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It’s been a slow start to Tuesday’s trading so far for the S&P/ASX 200 Index (ASX: XJO). At the time of writing, the ASX 200 has slipped by 0.07%, and is down to around 7,730 pints. That makes what’s happening with the Coles Group Ltd (ASX: COL) share price appear even stranger.

Coles shares are seemingly getting singled out for some punishment too. The ASX 200 supermarket stock closed at $17.03 a share yesterday afternoon. But this morning, Coles shares opened at just $16.75 each and are currently trading at $16.52. That’s a fall worth a hefty 2.99%.

But investors shouldn’t be too concerned. This steep share price might even be welcomed by some investors. That’s because today is Coles’ ex-dividend date.

Supermarket falls as shares trade ex-dividend

Last month, Coles announced its latest earnings, covering the six months to 31 December. As we discussed at the time, this set of earnings was well-received by investors. Coles reported a 6.8% uptick in revenue from continuing operations, as well as a 4.2% increase in underlying earnings to $1.9 billion.

This led to Coles declaring an interim dividend of 36 cents per share, fully franked, for the period. That’s steady on last year’s interim dividend

However, as we warned last week, Coles is scheduled to trade ex-dividend for this upcoming payment today. That means that anyone who wanted to secure this dividend but didn’t already own Coles shares, needed to own them as of yesterday’s closing bell.

Today, Coles stock no longer comes with the rights to receive this upcoming dividend attached.

As such, Coles shares have just become intrinsically less valuable. So it’s no surprise to see the grocer’s share price take a bit of a hit. This is the norm when a dividend stock trades ex-dividend.

For anyone who owned Coles shares as of yesterday’s close, the dividend payday is set for 27 March later this month.

Coles share price snapshot

Coles shares have bounced since the company reported its earnings last month, leaving the company with a year-to-date gain of 2.23% at present. However, over the past 12 months, the Coles share price remains down by 6.4%.

At current pricing, Coles shares are trading on a dividend yield of 3.98%.

The post How is the Coles share price down 3% today? appeared first on The Motley Fool Australia.

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More reading

• 3 all-star ASX dividend stocks I’d own in retirement to combat falling interest rates
• 5 things to watch on the ASX 200 on Tuesday
• If I were 60 I’d buy these ASX shares for dividends
• Top brokers name 3 ASX shares to buy next week
• 34 ASX 200 shares with ex-dividend dates next week

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 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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Paragon Care Ltd (ASX: PGC) shares are taking off on Tuesday after returning from a trading halt.

At the time of writing, the ASX small cap stock is up 27% to 26 cents.

Why is this ASX small cap stock rocketing?

Investors have been fighting to get hold of the healthcare supplier’s shares after it announced plans to merge with CH2 Holdings.

CH2 is a privately owned, Australian based distributor and wholesaler of pharmaceuticals, medical consumables, and complementary medicines. It has an 85-year history of providing innovative supply chain solutions to the Australian healthcare industry.

According to the release, the two parties have agreed to a “transformative merger” that they believe will create a leading healthcare wholesaler, distributor, and manufacturer operating across growing healthcare markets in the Asia Pacific region.

The combined entity will have estimated FY 2024 pro-forma revenues of $3.3 billion and EBITDA of $93 million. This includes synergies and cost efficiencies of more than $5 million per annum.

As a comparison, Paragon Care recently released its half-year results and reported revenue of $159.5 million and EBITDA of $13.4 million for the six months.

How does the merger work?

Under the merger, it is proposed that Paragon Care will acquire all of the issued share capital in CH2 in exchange for issuing 943,524,071 shares.

This implies a purchase price of approximately $201.5 million based on where its shares last traded.

The merger will be subject to the approval of Paragon Care shareholders by ordinary resolution (>50%) at a general meeting in late May.

The ASX small cap stock’s board unanimously recommends that shareholders vote in favour of the resolutions to be considered at the merger meeting. This is in the absence of a superior proposal and subject to the independent expert’s report.

The post Guess which ASX small cap stock is rocketing 27% on ‘transformative’ merger appeared first on The Motley Fool Australia.

