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If you’re looking for dividend shares to boost your income, then you may want to check out the two listed below.

Here’s why these ASX dividend shares have been rated as buys:

Centuria Industrial REIT (ASX: CIP)

The first ASX dividend share to look at is Centuria Industrial.

It is the largest domestic pure play industrial REIT on the Australian share market and the owner of a high quality portfolio of in-demand properties.

Demand has been so strong that last month the company revealed that its occupancy rate increased to ~99% with a weighted average lease expiry of 8.3 years. This helped underpin a 22% increase in funds from operations to $111.7 million.

Analysts at Macquarie were pleased with its performance and appear confident on its outlook. The broker currently has an outperform rating and $3.69 price target on its shares.

As for dividends, Macquarie is expecting dividends per share of approximately 16 cents in FY 2023 and FY 2024. Based on the current Centuria Industrial share price of $2.70, this will mean yields of 5.9% for investors.

Medibank Private Ltd (ASX: MPL)

Another ASX dividend share that has been tipped as a buy is Medibank.

It is of course one of Australia’s leading private health insurers, operating the Medibank and AHM brands.

The team at Citi is positive on the private health insurer and recently put a buy rating and $4.00 price target on its shares.

Citi was pleased with Medibank’s full year results and expects more of the same in the coming years. Particularly given its positive exposure to higher interest rates.

In light of this, the broker is expecting Medibank’s shares to provide attractive yields in the near term. It is forecasting fully franked dividends of 15.9 cents per share in FY 2023 and 16.3 cents per share in FY 2024. Based on the current Medibank share price of $3.47, this will mean yields of 4.6% and 4.7%, respectively.

The post Boost your income with these ASX dividend shares: experts appeared first on The Motley Fool Australia.

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More reading

• What is the outlook for the Medibank dividend in FY23?
• The biggest threats and opportunities for ASX industrial REITs revealed: fund manager
• How this ASX 200 REIT is delivering 5% plus dividend yields: fund manager
• What’s the outlook for the Medibank share price in FY23?
• ‘Sweet spot’: Citi names 2 ASX 200 shares that are ‘inexpensive’ right now

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

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It’s been a rough year so far for shares in S&P/ASX 200 Index (ASX: XJO) iron ore (and green energy) favourite, Fortescue Metals Group Limited (ASX: FMG).

The stock has slumped around 16% year to date while the iconic index has dumped 13%.

The Fortescue share price last traded at $16.76. So, could it be about to embark on the path to recovery?

Most brokers think not. Let’s take a look at what experts are predicting for the future of the Fortescue share price.

What might the future hold for Fortescue shares?

Fortescue shares – like those of its fellow ASX 200 materials giants – are often heralded as a dividend haven. Indeed, the company is currently trading with a 12.36% yield, having offered investors $2.07 of dividends per share over the last 12 months.

On top of that, the company has likely garnered interest on the back of its green energy leg, Fortescue Future Industries.

But its apparent commitment to decarbonisation and the energy transition may dint its dividends, according to experts.

Goldman Sachs expects the company’s recently announced plan to decarbonise its Pilbara operations at a cost of US$6.2 billion to likely see its payout ratio drop from 75% to 50% from financial year 2024. Though, the company believes the move will deliver US$3 billion of cost savings by 2030 and payback of capital by 2034.

The broker has a sell rating and a $12.10 price target on Fortescue shares. That represents a potential 28% downside.

Macquarie and Morgan Stanley share similar concerns about the company’s dividends, The Australian reports.

They’re said to have respectively slapped the stock with underperform and underweight ratings and price targets of $14.30 and $15.15.

Meanwhile, UBS analysts are reportedly worried about iron ore prices, leading the broker to tip Fortescue as a sell and hit its shares with a $15.80 price target.

But not all experts are so bearish on the future of the Fortescue share price.

Morgans apparently believes the stock is trading at a decent price right now. It has a hold rating and a $17.30 price target on the company’s shares, as my Fool colleague James reports.

Though, the broker also offers a potentially disappointing outlook for Fortescue’s dividends. It’s expecting the company’s full-year payout to slip to 37 US cents by financial year 2026.

The post Fortescue shares: Buy, hold, or fold? appeared first on The Motley Fool Australia.

