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You don’t have to invest large sums of money into the share market to generate meaningful ASX dividend income.

If you’re willing to be patient, then making small investments on a regular basis can grow into something substantial thanks to the power of compounding.

Compounding is what happens when you earn interest on top of interest, or returns on top of returns in the case of ASX shares.

Creating $2,000 in annual dividend income

Over the long-term, share markets have generated average returns of approximately 10% per annum.

While there’s no guarantee that this will be the case in the future, it is reasonable to target such a level of return, so we will base our assumptions on it.

With that in mind, if you were to invest $100 per month into ASX shares and earned the market return, you would have a portfolio valued at $40,000 after 15 years.

Once your portfolio has reached that level, it’s possible that you could adjust your holdings so that they average a dividend yield of 5%. This isn’t too hard to accomplish. For example, ASX shares such as Accent Group Ltd (ASX: AX1) and Westpac Banking Corp (ASX: WBC) offer yields comfortably above 5% at present.

Doing so, would mean that your portfolio generates $2,000 in ASX dividend income for the year. All without having to lift a finger.

But it won’t stop there.

Growing your income

If your portfolio also continues to grow at the market rate, you would see the value of your portfolio increase an additional 5% each year after dividend withdrawals.

So, without making any further contributions, your portfolio would grow to be worth $65,000 in 10 years and $83,000 in 15 years.

If you were to generate a 5% dividend yield on portfolios of these sizes, your annual ASX dividend income would become $3,250 and $4,150, respectively.

All in all, I believe this demonstrates how it is possible to generate a meaningful and growing source of passive income from modest investments.

The post How investing $100 per week can create $2,000 in annual ASX dividend income appeared first on The Motley Fool Australia.

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More reading

• Is the blistering rally in ASX 200 bank shares overdone?
• Why Accent, Cettire, Dicker Data, and Iress shares are dropping today
• Why is the Accent share price sinking 6% today?
• Forget Westpac and buy these ASX dividend shares
• Got $5,000? Buy and hold these ASX value stocks for years

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We’ve all been there once.

It’s a scary step to invest in stocks for the first time. You’ve yet to experience the ups and downs first-hand, so it’s hard to know whether you’re doing the right thing.

If you’re in this spot, I want to try to make that first step a tad easier.

Here are two ASX shares that I’d start a blank portfolio with:

A balance between risk and reward

Xero Ltd (ASX: XRO) is an oldie but a goodie for beginners.

It’s a well-established $20 billion company now, but still has much room to grow. So I feel like the S&P/ASX 200 Index (ASX: XJO) stock is a nice balance between risk and reward for those taking the plunge for the first time.

Despite some major shocks over the past five years, such as COVID-19 and steeply rising interest rates, Xero shares have managed to gain a tidy 172%.

The New Zealand business has shown it can adapt to changing conditions. Last year, a new chief executive was brought on to pivot Xero from a cash-burning technology startup to one that’s more focused on positive cash flow.

And the market has warmed to that new philosophy, sending the Xero share price 69% upwards over the past 12 months.

Even after that, nine out of 12 experts currently surveyed on broking platform CMC Invest are still recommending the stock as a buy.

The ASX shares that aren’t really an investment in shares

Maybe you are investing in shares to get away from unaffordable Australian real estate, but there’s a way to have your cake and eat it too.

Vanguard Australian Property Securities Index ETF (ASX: VAP) is an exchange-traded fund (ETF) that replicates the constituency of the S&P/ASX 300 A-REIT Index.

That index, in turn, represents the real estate investment trusts (REITs) from the 300 biggest companies on the ASX.

With the prospect of stability and even a cut in interest rates, the property market is already buoyant, sending the VAP share price 32% higher since late October.

But the fact remains the ETF is still more than 30% down from its 2021 peak. And we all know how much Aussies love real estate.

VAP also hands out quarterly distributions, which currently stand at around 3.4% yield.

