company. Your bank account, photos, and other information are all stored on the blockchain and are completely secure and anonymous.

Web3 is far from its final form, and it’s difficult to guess just what it might look like, but that is why investors have so much to gain right now. As the internet continues to evolve, investors can take advantage of a trend that has the potential to become the status quo.

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

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RJ Fulton has positions in Cardano, Ethereum, and Solana. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Ethereum, Meta Platforms, Inc., Microsoft, Polygon, and Solana. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia owns and has recommended Ethereum and Solana. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Meta Platforms, Inc. 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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10 October 2022
Why did the A2 Milk share price rocket 23% in the first quarter?
The market may have been out of form during the first quarter of financial year 2023, but that didn’t stop the A2 Milk Company Ltd (ASX: A2M) share price from shooting higher.

Over the three months, the embattled infant formula company’s shares rose a sizeable 23%.

This compares favourably to a 1.5% decline by the ASX 200 index over the same period.

Why did the A2 Milk share price smash the market during the quarter?

The main catalyst for the strong performance by the A2 Milk share price was the release of a surprisingly strong full year result at the end of August.

For the 12 months ended 30 June, A2 Milk reported a 19.8% increase in revenue to NZ$1.446.2 million and a 42.3% jump in net profit after tax to NZ$114.7 million. This was well ahead of the market’s expectations.

This was driven by the acquisition of MVM, double-digit China label and English label infant formula sales growth, and ANZ and USA liquid milk sales growth of 1.8% and 30.2%, respectively.

Anything else?

Also giving the A2 Milk share price a boost was the announcement of NZ$150 million on-market share buyback. Management explained that this buyback “demonstrates effective capital management and the improved confidence we have in our strategy, execution and outlook.”

Speaking of its outlook, management pleased investors by guiding to high single digit revenue growth in FY 2023 thanks largely to its infant formula business. It is also expecting EBITDA growth with a modest improvement in EBITDA margin.

Where next for its shares?

Opinion remains divided on where the A2 Milk share price is heading from here.

Bell Potter is bullish and has a buy rating and $6.60 price target on its shares.

Whereas analysts at Morgans are sitting on the fence with a hold rating and $5.87 price target and Macquarie is bearish with its underperform rating and lowly $4.25 price target.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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10 October 2022
These 3 ASX shares hold top spot as my favourite dividend deliverers
The investment style of my portfolio is to own ASX dividend shares. As I’ve previously written about, every one of my holdings pays a dividend.

I’m a fan of the green energy initiatives of Fortescue Metals Group Limited (ASX: FMG) and the company’s big dividend, though the dividend is not consistent enough to be one of my top picks.

I also like what Altium Limited (ASX: ALU) is doing with its core and newer software offerings relating to electronics. The business has an impressive dividend growth streak going on, though the dividend yield isn’t big enough to really count as an ASX dividend share.

But, these three are my favourites in the portfolio:

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Soul Pattinson is one of the oldest investment businesses in Australia.

It started off as a pharmacy business, however, it has since made many investments in companies like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), and Macquarie Group Ltd (ASX: MQG).

One of the main things that I like about this ASX dividend share is that the annual dividend has been increased every year since 2000.

The company has managed to do this by building a portfolio of defensive investments that can produce reliable cash flow, funding the dividend even in difficult times like the GFC and COVID-19.

The portfolio also continues to become more diversified. It reinvests the retained cash flow into more opportunities each year.

In FY22, it grew its annual dividend by 16.1% to 72 cents per share. That works out to a grossed-up dividend yield of 3.75%.

WAM Microcap Limited (ASX: WMI)

I don’t normally write about listed investment companies (LICs) but, for my own portfolio, I think this one makes sense.

There are hundreds of companies outside the S&P/ASX 200 Index (ASX: XJO). I wanted exposure to the small-cap ASX share space, but I think I’d need a lot of hours to research the many smaller opportunities properly. So, I’m happy to delegate the hunt for investments to others.

I think the Wilson Asset Management investment team has done well at finding small-cap ASX shares. The LIC structure allows WAM Microcap to turn investment returns into large and growing dividends, making it an ASX dividend share.

The ordinary FY22 dividend grew by 25% to 10 cents per share. That equates to a grossed-up dividend yield of 9.5%.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX dividend share that has a long history.

It has maintained or grown its dividend every year for more than 40 years. I like that type of stability for my dividend income.

I think it has a number of good assets, which also makes it attractive to me.

For starters, it has a long-term cross-holding of Soul Pattinson shares. Soul Pattinson owns Brickworks shares and Brickworks owns 26.1% of Soul Pattinson.

As I’ve already discussed, Soul Pattinson is a resilient business that pays a growing dividend. So, that is a good source of cash flow to fund the majority of the Brickworks dividend.

The other key element of the Brickworks business that I like is the industrial property trust that it operates along with Goodman Group (ASX: GMG). Impressive warehouses are being built on excess Brickworks land that has been sold into the trust.

The trust continues to complete projects which, in turn, is increasing the value of the trust and generates development profits for the business. Brickworks’ 50% share was worth $1.54 billion at 31 July 2022.

At the end of FY22, the ASX dividend share had an inferred asset backing of $33.15 per share. As such, I think that the Brickworks share price is valued at an attractive discount to the underlying value of its assets.

The FY22 annual dividend was grown by 3% to 63 cents per share. That equates to a grossed-up dividend yield of 4%. Added to that, I think the company’s expanding US brickmaking business is also promising.

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Motley Fool contributor Tristan Harrison has positions in Altium, Brickworks, Fortescue Metals Group Limited, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom 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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10 October 2022
The bear market is becoming a passive-income investor’s dream
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.