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More reading

• How is the Coles share price down 3% today?
• Is the surging Nvidia share price causing a stock market bubble?
• Guess which ASX lithium stock just surged 94% on a deal with Mineral Resources
• Why is the Lovisa share price sinking today?
• Why did the Tesla share price just tumble 7%?

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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The NVIDIA Corp (NASDAQ: NVDA) share price has been on an incredible run. It’s impressing the market with its strong financial growth. In this article, I’m going to look at whether this is the sign of a stock market bubble.

It’s a fantastic time to own NVIDIA shares and be involved in any company that has genuine exposure to artificial intelligence growth.

Since the start of 2024, the NVIDIA share price has risen 77%. The last year has seen a 262% increase for the company. In five years, it has gone up more than 2,100%.

Is this a stock market bubble?

Some investors may think it’s fair to compare this period to the 1999 dot com bust. Businesses that were involved with the internet that had hardly any revenue (or none at all) were being valued astronomically.

But, NVIDIA, Microsoft and many others are generating lots of revenue.

A few weeks ago, NVIDIA reported quarterly revenue of US$22.1 billion, up 22% quarter over quarter and up 265% year over year. FY24 full-year revenue was up 126% to $60.9 billion.

It also said that underlying earnings per share (EPS) was US$12.96, an annual increase of 288%.

NVIDIA revealed it’s expecting the FY25 first-quarter revenue to be around US$24 billion, which would be a quarter-over-quarter increase of 8.6%.

It’s demonstrating real growth, making huge revenue and posting enormous growth in its profit. The current forecast on Commsec puts the NVIDIA share price at 36 times FY25’s estimated earnings and 30 times FY26’s estimated earnings.

To me, those sorts of forward price/earnings (P/E) ratios are not excessive at all considering how quickly it’s growing. It could deliver stronger growth than what investors are expecting. Microsoft shares are trading at 31 times FY25’s estimated earnings.

I’m not going to call these stocks cheap, and the higher interest rate environment does raise the question of what multiple is fair in the current economic environment.

However, in three years, these large tech stocks may have materially grown earnings and interest rates could be materially lower.

Billionaire investor recently commented on LinkedIn about the stock market bubble question:

When I look at the US stock market using these criteria, it—and even some of the parts that have rallied the most and gotten media attention—doesn’t look very bubbly.

The Mag-7 is measured to be a bit frothy but not in a full-on bubble. Valuations are slightly expensive given current and projected earnings, sentiment is bullish but doesn’t look excessively so, and we do not see excessive leverage or a flood of new and naïve buyers. That said, one could still imagine a significant correction in these names if generative AI does not live up to the priced-in impact.

We can look for instance at Nvidia today versus Cisco during the tech bubble. The two cases have seen similar share price trajectory. However, the path of cash flows has been quite different. Nvidia’s two-year forward P/E is around 27 today, reflecting that, even as the market cap has grown ~10x, earnings have also grown significantly and are expected to continue to grow over the next year or two because of actual orders that we can validate. During the tech bubble, Cisco’s two-year forward P/E hit 100. The market was pricing in far more speculative/long-term growth than we see today.

My 2 cents on share valuations

I’m not an expert on US shares or AI. But, businesses that are delivering strong long-term growth are likely to see rising share prices as the market realises their potential.

Most of the large US tech companies are delivering numbers that justify some excitement. I don’t think we’re seeing a stock market bubble.

Are other industries and businesses reporting numbers that justify their current share prices? That’s what investing in shares is all about – making decisions about price and value.

I was very excited about share prices in late October 2023 and early November 2023, with loads of opportunities. I’m a lot less excited now. I believe business profits and share prices can rise over time from here, and there are still some undervalued areas, in my opinion, while some areas look challenged.

Keep in mind that if economies remain strong, interest rates are likely to remain higher for longer.

For a five-year investment, I’d rather buy a name like Nvidia, Microsoft or Alphabet over Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP) because of the potential earnings growth for those US tech names.

The post Is the surging Nvidia share price causing a stock market bubble? appeared first on The Motley Fool Australia.