The post Beginners: Buy these 2 ASX shares to start your portfolio appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Best ASX growth stocks to consider buying in March
• Goldman Sachs has added this ASX 200 tech stock to its APAC conviction list
• Top brokers name 3 ASX shares to buy next week
• Here’s how the ASX 200 market sectors stacked up this week

Motley Fool contributor Tony Yoo has positions in Vanguard Australian Property Securities Index ETF and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is very close to its all-time high right now, closing the trading day at 7,733.5 points on Wednesday. Would Warren Buffett buy ASX shares at these prices?

Firstly, I don’t think Warren Buffett would actively buy something because it’s at an all-time high.

Keep in mind that a company’s share price can go up and be cheap, or go down and be expensive. It’s more about the value on offer than the price.

Don’t swing at every pitch

One of the most helpful pieces of advice that Buffett has said about this topic is a comparison between baseball and investing. Essentially, you don’t have to swing at every baseball delivery. The investing legend once said:

The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.

Buffett referred to a book by one of the great baseball batters, Ted Williams, who waited for the right pitch to swing at, rather than going for the wrong pitches. Buffett said:

If he waited for the pitch that was really in his sweet spot, he would bat .400. If he had to swing at something on the lower corner, he would probably bat .235.

Of course, that’s not to say that we can’t find opportunities during this time. There are lots of good businesses that we can invest in. I’m still investing, even if they’re not as cheap as four or five months ago.

Is it good value?

Good companies should be able to grow their earnings and deliver decent investment returns, in my opinion. But we shouldn’t buy an ASX share at any price. Buffett once explained:

For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.

But if the price is good enough, it can deliver good returns and hopefully outperform. As Buffett said:

It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.

My 2 cents on whether Warren Buffett would buy ASX shares today

I think he’d be less willing to buy ASX shares today than if the question was posed in October 2023.

However, the ASX share market being at an all-time high wouldn’t stop him from buying if he could see a good opportunity.

I don’t know which ASX shares Buffett would invest in this week, but I do know what I’m going to buy next. I’ll write about that next week when trading rules allow.

The post Would Warren Buffett buy ASX shares in a raging bull market? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• How will today’s GDP numbers hit the ASX (and interest rates)?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Key takeouts for ASX shares this earnings season: CBA analysis

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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Just $9,000 could start your journey into the delicious world of passive income.

In fact, I reckon you’re in with a shot of generating a perpetual monthly payment of $500 if you play your cards right.

Don’t believe me?

Check out this hypothetical:

Go the growth shares, I reckon

With $9,000, I would construct a diversified portfolio of ASX growth shares.

Although the Australian stock market suffers from the stereotype that it’s dominated by dividend stocks, there are plenty of excellent growth investments out there.

Take Telix Pharmaceuticals Ltd (ASX: TLX) and Audinate Group Ltd (ASX: AD8), for example.

Both are well established businesses mature enough to be in the S&P/ASX 200 Index (ASX: XJO).

Yet the Audinate share price has soared more than 305% over the past five years, equating to a compound annual growth rate (CAGR) of 32%.

As for Telix? Its investors are tickled pink as the stock returned a mind-blowing 1,647% in the last half-decade.

That’s a CAGR of 77%.

So I reckon it’s within the realms of possibility that you could build a portfolio that could average 13% of growth a year.

Passive income later requires discipline now

That’s not all though.

You want to keep saving and adding to this investment.

If you can spare $100 a week or $400 a month, the nest egg will grow in no time.

After just five years of that savings discipline with a CAGR of 13% will see the portfolio reach $47,687.

Beyond that, try selling off the 13% return each year instead of leaving it in the portfolio.

That will reap an average of $6,199 per annum, which is $516 of monthly passive income.

Whoomp, there it is.

What if that passive income isn’t enough though?

You just need to add patience to the pot.

Let the portfolio grow for 10 years instead of five, and it will have hit $118,965.

From that point on if you cash in your winnings each year that’s a cool $15,465. In monthly terms, that’s $1,288 of passive income.

Nice work.