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More reading

• Broker gives its verdict on the Fortescue share price
• The Fortescue share price has outpaced the ASX 200 today. Could green dreams be why?
• Is the Fortescue dividend at risk from the miner’s $9b decarbonisation strategy?
• Why has the Fortescue share price been having such a rough trot lately?
• This is how I found a 15-bagger ASX share: fund manager

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX share market is going through plenty of volatility. On Friday, the S&P/ASX 200 Index (ASX: XJO) dropped by another 1.9%.

At the time of writing, the ASX 200 is down 11% over the past six months.

That feels like a big drop. Of course, it was a lot worse during the COVID-19 crash in early 2020 when it fell by more than 30%.

But, the ASX 200’s movements are dictated by a few large blue chips like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP).

There’s a lot more pain than the index would suggest. For example, the Xero Limited (ASX: XRO) share price is down over 20% since mid-August and it has fallen around 50% in 2022 to date.

What’s causing the latest volatility?

This year we can probably put the declines down to a mixture of inflation, rising interest rates and the tailwind of COVID-19 impacts on things like the supply chain.

But, today’s drop could be due to what’s going on in the United Kingdom. While its economy is not quite as big as it used to be, it’s still a member of the G8, a group of eight of the largest economies in the world.

There has recently been a change of prime minister in the UK, as well as a new economic strategy implemented to grow the economy.

As reported by various media, including the Financial Times, the UK’s new chancellor announced plans to cut taxes and increase debt. It will reportedly add 72 billion pounds of borrowing to fund tax cuts and economic growth. Taxes will be cut to the tune of 45 billion pounds, with wealthier households being key beneficiaries.  

What will this do to the UK economy, inflation and interest rates? The market tends not to like uncertainty.

According to a quote by the Financial Times, chancellor Kwasi Kwarteng said:

What I was worried about was low growth. The danger is in choking growth — that’s the danger. The only way we deal with that is by growing the economy.

Markets move all the time. It’s very important to keep calm and focus on the longer-term strategy.

Is this a time to worry?

The thing is, there is always something to worry about on the ASX share market.

Inflation and rising interest rates are influential. So are the effects of the Russian invasion of Ukraine. There are regular concerns about China.

The COVID-19 pandemic was a huge thing to worry about.

Brexit.

Greece.

The GFC.

The dot com crash.

All of these things have unsurprisingly caused a bit of volatility.

Valuations would go through the roof if there were nothing to worry about. Then valuations would be something to worry about.

It’s human nature to have concerns and want to protect yourself.

But, I think it’s moments like this are when it’s best to invest, if we have the funds to do it. Ideally, we’d want to buy shares for the lowest price possible – that normally comes during a bear market, when investors become fearful.

It’s true that it is painful to see your ASX shares fall 20%, 50% or even more. However, for good investments, volatility is the price of entry. Good businesses have historically recovered to former heights, even if it takes a while.

That’s why I think it’s worth always investing in assets I’d want to buy more of in a crash or economic recession. It’s easier to know if it’s an opportunity.

I have been investing during the last few weeks and I’m planning to make multiple investments today/this week. I believe it will help accelerate my long-term wealth-building.

The post ‘Markets move all the time. It’s very important to keep calm and focus on the longer-term strategy’ appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’d invest $2,000 in ASX shares if I’d just turned 18
• Xero share price is tumbling 5%, but could it be worth a buy?
• Goldman Sachs names 2 ASX tech shares to buy now
• 5 things to watch on the ASX 200 on Tuesday
• Why I’m seriously considering buying these ASX shares following today’s market crash

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 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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ASX dividend shares could be a good area to go hunting for investment income opportunities.

Businesses can decide to pay out a sizeable amount of their profit each year to investors. This way, shareholders get to enjoy ‘real’ cash returns each year while, hopefully, also benefiting from the long-term profit growth and capital growth of those companies.

While many of the biggest ASX shares are known for being dividend payers, there are other smaller businesses that could be better long-term picks in my opinion. This is because of their ability to grow. At the same time, some can also be rated as higher quality.  That’s because it’s much harder for a huge business to keep growing at a good pace due to its size to begin with.

That said, I think the following two ideas could be appealing income picks.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)

This is an exchange-traded fund (ETF) based on a portfolio that aims to generate income from quality Australian companies.

The ETF is designed to track the performance of the 25 highest paying ASX dividend shares, excluding real estate investment trusts (REITs), that meet the fund’s required moat ratings and its ‘distance to default’ measures.