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More reading

• Should I buy Nvidia stock as an Australian investor?
• 1 ASX stock I think is just as hot as Nvidia (without all the hype)
• Here’s how the ASX 200 market sectors stacked up this week
• The Brainchip share price is up 213% this month. Is Nvidia to blame?
• Is the Nvidia share price on course to reach US$1,400?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet and Nvidia. 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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A little-known ASX lithium stock is lighting up the boards on Tuesday.

This comes following the announcement of a joint venture agreement with S&P/ASX 200 Index (ASX: XJO) lithium share and diversified resources producer Mineral Resources Ltd (ASX: MIN).

Shares in the small-cap lithium explorer closed on Monday trading for 16 cents.

In earlier trade today shares were swapping hands for 31 cents apiece, up a whopping 94%. After some likely profit-taking, shares are trading for 27 cents at the time of writing, up 67%.

Any guesses?

If you said Dynamic Metals Ltd (ASX: DYM), go to the head of the virtual class.

Here’s why investors are sending the ASX lithium stock flying higher today.

Dynamic Metals shares surge on deal with Mineral Resources

The Dynamic Metals share price is off to the races after the company reported on a binding joint venture and farm-in agreement with HoldCo, a 100% owned subsidiary of Mineral Resources.

Subject to the satisfaction of certain conditions, the agreement will see the ASX lithium stock sell 40% of its lithium mineral rights at the Widgiemooltha tenement package for $5 million.

On completion, Mineral Resources (via HoldCo) and Dynamic will form a 40% / 60% unincorporated joint venture.

Mineral Resources has the right to increase its stake to 65% by sole funding an additional $15 million of exploration over the four years following completion of the agreement.

The deal only relates to lithium. Dynamic Metals will retain the rights to all other minerals at the project.

The agreement will see Mineral Resources pay $400,000 straight off as a signing fee with an additional $3.6 million in cash on completion. The remaining $1 million will be paid on 1 July 2025.

The companies anticipate the deal to be completed in the second quarter of 2024.

Commenting on the agreement sending the ASX lithium stock rocketing today, Dynamic Metals managing director Karen Wellman said:

The Widgiemooltha Project is a regionally significant tenement package that has yet to be fully assessed for its lithium potential. Although we have had some encouraging results with our first pass exploration activities, the sheer size of the Project means that it would likely have taken Dynamic many years and considerable expenditure to assess its potential and realise value…

The initial consideration will be used to advance exploration of our pipeline of new projects, whilst lithium exploration at Widgiemooltha is expected to generate considerable news flow, both short and medium term.

How has the ASX lithium stock been tracking?

With today’s intraday gains factored in the ASX lithium stock is well into the green in 2024.

Since the closing bell on 28 December (the last day it traded in 2023), the Dynamic Metals share price is up 86%.

The post Guess which ASX lithium stock just surged 94% on a deal with Mineral Resources appeared first on The Motley Fool Australia.

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• ASX mining shares up amid Labor plan to spend multibillions on renewables revolution

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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The Lovisa Holdings Ltd (ASX: LOV) share price is having a tough time on Tuesday.

At the time of writing, the fashion jewellery retailer’s shares are down 3.5% to $30.58.

Why is the Lovisa share price under pressure?

The good news for shareholders is that today’s decline has nothing to do with a bad update or a broker downgrade. In fact, today’s decline could be seen as a positive for them.

That’s because the Lovisa share price weakness has been driven by its shares going ex-dividend today for its upcoming interim dividend.

When a share goes ex-dividend, it means the rights to the dividend payment are locked in. So, if you were buying shares today, you would not receive the dividend on pay day. Instead, the dividend would go to the seller of the shares.

In light of this, a share price will generally fall in line with the value of the dividend to reflect this. After all, you don’t want to pay for something you won’t receive.

If you are an eligible Lovisa shareholders, you can now sit back and wait for pay day next month. The company will be paying shareholders a 50 cents per share partially franked dividend on 18 April.

Should you buy shares?

The team at Morgan Stanley may see the weakness in the Lovisa share price today as a buying opportunity.