The post $9,000 in savings? Here’s how I’d try to turn that into $516 a month of passive income appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares smashing 52-week highs that are STILL BUYS
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• Here are the top 10 ASX 200 shares today
• 1 ASX stock I think is just as hot as Nvidia (without all the hype)

Motley Fool contributor Tony Yoo has positions in Audinate Group and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended Audinate Group. The Motley Fool Australia has recommended Telix Pharmaceuticals. 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 post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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• How will today’s GDP numbers hit the ASX (and interest rates)?
• Magellan share price leaps 8% as funds grow up and flow out
• Why DroneShield, Magellan, Platinum, and Zip shares are rising today
• 5 things to watch on the ASX 200 on Wednesday
• 2 ASX shares with attractive ‘risk-reward’ balance to buy right now

Motley Fool contributor Sebastian Bowen 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 Corporate Travel Management. The Motley Fool Australia has recommended Corporate Travel Management. 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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Today, we got the latest economic report from the Australian Bureau of Statistics (ABS). And it wasn’t pleasant reading for anyone who wants to see the Australian economy (specifically its gross domestic product (GDP) running on all cylinders at full steam ahead.

The ABS informed us, in contrast, that the Australian economy grew by a seasonally adjusted 0.2% over the three months to 31 December 2023, putting its annualised growth at 1.5% for the 12 months to 31 December. That’s the slowest annual growth rate since the pandemic began.

Even more worryingly, the economy actually contracted before we account for the benefits of population growth. The ABS stated that “strong population growth saw GDP per capita fall 1.0 per cent over the year”.

The ABS’ data also showed that household savings increased, while household consumption rose “a meagre 0.1%”. Imports also fell over the quarter.

In some good news, labour productivity was up 0.5%, which helped wages rise 0.9% for the quarter and 4.2% year on year. That’s the highest annual wage growth recorded since 2009.

Business investment also ticked up by 0.7% during the quarter, marking the 14th quarterly rise in a row.

So why is the share market up on this GDP news?

Before this report became public, the S&P/ASX 200 Index (ASX: XJO) was having an awful day. But the release of this data seemed to put a spring in investors’ steps, with the index now healthily in the green with a 0.08% rise to over 7,730 points at present.

Since 12:30 pm, the ASX 200 has added 0.4%.

So investors appear to be celebrating this news. Why? Well, the only possible explanation is the impact this data might have on the Reserve Bank of Australia (RBA)’s next interest rate move.

As many investors would know, interest rates have a direct and meaningful impact on the share market. Higher rates, as Warren Buffett once put it, tend to act like gravity on asset classes characterised as ‘risky’. That, of course, includes shares. Because higher rates increase the appeal of ‘safer’ assets like cash and government bonds, shares tend to suffer when rates go up.

But the opposite is also true. Lower rates increase the attractiveness of shares as the yield available from cash investments and government bonds is degraded.

With economic growth slowing, the RBA might be keener to start cutting rates sooner rather than later.

The ASX has arguably been reaching new all-time highs in recent weeks partly for this very reason. Investors and commentators have been growing bolder with their predictions for rate cuts in 2024 for a while now, and these latest GDP figures will do nothing to dampen that speculation.

Judging by today’s post-announcement market recovery, it may be increasing it.

Let’s see what happens next.

The post How will today’s GDP numbers hit the ASX (and interest rates)? 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
• Key takeouts for ASX shares this earnings season: CBA analysis
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen 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 Super Retail Group Ltd (ASX: SUL) share price dropped more than 1% today after the ASX retail share went ex-dividend.

This is the business behind Supercheap Auto, Rebel, BCF and Macpac.

Ex-dividend date

Today is the ex-dividend date, which is the day that new investors are no longer entitled to the upcoming FY24 half-year dividend. If buyers aren’t going to receive the upcoming dividend, they’re probably not going to want to pay as much for Super Retail shares.

Super Retail is going to pay a fully franked interim dividend of 32 cents per share. This dividend is going to be paid on 12 April 2024, which is a month and a week away.

The 32 cents per share represents a fully franked dividend yield of 2.1% and a grossed-up dividend yield of 3% at yesterday’s share price.

The company generated statutory earnings per share (EPS) of 63.5 cents, so the dividend payout ratio is roughly 50%. The company is paying half of its profit to shareholders and retaining half within the business, which can be used for growth spending and/or improving the balance sheet.