An “economic moat” is a way of describing a business’s ability to maintain its competitive advantages and defend its long-term profitability. Some moats include switching costs for customers, intangible assets (like brand power or patents), network effects, cost advantages, and efficient scale.

The Moat Income ETF has a management fee of 0.35% per annum. Some of its biggest positions include IPH Ltd (ASX: IPH), AUB Group Ltd (ASX: AUB), Ansell Limited (ASX: ANN), National Australia Bank Ltd (ASX: NAB), Medibank Private Limited (ASX: MPL), and Wesfarmers Ltd (ASX: WES).

Metcash Limited (ASX: MTS)

Metcash is a supplier to food and liquor shops around Australia. Indeed, it supplies more than 1,600 independently owned supermarket stores, including the IGA and Foodland brands.

In the company’s liquor division, it supplies brands such as Cellarbrations, The Bottle-O, IGA Liquor, Porters Liquor, Thirsty Camel, Big Bargain Bottleshop, and Duncans.

The business also has a hardware segment which includes Mitre 10, Home Timber & Hardware, and Total Tools.

Metcash has a target dividend payout ratio of 70% of underlying net profit after tax (NPAT). In FY22, it increased its dividend per share by 23% to 21.5 cents. It also recently completed a share buyback of $200 million.

At the current Metcash share price, the ASX dividend share has a FY22 grossed-up dividend yield of 7.7%.

In a trading update for the 17 weeks to 28 August, it said that group sales had increased 8.9% with growth in all pillars.

According to CMC Markets, Metcash is expected to pay a dividend per share of 22 cents in FY23. This would translate into a grossed-up dividend yield of 7.9%.

I think that Metcash can continue to grow its business over the longer term, particularly in its hardware division.

The post Building up income: 2 ASX dividend shares I believe are a buy appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• 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 no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended IPH Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd., Austbrokers Holdings Limited, and IPH 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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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.

As the highest-valued company in the world with a market cap of $2.5 trillion, Apple Inc. (NASDAQ: AAPL) regularly makes headlines. However, public scrutiny often increases around September, when Apple regularly announces its updated lineup of iPhones and other products. 

This year has been no different as analysts attempt to gauge the success of 2022’s iPhone 14 series. The launch has had highs and lows, with the costlier models seemingly outselling the base versions for the first time in years. 

Regardless of what might play out with Apple’s latest iPhones, the company has consistently proven its resiliency in the market — and that the MacBook manufacturer is an asset to any portfolio looking for long-term gains. 

Combating stagnation 

As smartphone technology advances, devices are becoming more powerful every year, offering more storage and longer battery life. As a result, tech companies are having an increasingly difficult time convincing consumers that a yearly upgrade is necessary. Apple has remained chiefly unscathed by smartphone stagnation as its ecosystem of interconnected products keeps consumers returning to the iPhone. However, its newest lineup of smartphones is the company’s biggest push to stave off the phenomenon.  

On Sept. 7, Apple unveiled its 2022 lineup of smartphones, including a base model iPhone 14, a larger Plus version, the 14 Pro, and the 14 Pro Max. The smartphones saw Apple widen the gap between the base versions and Pros, pushing consumers toward the more expensive options. For instance, the Pro models received a 48-megapixel camera, up from 12 the previous year, a software update that integrates the camera cut-out into a helpful user interface tool called Dynamic Island, a faster A16 Bionic chip, and a new always-on display feature. 

Meanwhile, the iPhone 14 saw marginal improvements on 2021’s 13, primarily including one extra core in its A15 Bionic chip, an extra hour of battery life, and satellite connectivity in the case of emergencies. As a result, consumers have flocked to the Pro models, with Apple analyst Ming-Chi Kuo reporting that 85% of iPhone 14 orders have opted for the Pro models.

However, not all headlines have been rosy concerning the costlier Pro models. Some users have experienced an issue that makes the rear-facing camera physically shake in third-party apps. Bloomberg reported on Sept. 19 that Apple would release an update to resolve the problem next week, but it remains to be seen whether it is a software or hardware issue. The company’s stock doesn’t seem to be affected by the reports so far, but Apple will be working hard to resolve the problem through a software update as a hardware issue would be costly. 