Last month, the broker put an overweight rating and $32.50 price target on its shares.

However, as this implies only modest potential upside of 6.3% for investors over the next 12 months, it may be better waiting to see if a more compelling entry point emerges in the near future.

The post Why is the Lovisa share price sinking today? appeared first on The Motley Fool Australia.

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• 34 ASX 200 shares with ex-dividend dates next week
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• I’d use the Warren Buffett method and buy this ASX stock

Motley Fool contributor James Mickleboro has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. 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 Tesla Inc (NASDAQ: TSLA) share price closed down 7.2% overnight.

Those losses added to selling pressure on the Nasdaq Composite Index (NASDAQ: .IXIC), with the tech-heavy index closing the day down 0.4%.

Shares in Elon Musk’s EV and tech company closed on Friday trading for US$202.65. At market close, those shares were swapping hands for US$188.14 apiece.

As you can see in the chart above, the Tesla share price soared an eye-popping 102% in 2023.

But 2024 has been a different story so far, with the stock down 24% since the opening bell on 2 January.

Here’s why Nasdaq investors were hitting the sell button again overnight.

Why is the Tesla share price under selling pressure?

Much of the overnight sell-off looks to have been spurred by some gloomy sales data out of China, the world’s top EV market.

According to data from China’s Passenger Car Association, Musk’s company shipped 60,365 vehicles from its Shanghai-based factory in February. That’s down almost 16% from January shipments. And it’s the lowest number of shipments in more than two years, heaping pressure on the Tesla share price.

Atop the falling vehicle sales in China, troubles continue to build for Elon Musk at X (formerly Twitter).

More lawsuits at X

While most of the headwinds buffeting the Tesla share price look to be related to the slumping China sales data, ongoing legal ructions at X could also be stoking investor angst.

As you likely recall, Elon Musk acquired Twitter for US$44 billion back in October 2022.

And not everyone was happy with how that acquisition was carried out.

There are already several class action lawsuits in the works, with sacked workers seeking more than half a billion US dollars in severance pay.

And, as Reuters reports, yesterday saw yet another lawsuit filed on behalf of four former high-ranking Twitter executives. They’re asking for a total of more than US$128 million in unpaid severance.

“This is the Musk playbook: to keep the money he owes other people, and force them to sue him,” Twitter’s sacked executives stated in the lawsuit documents.

As for the 2024 Tesla share price plunge, long-term investors should still be sitting pretty.

Shares in the US EV giant remain up 893% over five years.

The post Why did the Tesla share price just tumble 7%? appeared first on The Motley Fool Australia.

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• Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven
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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 Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Wildcat Resources Ltd (ASX: WC8) share price crashed by 19% shortly after the market open on Tuesday.

This follows the release of drilling results at the flagship Tabba Tabba lithium project in Western Australia.

The Wildcat Resources share price is currently 68 cents, down 12.65%.

The stock hit an intraday low of 63 cents shortly after the opening bell, representing an 18.7% spiral from yesterday’s closing value of 77.5 cents.

Investors appear to be displeased with the latest update, but it’s worth keeping in mind that despite today’s fall the ASX lithium share is still up 2,150% over the past 12 months.

Perhaps today’s price drop is a case of exuberant investors’ expectations being a bit too high.

Let’s check out the details of this update.

Wildcat Resources share price crashes 19% on mine update

Wildcat reported results from its 100,000m drill program at Tabba Tabba today.

The latest results are from the Leia pegmatite, including:

• 119.2m at 1.0% Li2O from 334.3m (TADD010) (estimated true width) including 31m at 1.7% Li2O from 336.0m and 34.5m at 1.2% from 418.5m
• 62.3m at 1.0% Li2O from 223.2 (TARC162D) (est. true width)
• 83.4m at 0.8% Li2O from 314.2m (TARC242D) (est. true width) including 22.7m at 1.4% Li2O from 262.4m
• 84.6m at 0.7% Li2O from 238m (TARC239D) (est. true width) including 9.6m at 1.7% Li2O from 308.4m

Wildcat estimates that the Leia pegmatite is more than 2.2km long with mineralisation extending from the surface to significant depths. The thickest intercept to date is 180m at 1.1% Li2O.

