Tag: The Motley Fool Australia

BHP Group Ltd (ASX: BHP) shares have been getting even more attention than usual in recent weeks.

As the largest company listed in Australia, the S&P/ASX 200 Index (ASX: XJO) mining giant is already a frequent headline leader.

But investor and media interest in BHP shares ramped up to the next level on 26 April. That’s when the miner announced it had made a non-binding offer to acquire Anglo American (LSE: AAL).

The all scrip offer amounted to 31.1 billion British pounds, or roughly AU$60 billion.

As you’re likely aware, BHP is eyeing Anglo American with an eye on its copper assets.

Copper represents 30% of Anglo American’s total production. Should BHP’s takeover succeed, the ASX 200 miner would become the world’s top copper producer, producing around 10% of global output.

Amid growing demand and limited new supplies, the copper price has surged 16% year to date to US$9,905. And most analysts expect copper prices to continue trending higher from here.

It’s a markedly different story for iron ore, the top revenue earner for BHP shares. The iron ore price is down 16% in 2024 at US$116 per tonne, with many analysts forecasting it will trend lower from here.

Take two?

Now, as you’re also likely aware, Anglo American’s board rejected BHP’s offer on 29 April.

Anglo American chair, Stuart Chambers said the offer significantly undervalued the company and its future growth prospects.

Rumour has it that BHP is likely to come back with an improved offer. The company has until 22 May to place a formal offer under UK acquisition regulations.

But if you’re buying BHP shares for the takeover potential, Aitken Mount Capital Partners stockbroker Angus Aitken cautioned the result could be a “complete mess”.

Why BHP shares could get walloped by the Anglo American takeover

According to Aitken (courtesy of The Australian Financial Review), BHP is primarily interested in Anglo American’s copper and coal assets. Meaning that it could look at selling numerous other projects, including the Barro Alto nickel mine in Brazil.

And that could throw up some longer-term headwinds for BHP shares.

According to Aitken:

In our view, this deal really does have the potential to be a complete mess for BHP long-term. This is like BHP is trying to buy a six-bedroom house, just to get the garage. There are multiple large risks in BHP long-term in trying to sell off the assets they don’t want.

He added that this strategy “seems crazy to us”.

And the takeover proposal is far from simple.

“If you are a BHP shareholder and think this is a simple transaction, you have rocks in your head,” he said.

Aitken continued:

BHP are the single worst sellers of assets in the world with Rio Tinto a close second, and yet a lot of this potential deal involves BHP on-selling assets for good prices, and we are cautious on that. How are you going to get a full price for the assets they want to divest when everyone knows you are a non-natural owner of them?”

Certainly, not everyone agrees with Aitken’s bearish take on the proposed acquisition.

Both Argo Investments and Wilson Asset Management believe the takeover can add value to BHP shares over time.

The post Buying BHP shares for the Anglo takeover? Here’s why it might be a ‘crazy’ move appeared first on The Motley Fool Australia.

More reading

• Is it too late to buy surging ASX copper shares like Sandfire?
• How important is copper for the future of BHP shares?
• Buy BHP and these ASX dividend shares in May
• Here’s what moved BHP shares in April
• Maximizing dividends: 3 of the best ASX shares for income investors right now?

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.

It was a huge week for investors in S&P/ASX 200 Index (ASX: XJO) bank shares.

Three of the big four banks reported quarterly or half-year results over the week. And one traded ex-dividend.

Here’s what happened.

Three ASX 200 bank shares reporting results

Westpac Banking Corp (ASX: WBC) released its half-year earnings results on Monday.

For the six months through 31 March, the ASX 200 bank share reported a 4% year-on-year decline in net operating income to $10.59 billion. And ongoing competition saw net interest margins (NIMs) come down 0.07% to 1.89%.

With operating expenses up 8%, Westpac’s net profit before one-offs was down 8% to $3.51 billion.

But management pleased passive income investors by declaring a fully franked dividend of 90 cents per share.

Westpac also announced an additional $1 billion on-market share buyback. Westpac shares closed up 2.7% on Monday.

On Tuesday, it was Australia and New Zealand Banking Group Ltd (ASX: ANZ) that reported half-year results.

As with Westpac, ANZ’s NIM declined, though by a lesser 0.02%.