A winning business model

Apple’s current strategy of pushing consumers toward its Pro models is excellent if it succeeds; however, it does pose some risks. In the second quarter of 2022, Apple sold about 37% more of the base model iPhone 13 and 13 Mini than the two Pro versions in the lineup. The difference is not uncommon, as the iPhone 11 also sold about 80% more than the Pro versions in the first half of 2020. Judging by previous years, the current iPhone 14 Pro models will need to sell significantly more than previous years to make up for the loss of base model sales. 

Despite a slightly questionable iPhone launch, Apple remains a company investors can count on. Its powerful ecosystem of products means that even in the case of poor iPhone sales, the company is likely to continue pulling revenue in from alternate sources. Apple’s walled garden of products makes it easy to draw consumers in with just one product. For instance, iPhone users who upgrade their smartphones every three years are still likely to turn to products such as the MacBook or AirPods to fill other needs because of their connectivity with the iPhone.

That’s also before mentioning Apple’s Services business that includes monthly subscriptions for video streaming, music, a fitness platform, cloud storage, and more. The booming segment saw year-over-year revenue rise 12% in the third quarter of 2022, hitting $19.8 billion, and has become the company’s second-biggest revenue stream after the iPhone.

So is Apple’s stock a buy?

As one of the most innovative companies in the world, Apple is one of the top stocks to invest in for the long-term. In 2022, tech stocks have suffered considerably on the back of inflation rises and declines in consumer demand. The effects are evident in the Nasdaq 100 Technology Sector index’s decline of 36% since January. However, Apple’s more modest fall of 15% in the same time frame proves its stability and resiliency under strenuous conditions. 

September has been a busy month for Apple with a slightly chaotic iPhone launch, but the company remains a safe buy for investors in it for the long haul. 

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

The post Why is everyone talking about Apple stock? appeared first on The Motley Fool Australia.

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More reading

• Should you really buy Apple stock?
• Where will Apple be in 5 years?
• Why investors found Apple stock tempting today
• 60% of Warren Buffett’s portfolio is invested in these 3 stocks
• 5 reasons I wouldn’t touch Shiba Inu with a 10-foot pole

Dani Cook 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 Apple. 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 has recommended Apple. 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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I like the idea of finding investment trends where businesses can benefit from a tailwind that pushes their earnings higher. In my opinion, exchange-traded funds (ETFs) give us the option to get exposure to compelling trends. One of the most interesting ones, in my view, is the VanEck Video Gaming and Esports ETF (ASX: ESPO).

As the name suggests, it’s focused on the video gaming and e-sports industry.

According to VanEck, the video game sector is now larger than both the movie and music industries combined. The top e-sports tournaments are reportedly drawing crowds that rival World Cup football and the Olympic Games. The decade of the 2010s saw “massive growth in viewership and big brand sponsorships”, VanEck says.

How fast is video gaming growing?

Newzoo data shows that video gaming has achieved 12% average annual revenue growth since 2015, while e-sports revenue has grown by an average of 28% per year since 2015.

VanEck also referred to research via Newzoo that the world’s 2.7 billion gamers will spend $200 billion by 2023.

E-sports has created new potential revenue streams for the businesses involved with video gaming such as game publisher fees, media rights, merchandise, ticket sales, and advertising.

What businesses are in the ETF’s portfolio?

Businesses that are in the portfolio need to generate a significant portion of their revenue from the video gaming and e-sports industry.

There are meant to be a total of 25 holdings in the VanEck Video Gaming and Esports ETF portfolio.

Readers may have heard of some of the largest holdings such as Tencent, Activision Blizzard, Nvidia, Advanced Micro Devices, Roblox, Nintendo, Netease, Bandai Namco, and Electronic Arts.

Many of the world’s most popular game titles are covered by the businesses I just mentioned.

The portfolio provides more geographic diversification than other typical ETFs based on a global portfolio. For example, the US represented 41.6% of the portfolio, Japan was 21.7% of the portfolio, China was 17.3%, Australia was 5%, Singapore was 3.5%, France was 3%, South Korea was 2.9%, Sweden was 2.3%, Taiwan was 1.8%, and Poland was 0.8%.

Annual management fee

The ETF has management costs of 0.55% per annum. While this isn’t as cheap as something like Vanguard MSCI Index International Shares ETF (ASX: VGS), there is more to the returns than just the fees.

So what are the returns?

Ultimately, we’re investing to make returns. Since listing, the VanEck Video Gaming and Esports ETF has had a rough time of it amid inflation and rising interest rates.

Since the start of 2022, the ETF has shed 32%. Taking a longer view, however, it has dropped 5.7% since listing to 31 August 2022.