A bear market can be brutal for investors. The more than 20% decline in stock prices has many investment portfolios well off their recent peak.

However, bear markets can be a blessing in disguise if you own dividend-paying stocks. That’s because there’s an inverse relationship between stock prices and dividend yields. With the bear market taking stock prices down sharply, dividend yields are soaring. That allows investors to reinvest their dividends at higher yields. They can also use their idle cash to generate more income. That can enable investors to supercharge their passive income.

Get more out of your reinvested dividends

Some investors automatically reinvest their dividends, while others manually invest that cash as they see fit. Either way, a bear market turns that dividend income into even more passive income.

For example, if an investor owned 100 shares of Crown Castle (NYSE: CCI), a leading real estate investment trust (REIT) focused on communications infrastructure, they’d receive $147 per quarter in dividends. If they reinvested that money into buying more shares of Crown Castle earlier this year when shares had a 2.6% dividend yield, it would boost their annualized dividend income by $3.80.

However, with shares falling more than 20% this year, the stock now yields 4%. Because of that, if an investor reinvested the company’s $147 quarterly dividend payment at that yield, it would add $5.88 of annualized incremental dividend income. While $2 of additional annual dividend income might not sound like much, it adds up as it gets reinvested and compounded over the years. Crown Castle expects to grow its dividend by 6% to 8% per year, powered by increasing demand for communications infrastructure to support the build-out of 5G networks.

Meanwhile, Crown Castle shareholders who don’t automatically reinvest their dividends have the flexibility to invest that money into an even higher-yielding opportunity. For example, they could buy shares of VICI Properties (NYSE: VICI), a REIT focused on experiential real estate. It currently yields 5.1%. Because of that, an investor could turn their $147 Crown Castle dividend payment into a $7.50 and growing passive income stream by purchasing shares of the higher-yielding VICI Properties. The casino owner has recently increased its payout by 8%, its fifth raise since its formation.

Turn idle cash into an attractive passive income stream

In addition to earning more income by reinvesting dividends, bear markets allow investors to turn cash sitting on the sidelines into a passive income stream.

For example, shares of Agree Realty (NYSE: ADC) have fallen more than 15% from their recent high. That has pushed up the REIT’s dividend yield to 4.1%. At that rate, an investor could turn $1,000 of idle cash into a $3.40 monthly passive income stream ($41 annualized) since it pays a monthly dividend. That income stream will likely steadily rise in the coming years. Agree Realty has grown its dividend payment by 7.8% over the past year and at a 5.5% annual rate over the last decade. The REIT has a solid financial profile, giving it the flexibility to continue acquiring income-producing real estate to keep growing the dividend.

Meanwhile, the bear market has brutalized shares of Digital Realty (NYSE: DLR). The data center REIT’s stock is down over 40%, pushing its dividend yield above 5%. That would turn a $1,000 investment into a $50 (and growing) annual passive income stream. The company increased its payout by 5% earlier this year, marking its 17th straight year of giving investors a raise. With a strong balance sheet and a large pipeline of data centers under development, Digital Realty should be able to continue growing its dividend in the future.

Bear markets can accelerate your passive income

For those fully invested in non-dividend-paying stocks, bear markets are a difficult time. However, they’re an opportunity for those with cash or income-producing assets. Bear markets can accelerate investors’ capacity to generate passive income because they can turn dividend income and idle cash into bigger income streams. That can enable investors to make more money in the future, putting them even closer to reaching their financial goals.

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

The post The bear market is becoming a passive-income investor’s dream appeared first on The Motley Fool Australia.

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Matthew DiLallo has positions in Crown Castle, Digital Realty Trust, and VICI Properties Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Crown Castle and Digital Realty Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended VICI Properties Inc. 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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10 October 2022
Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here’s the lowdown
The three months ended 30 September were rough on the broader market. Yet Wesfarmers Ltd (ASX: WES) shares gained over the period.

After closing June trading at $41.91, the Wesfarmers share price was $42.72 at the end of September. That marks a 1.93% gain for the most recent quarter.

Indeed, at its highest point of the quarter, the S&P/ASX 200 Index (ASX: XJO) retail-focused conglomerate’s stock was swapping hands for $49.27 – 17.5% higher than its June close.

Meanwhile, the ASX 200 tumbled 1.43% over the September quarter.

So, what pushed the Wesfarmers share price to outperform the market? Let’s take a look.

What went right (and wrong) for Wesfarmers shares in Q1?

Certainly, the September quarter was rough on both the ASX 200 and Australians’ back pockets.

The Reserve Bank of Australia hiked interest rates from 0.85% to 2.35% over that period while high energy prices and inflation also took their toll on consumers.

Of course, what’s bad for consumers is generally also bad for S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) shares. And such impacts seemingly took their toll late in the quarter.

However, Wesfarmers’ full-year earnings, released in August, surpassed expectations.

The company posted $36.8 billion of revenue – up 8.5% year on year — and $3.6 billion of earnings before interest and tax, down 3.8%. Its after-tax profits slumped 1.2% to $2.35 billion.

The ASX 200 favourite also upped its full-year dividend offering by 1.1%, declaring a $1 final dividend. That was paid out last week.

Finally, it revealed the first seven weeks of financial year 2023 had brought continually robust trading conditions and benefits for both the company’s retail businesses – including iconic Aussie hardware store Bunnings – and its industrial businesses.

That might have bolstered the market’s hopes for the stock just in time for a September downturn.

The Wesfarmers share price tumbled 9% last month compared to the ASX 200’s 7.3% slump.

And while the stock outperformed over the September quarter, it closed the period nearly 29% lower than it started 2022. For comparison, the ASX 200 dumped close to 15% over the first nine months of the year.

The post Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here’s the lowdown appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended 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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10 October 2022