Over the past two months, Wildcat said it has also completed a high-resolution ground gravity and magnetic survey, drone aerial imagery, and a detailed geological map of the tenement package.

What’s next at Tabba Tabba?

Wildcat said results are still pending for 27 holes and 3,294 samples.

Meantime, drilling is underway at the Hutt and Han pegmatites to follow up on last year’s discovery.

The miner is funded to complete the 100,000m drilling program at Tabba Tabba this year.

Wildcat Resources share price history

Wildcat might be a relatively new name to many investors after gaining attention during the 2022 and 2023 lithium boom. But the company has actually been listed on the ASX since 2005.

The Wildcat Resources share price really exploded in 2023, as the graph below shows.

The stock hit a 15-year high of $1.01 in November following the release of assay results from Tabba Tabba.

The miner completed its acquisition of the project in October.

The post Up 2,150% in a year, why is the Wildcat Resources share price crashing today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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 S&P/ASX 200 Index (ASX: XJO) may be slipping into the red today, but the same cannot be said for Medibank Private Ltd (ASX: MPL) and NIB Holdings Limited (ASX: NHF) shares.

Both private health insurers are outperforming today with solid gains.

For example, Medibank shares are currently up 2% to $3.76, whereas NIB shares are up 3.5% to $7.85.

Why are Medibank and NIB shares outperforming?

Investors have been buying their shares this morning after the Australian Government gave the green light to premium increases in 2024.

According to a government release, the Albanese Government has approved an average industry premium increase of 3.03%.

Commenting on the increases, the release states:

The Albanese Government has ensured Australians get value for money from their private health insurance, with the average cost of private health insurance premiums rising at a much slower rate than the increase in wages, the age pension and inflation.

The 3.03 per cent increase is well below the annual rise in wages, social security payments and inflation, with wages rising by 4.2 per cent and inflation increasing by 4.1 per cent in 2023, and social security payments increasing in line with inflation.

NIB increases

NIB has been able to score a larger than average increase to its premiums.

An announcement this morning reveals that its 2024 health insurance premiums will rise by an average of 4.1% from 1 April 2024.

Its CEO, Mark Fitzgibbon, notes that the increase reflects the return of hospital and ancillary treatment post COVID-19, and a rise in health and medical treatment costs. He also highlights that claims inflation has moved back to long-term trends and believes it is crucial that insurers are able to price for this.

Mr Fitzgibbon commented:

We’re not sitting back passively responding to inflationary pressure by just lifting premiums. We have a range of new measures designed to help members maintain good health as well as reduce out of pocket expenses. Essentially, we’re trying to provide members with more value for their premiums.

Medibank will be increasing its premiums by a lower rate of 3.3% for 2024.

The post Why Medibank and NIB shares are outperforming today appeared first on The Motley Fool Australia.

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More reading

• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
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• Buy NIB and this ASX 200 dividend stock 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 positions in and has recommended NIB Holdings. 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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Healius Ltd (ASX: HLS) shares are storming higher on Tuesday morning.

In early trade, the beaten-up ASX 200 stock is up 14% to $1.28.

Why is this ASX 200 stock jumping?

Investors have been buying the healthcare company’s shares this morning after it announced the exit of its CEO, Maxine Jaquet.

According to the release, Jaquet has left Healius with immediate effect and has been replaced by its chief financial officer, Paul Anderson.

While a company’s shares will often come under significant pressure when a CEO leaves abruptly, it seems that the market is cheering on this exit on this occasion. After all, since Ms Jaquet was elevated to the CEO role in March 2023, the ASX 200 stock had lost over half of its value.

It’s possible the market believes a change of leadership was needed to get the company back on the right path.

Strategic review

In other news, the company has announced that it will now commence a wide-ranging strategic review of its structure and assets.

It will engage investment banking advisors to help undertake the review alongside management and the Board of Healius.