But, this ETF actually tracks an index of gaming shares. The index has existed for more than five years, and has returned an average of 16.2% per annum. However, past performance is not a predictor of future results though.

The post This ETF could be compelling for gaining exposure to a $200 billion industry appeared first on The Motley Fool Australia.

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More reading

• 2 excellent ETFs for ASX investors to buy now
• 2 high quality ETFs for ASX investors in September
• 2 tech ETFs I think are smart buys in September
• Why I’d buy these 2 ASX ETFs right now
• 3 fantastic ETFs for ASX investors to buy 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 positions in and has recommended Activision Blizzard, Advanced Micro Devices, Nvidia, Roblox Corporation, Tencent Holdings, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts, NetEase, and Nintendo. The Motley Fool Australia has recommended Activision Blizzard, Nvidia, VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There is much volatility on the ASX share market right now, as with markets around the world. I think this could prove to be a fine time to go hunting for cheap ASX share opportunities.

Indeed, one of the world’s best-performing and wisest investors Warren Buffett has offered his wisdom on times like these:

Be fearful when others are greedy, and greedy when others are fearful.

Certainly, it could be useful to think with a contrarian mindset. When investors sell off an entire sector or even the entire share market, it could be a sign of longer-term opportunity. It could also be a time to be greedy with sectors that are cyclical.

Retail businesses aren’t always going to have booming sales and profits. When a downturn is seemingly approaching, and share prices drop, it could be fruitful to find some cheap ASX shares that could see a turnaround in the medium term.

While share prices may see the bottom of their decline sooner rather than later, it could take a while for net profits to reach the bottom of their cycle. Share prices often move harder and earlier than companies’ financials.

Adairs Ltd (ASX: ADH)

Adairs is a retailer of homewares and furniture with brands like Adairs, Mocka, and Focus on Furniture.

How much pain are we talking about for the Adairs share price? The ASX share is down by 57% in 2022 at the time of writing. That’s a very large fall. It’s similar to the plunge seen during the worst of the COVID-19 crash in March 2020. However, I don’t think things look as dire now as they seemed then.

For one, shops are now open (with no lockdowns). People still need furniture, bedsheets, and so on. Adairs is still working on plans for growth including opening more stores, upsizing some stores, growing online sales, offering more products, and so on.

The broker Morgans thinks that the Adairs share price is valued at just six times FY23’s estimated earnings with a potential grossed-up dividend yield of 14.7%.

City Chic Collective Ltd (ASX: CCX)

City Chic is a leading retailer that sells clothes, footwear, and accessories to plus-size women. The ASX share has a large presence in Australia, the UK, and the US, while also having a small presence in Europe.

It has been a harsh year for the City Chic share price, which has dropped by 73% in 2022. It last traded at $1.48 a share. While I’m not expecting the share price to get back above $6 any time soon, I think that this much-lower valuation now includes a lot of pessimism.

While FY22 did see elevated inventory as well as negative cash flow (due to a large increase in inventory), it also saw growth. Sales revenue grew by 39% to $369.2 million, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 11.3% to $$7.1 million and underlying net profit after tax (NPAT) increased by 14.5% to $28.5 million.

The ASX share is expecting profitable growth in FY23, with price increases to offset rising costs while also growing market share.

Macquarie’s estimates for the retailer suggest that the City Chic share price is valued at 12 times FY23’s estimated earnings and 11 times FY24’s estimated earnings.

The broker also thinks that City Chic could start paying a dividend in FY23, with a potential grossed-up dividend yield of 8.7%.

The post I think these 2 cheap ASX shares are buys for value investors appeared first on The Motley Fool Australia.

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More reading

• 8 ASX 200 shares got kicked out of the index on Monday. How are they tracking?
• 5 ASX retail shares spruiking the highest dividend yields right now
• The ASX 200 is getting a shakeup today. Here’s the tea
• Out in the cold: How are the ASX 200 evictees faring on Monday?
• Here are the 10 most shorted ASX shares

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 positions in and has recommended ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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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Starting investing in ASX shares can be a daunting prospect for 18-year-olds entering the investment world. Beginners are faced with many different options to consider.

I think it’s worth pointing out that compounding is one of the strongest financial forces. We don’t need to find the next Apple to do well.