This payout is 6% smaller than the FY23 half-year payout a year ago.

What next for Super Retail shares?

The company is projected to pay an annual dividend per share of 80 cents in FY24, according to Commsec. This would be a cut compared to FY23, but would still represent a dividend yield of 5.4% or a grossed-up dividend yield of 7.7%.

In terms of the outlook, it said FY24 second half like for like sales were down 3% year over year.

It said demand in the auto category remains “resilient”, particularly for products that keep customers’ cars on the road including batteries, lubricants and wipers.

Rebel is cycling elevated sales in the prior corresponding period.

BCF’s fishing category is continuing to “perform well”, though trading has been disrupted by wet weather events.

Macpac has made a “positive start” to the second half.

The business is seeing signs of a more subdued consumer environment, but it’s “relatively well-positioned”. It’s focusing on optimising the margin and “driving cost efficiencies”. It’s still seeing inflation in wages and rent costs.

Super Retail share price snapshot

In the last six months, the Super Retail share price has risen around 25%.

The post Why did Super Retail shares drop after going ex-dividend? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Move quickly if you want to receive the Super Retail dividend
• 34 ASX 200 shares with ex-dividend dates next week
• How I’d invest $250 a month in ASX dividend shares to target a $24,000 annual second income
• Morgans says these ASX shares are buys (with special dividends to come)

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 Super Retail Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) bank shares have been on a tear over the past six months.

And a growing number of analysts are cautioning that the rally may be getting overheated.

Here’s how the big four bank stocks have performed over the past six months:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares have gained 15.2%
• National Australia Bank Ltd (ASX: NAB) shares are up 19.0%
• Westpac Banking Corp (ASX: WBC) shares have gained 26.7%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 16.5%

For some context, the ASX 200 has gained 6.4% over this same period.

The blistering rally sees ASX 200 bank shares trading at more than one-year highs. On Monday, the CBA share price notched a fresh all-time high. Australia’s biggest bank closed the day at $118.12 a share.

Are ASX 200 bank shares getting frothy?

Concerns that the rally may be running out of steam are being fuelled on several fronts.

First, there’s the increasing level of bad debts reported by the ASX 200 bank shares as more customers come under pressure from high interest rates.

The level of non-performing loans hasn’t reached critical levels yet. And the banks are well-capitalised to withstand some impairments. But should bad debt levels continue to rise, investors may start to rethink their portfolio holdings.

Second, net interest margins among the banks are coming under pressure amid intense competition in the lucrative Aussie mortgage market. This is crimping profit margins and could also see the ASX 200 bank shares come under selling pressure down the road.

E&P Capital analyst Azib Khan is sceptical on the big share price gains of the last six months, with investor exuberance about pending interest rate cuts potentially sending the bank stocks unjustifiably high.

According to Khan (quoted by The Sydney Morning Herald), “Prospects of interest rate cuts have seen bank share prices get ahead of themselves. While rate cuts may well prove beneficial for bank earnings, [future earnings forecasts] already appear quite optimistic.”

Morgan Stanley equity analyst Richard Wiles flagged the historically high forecast price-to-earnings (P/E) ratios the ASX 200 bank shares are trading on as a potential warning sign.

“In our view, the major banks did not deliver the material upgrades to earnings, dividend or buyback expectations necessary to support current multiples,” Wiles said.

There you have it.

Proceed with caution.

And, as always, if you’re unsure of where or how to invest your money, seek out some professional help.

The post Is the blistering rally in ASX 200 bank shares overdone? appeared first on The Motley Fool Australia.

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More reading

• ANZ shares push higher amid asset sale and dividend bump hopes
• Forget Westpac and buy these ASX dividend shares
• An 8% yield on CBA shares? Here’s how these passive income investors achieved it!
• Investing in an ASX share portfolio for lifelong passive income!
• 3 ASX 200 shares I think could grow to be bigger than BHP one day

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 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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Many ASX investors, and certainly those who own ASX lithium stocks, would be aware that this corner of the share market has had a rough trot in recent months.