The company’s new CEO, Paul Anderson, will lead the strategic review, which is aimed at maximising shareholder value in a changing diagnostics market. It will be undertaken in conjunction with the ongoing Pathology Transformation Reset Program.

Healius’ interim chair, Ms Kate McKenzie, believes Anderson is the right person to lead to review. She said:

Paul is an experienced business leader with an extensive background in industries facing significant disruption. He has strong credentials to lead the strategic review of Healius and we are pleased he has agreed to take on the CEO role as we plan and execute this next stage for our business.

The post Beaten-up ASX 200 stock jumps 14% on CEO resignation appeared first on The Motley Fool Australia.

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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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Much of the investing environment of the past few years has been characterised and shaped by the massive and historically steep run of interest rate rises we’ve all endured. That includes ASX dividend stocks.

Cast your minds back to early 2022, and interest rates were still at the pandemic-induced, record low of 0.1%. But since then, the Reserve Bank of Australia (RBA) has conducted one of the most dramatic pivots in its history.

Thanks to a long string of interest rate rises since 2022, the cash rate today now stands at 4.35%. The last interest rate rise we got was only back in November last year.

Yet most commentators are now expecting the RBA’s next move to be an interest rate cut. Whenever that may be.

The last time interest rates were as high as they are today was in the early 2010s. So it’s very possible that the average interest rate over the next five years will be lower than the current 4.35%.

If that happens, it could have significant impacts on the ASX share market. Income investors and retirees are particularly sensitive to interest rates. When rates are high, many prefer to use safer investments like term deposits instead of ASX dividend stocks.

But I still think dividend stocks are the better choice for a retired nvestor.

So today, let’s discuss three all-star dividend stocks I’d own for a lower interest rate world.

3 all-star ASX dividend stocks for a lower-rate world

Transurban Group (ASX: TCL)

First up is toll road operator Transurban. Now Truansurban was a seemingly safe ASX dividend stock that gave investors a nasty shock during the pandemic. However, I don’t think it’s wise to judge the company’s dividend credentials on that.

The fact remains that Transurban has a unique advantage that makes it a potential dividend stock all-star in both night and low interest rate environments. That advantage is that Transurban has the right to increase many of its road tolls every quarter by the rate of inflation, or 4% – whichever is higher.

This was a talisman for this company in the low-inflation days before the pandemic. Although inflation (and therefore interest rates) was exceptionally low between 2016 and 2020 (under 2% per annum), Transurban was still allowed to keep raising its tolls every quarter by an annualised 4%.

If the RBA moves Australia back to a low-rate environment going forward, this is the reason I’d be looking at this dividend stock.

Coles Group Ltd (ASX: COL)

Coles is another stock I’d have full confidence owning in a falling rate economy. As a consumer staples ASX dividend stock, Coles has the advantage of being able to attract customers through thick and thin.

However, that doesn’t mean the company won’t benefit from falling interest rates. Falling rates mean customers have more money to spend in their pockets. Coles will be able to directly benefit from this, with consumers being less sensitive to price discounts.

Coles stock has already demonstrated its dividend all-star status, having delivered several hikes to its shareholder payouts (and no cuts) in recent years. As such, it would be another dividend stock I’d be happy to hold in a low-rate economy.

JB Hi-Fi Ltd (ASX: JBH)

Finally, let’s discuss electronics and appliances retailer JB Hi-Fi. I’ve long admired JB for its ability to move with the times and deliver relevant goods to its customers. It doesn’t sell too much hi-fi equipment these days, for example.

JB is the kind of retailer that is in line to benefit more than most from falling interest rates. If the RBA wishes to stimulate the economy with rate cuts, one of the first things many Australians will probably do is head out and upgrade their fridge, television or mobile phone. And JB is a choice destination for many Aussies to do so.

JB has had to trim its dividends over the past 12 months or so, no doubt due in part to rising rates. But I would expect this trend to reverse if rates start going down, and would therefore be very happy to buy JB shares in anticipation of this.

The post 3 all-star ASX dividend stocks I’d own in retirement to combat falling interest rates appeared first on The Motley Fool Australia.

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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 positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Jb Hi-Fi. 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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