The ASX share market has typically averaged around 10% per year over the long term. That doesn’t mean shares will return 10% year after year. There will be some great years and also some difficult years. One year could see a gain of 25% and the next could show a drop of 15%.

Those numbers I was just talking about are for the share market as a whole but, within that, there are even wider swings for individual companies.

I’d also want to point out that it’s probably not necessary for young investors to try to find high dividend yields, and rather focus on businesses that have good long-term growth prospects. That could be a smart tactic right now considering share markets have dropped a fair bit lately. Certainly, it’s a good time to find bargains.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This is an exchange-traded fund (ETF). It’d be a good idea to read up on what an ETF is in the linked explainer. But, essentially, an ETF allows investors to buy a basket of shares as just one investment, rather than having to go and buy 50, 200, or even 1,000 different shares of businesses separately.

Some ETFs are based on an index like the S&P/ASX 200 Index (ASX: XJO) which represents 200 of the biggest ASX shares.

The BetaShares Global Sustainability Leaders ETF is based on investing in 200 of the biggest listed businesses in the world.

But, there’s a big difference because this ETF tries to construct a portfolio that aligns with investors’ ethical standards. I think this could appeal to younger investors.

It excludes a number of industries from its portfolio including gambling, alcohol, and fossil fuels. It also excludes businesses that do animal testing, companies with supply chain concerns, and so on.

In terms of the actual holdings, these are some of the biggest current positions: Apple, Visa, Home Depot, Mastercard, Toyota, Nvidia, and Adobe. I like the global diversification that the ETF provides.

Of course, past performance is not a reliable indicator of future returns but over the past three years, the BetaShares Global Sustainability Leaders ETF has returned an average of 13.3% per year to 31 August 2022.

Xero Limited (ASX: XRO)

Xero is one of the biggest and best technology businesses on the ASX. It’s one of the few tech businesses from the ANZ region to become truly global.

For readers who don’t know, Xero is the provider of cloud accounting software to small and medium businesses. It’s focused on being a platform that helps businesses with many other features, not just accounting.

Why is it such a good business to consider right now? It’s still growing its global subscriber base, even though it already has 3.27 million. It’s also growing its average subscriber fee, its customers are extremely ‘sticky’, meaning Xero retains nearly all of its subscribers each year, and it’s investing for more growth.

One of the most attractive things about the business is its extremely high gross profit margin of 87.3% (which keeps growing every year). This means that means a significant portion of new revenue can turn into gross profit, which can then be spent on things like advertising, software development, and so on — more growth, essentially.

One of the main reasons to consider the ASX share is that the Xero share price is down 48% in 2022 to date. That means it’s a lot cheaper and better value, in my opinion.

The post Here’s how I’d invest $2,000 in ASX shares if I’d just turned 18 appeared first on The Motley Fool Australia.

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More reading

• Xero share price is tumbling 5%, but could it be worth a buy?
• Goldman Sachs names 2 ASX tech shares to buy now
• Here are 2 high quality ETFs for ASX investors to buy right now
• 5 things to watch on the ASX 200 on Tuesday
• How I’d invest $10,000 in ASX shares when starting a family

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 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 Medibank Private Limited (ASX: MPL) dividend might be attractive for some investors focused on investment income.

Medibank is the largest private health insurer in Australia, giving it good scale benefits. This enables it to make a good profit and pay attractive dividends.

Firstly, let’s look at Medibank’s dividend from FY22.

FY22 dividend recap

In the FY22 result, Medibank’s board decided to declare a final dividend of 7.3 cents per share. This was an increase of 5.8% year over year.

Overall, the business saw group net profit after tax (NPAT) fall 10.7% to $393.9 million due to net investment income falling from a $120 million gain in FY21 to a $24.8 million loss in FY22. However, the operating profit rose 12.5% to $594.1 million in FY22.

The full-year dividend was 13.4 cents per share, representing an increase of 5.5% compared to FY21.

Medibank’s full-year dividend represented a payout ratio of 84.8% of underlying NPAT, normalising for investment market returns. This was at the top end of its target payout ratio range of between 75% to 85%.

At the current Medibank share price, this means it has an FY22 grossed-up dividend yield of 5.5%.

How big is the Medibank dividend expected to be in FY23?

Different analysts have different estimates for how much profit and how big the dividend may be from Medibank in the next couple of financial years.