Lithium shares are certainly not immune from wild swings. But the downturn we’ve seen over the back half of 2023 and into 2024 is one of the worst slumps investors have had to deal with in a long time.

Nowhere is this more evident than on the ASX short-seller lists. Every Monday, my Fool colleague James publishes a list of the ASX’s most short-sold shares. For months now, ASX lithium stocks have been a constant presence on this list.

Just look at this week’s list. Pilbara Minerals Ltd (ASX: PLS), Core Lithium Ltd (ASX: CXO) and Sayona Mining Ltd (ASX: SYA) all featured prominently. Pilbara, the largest lithium stock on the ASX, even came in at the number one spot, with a whopping 21% of its outstanding shares being held in a short position.

When an investor shorts a share, they actually borrow someone else’s shares and sell them with a promise of returning them at a later date. If the share price has fallen over this period, they make a profit.

When will the shorters stop targeting ASX lithium stocks?

Obviously, ASX lithium stocks would have proved to be very fertile ground indeed to farm for short-selling gains recently. And judging by this week’s short-seller report, that short interest doesn’t look like it’s fading.

However, long lithium investors might soon get some breathing room, if recent forecasts prove accurate.

Shorters only target companies that they think have a reasonable chance of losing value. With the price crash of lithium and its derivative materials over the past eight months or so, these companies were always going to be a treat for short sellers. But if lithium prices start picking up, we could see those same short sellers run for the door.

We’ve already seen signs of a recovery. Pilbara shares, for instance, are up more than 23% from their 52-week low from only a few months ago. That’s probably thanks to a slight recovery in lithium prices over 2024 to date.

Earlier this week, my Fool colleague went over the views of analysts from Macquarie. They were bullish on lithium’s immediate future, stating that “we believe lithium demand growth could outpace that of batteries in 2024”.

They added that “We believe that the significant month-on-month increase in battery production plans in March may indicate that demand is better than market expectations”.

However, at a similar time, we also covered the views of ASX broker Goldman Sachs. Goldman is forecasting only improvements in the lithium carbonate and lithium hydroxide prices every year from now until 2027. Goldman was slightly more bearish on lithium spodumene, but thinks this compound will start rising as well after a dip in 2025.

If the recovery in lithium prices is as modest as Goldman is projecting, it could mean that it might be a while before we see ASX lithium stocks like Pilbara back at record highs. But it could also mean short-sellers might finally move onto greener pastures. We’ll have to wait and see though.

The post Could the big short of ASX lithium stocks be nearing its end? appeared first on The Motley Fool Australia.

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More reading

• Why is the Core Lithium share price down 14% in two days?
• 2 ASX 200 shares I recently sold
• Why are ASX lithium shares like Pilbara Minerals crashing on Tuesday?
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Motley Fool contributor Sebastian Bowen 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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If you’re on the lookout for some income options, then it could be worth checking out these ASX dividend stocks listed below.

Here’s what analysts are saying about these buy-rated shares:

Coles Group Ltd (ASX: COL)

The first ASX dividend stock for income investors to look at is supermarket giant Coles.

Morgans is a fan of the company following earnings season, particularly with its results coming in ahead of expectations. It was also pleased to see its sales growth outperform its arch rival early in the second half of FY 2024.

In light of the above, the broker is now forecasting fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $16.31, this will mean dividend yields of 4% and 4.2%, respectively.

Morgans currently has an add rating and $18.70 price target on its shares.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend stock that could be a buy is Dexus Convenience Retail REIT.

It is a property company that owns a portfolio of service station and convenience retail assets located across Australia but concentrated on the eastern seaboard.

Bell Potter likes the company due partly to its attractive valuation and generous forecast dividend yields.

In respect to the latter, the broker is forecasting dividends per share of 20.9 cents in FY 2024 and 20.7 cents in FY 2025. Based on its current share price of $2.70, this equates to yields of approximately 7.7% in both years.

The broker has a buy rating and $3.00 price target on its shares.

The post 2 buy-rated ASX dividend stocks for income investors in March appeared first on The Motley Fool Australia.

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More reading

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• If I were 60 I’d buy these ASX shares for dividends

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 positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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