For example, using the estimates on CMC Markets, Medibank is expected to generate earnings per share (EPS) of 18.4 cents in FY23 and 19.1 cents per share in FY24. This could translate into a dividend per share of 15.2 cents per share in FY23 and 15.8 cents per share in FY24. In percentage terms, this could mean a grossed-up dividend yield of 6.25% in FY23 and 6.5% in FY24.

Those dividend yields are pretty sizeable and would be attractive in my opinion. It could be a useful yield in this uncertain economic climate.

Let’s have a look at a couple of the other estimates.

The broker Citi, which rates Medibank as a buy, thinks that Medibank could pay a grossed-up dividend yield of 6.5% in FY23 and 6.7% in FY24.

However, there are other estimates that put future dividends at a lower level. For example, Ord Minnett has projected that Medibank could pay a grossed-up dividend yield of 6.2% in FY23 followed by a grossed-up dividend yield of 6.6% in FY24.

Foolish takeaway

The private health insurer could generate a higher profit in FY23 with policyholder growth (projected by the company to be 2.7% in FY23). There could also be productivity improvements relating to management expenses and targeted organic or ‘inorganic’ growth. It’s also possible that its investments could deliver gains again in FY23.

The post What is the outlook for the Medibank dividend in FY23? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for the Medibank share price in FY23?
• ‘Sweet spot’: Citi names 2 ASX 200 shares that are ‘inexpensive’ right now
• Why is the Medibank share price slipping on Wednesday?
• 5 things to watch on the ASX 200 on Wednesday
• Ready for a storm: 3 ASX 200 shares with ironclad balance sheets

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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ASX shares involved in lithium production continue to be popular, and for good reason.

Analysts at Wilsons reckon demand for the element will expand six- to eight-fold by the end of this decade.

“We don’t believe lithium supply can keep up with this level of demand growth,” equity strategist Rob Crookston said in a memo to clients.

“Lead times for lithium mines (from discovery to production) can take 5+ years, so there is no quick fix.”

With the rising popularity of electric cars and other innovations that require powerful batteries, the Wilsons team is forecasting potentially “large supply deficits from 2025 onwards”.

“While we expect the price of lithium to fade over time, the forecast price profile seems inconsistent with the forecast supply/demand balance,” said Crookston.

“We believe there could be significant upside to the forecast long-term price if there is a supply-demand imbalance and the current price profile looks too pessimistic.”

‘Significant upside’ to this company’s earnings

So which ASX shares is Crookston’s team buying to invest in this thematic?

The memo mentioned four stocks, but out of them Allkem Ltd (ASX: AKE) is Wilsons’ “preferred” exposure.

The analysts cited the company’s position as one of the world’s five biggest producers, processing three different forms — brine, spodumene and hydroxide.

“While we do not expect lithium prices to remain elevated at these levels over the next 12 months, we believe they will be significantly higher than consensus, which is currently pricing at ~US$36,000/tonne (vs. spot of US$73,500/tonne),” said Crookston.

“If this is the case, there should still be significant upside to Allkem’s earnings, leading to analyst upgrades.” 

The Wilsons team also likes the geographic diversity, with operations spread out in Australia, Argentina, Canada and Japan.

Its dominance in the market could also see it attempt some takeovers.

“We believe consolidation is likely in the pipeline for Allkem, one of the biggest players in South America’s ‘Lithium Triangle’. The company could acquire smaller explorers to increase its capacity.”

Three more lithium stocks to buy

Pilbara Minerals Ltd (ASX: PLS) is a pure play lithium producer that the Wilsons team also likes.

“Spodumene production is expected to increase to ~1 million tonnes by FY28, up from 360 kilo tonnes in FY22.”

Moreover the analysts named IGO Ltd (ASX: IGO), which extracts and processes several different commodities involved in green energy, such as nickel, copper and cobalt, as well as lithium.

Perhaps Wilsons’ stock recommendation that is least specialised in lithium is Mineral Resources Limited (ASX: MIN).

“Diversified exposure to predominantly lithium and mining services, as well as (low quality) iron ore,” said Crookston.

“A speculated NYSE spin-off of the lithium business could untap hidden value in the business.”

The post Our 4 favourite lithium ASX shares right now: Wilsons appeared first on The Motley Fool Australia.

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More reading

• Are you attracted to ASX losers?
• 2 stellar ASX growth shares that experts say are buys
• Allkem share price sinks 5% amid Mexico lithium deposit speculation
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here’s which ASX lithium shares investors have been loading up on this month

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

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