The ASX 200 bank share’s statutory profit after tax declined by 4% from the prior half to $3.41 billion, with cash profits dipping 1% to 3.55 billion.

Management declared an interim dividend of 83 cents per share, franked at 65%. That’s up from last year’s interim dividend of 81 cents per share.

And not to be outdone by Westpac, ANZ also announced a $2 billion on-market share buyback.

ANZ shares closed up 0.1% on the day.

Two days later, on Thursday, Commonwealth Bank of Australia (ASX: CBA) reported its third-quarter update.

Compared to the prior corresponding quarter, the ASX 200 bank share saw operating income slip by 1%, while operating expenses increased by 2%.

As you’d expect, that led to lower profits for the three months, with unaudited statutory net profit after tax declining 5% year on year to $2.4 billion.

CBA remains well-capitalised with a Common Equity Tier 1 (CET1) ratio of 11.9%. That’s a significant safety margin over the minimum 10.25% ratio required by the Australian Prudential Regulation Authority (APRA).

And one trading ex-dividend

National Australia Bank Ltd (ASX: NAB) reported its half-year results on 2 May, a week earlier.

As with the other ASX 200 bank shares, NAB’s net operating income slipped year on year, down 0.9% to $10.14 billion. The big four bank’s cash earnings declined by 12.8% to $3.55 billion.

That didn’t hold management back from declaring a fully franked dividend of 84 cents per share, up from 83 cents per share last year.

NAB shares traded ex-dividend on Tuesday.

As investors buying the ASX 200 bank share on Tuesday were no longer eligible for the upcoming dividend payment, the NAB share price closed the day down 1.5%.

The post It was huge week for ASX 200 bank shares. Here’s why appeared first on The Motley Fool Australia.

More reading

• Do CBA shares justify their ‘valuation premium’ following the bank’s Q3 update?
• Where I’d invest $7,000 in ASX dividend stocks right now
• 5 things to watch on the ASX 200 on Friday
• Why Baby Bunting, JB Hi-Fi, Temple & Webster, and Westpac shares are falling today
• Why are CBA shares sliding following the bank’s quarterly update?

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.

Investors that are the lookout for technology exposure might want to consider TechnologyOne Ltd (ASX: TNE).

That’s the view of analysts at Goldman Sachs, which see the ASX 200 tech stock as a great option right now.

What is the broker saying about this ASX 200 tech stock?

Ahead of the release of the enterprise software provider’s half year result later this month, Goldman is predicting sales growth ahead of consensus estimates. It said:

We estimate TNE will report (1) SaaS ARR [annual recurring revenue] of A$425mn or +35% y/y vs +34% Visible Alpha Consensus Data; (2) Total revenue of A$241mn or +19% y/y vs A$231mn consensus; (3) Profit before tax of A$62mn or +18% y/y vs +19% consensus. We expect TNE to provide its typical +10-15% full-year PBT growth guidance, although based on recent strong ARR growth in combination with a small amount of margin leverage we expect TNE can comfortably exceed the top-end in November (GSe +16%).

Overall, the broker believes the ASX 200 stock is operating ahead of guidance and feels this isn’t being reflected in its share price. It adds:

In our view TNE’s above-trend ARR and earnings growth outlook, improved earnings visibility and upside levers to management targets (e.g. SaaS+, UK) are not being fully reflected in valuation. Execution on sustainable +115% NRR could help to close TNE’s recent underperformance vs tech peers given 1H24 is the first result without a material sequential cloud flip tailwind (ie. substantially all growth will be underlying).

Decent upside predicted

Today’s note reveals that Goldman has reiterated its buy rating with a slightly improved price target of $18.10.

Based on its current share price of $16.24, this implies potential upside of 11.5% for investors over the next 12 months. The broker also expects a modest 1.4% dividend yield to sweeten the deal further.

But it may not stop there. In its bull case, Goldman sees scope for the ASX 200 tech stock to rise to $27.40, which is almost 70% higher than current levels. It explains:

We highlight our recent TNE bull case analysis of A$27.4 which factors in low-to-mid teens top line growth in ANZ (still assumes the 115% NRR target is not met), as well as a 30% revenue CAGR in the UK, where we ascribe A$21.3 to the ANZ business and A$6.1 for the UK. On this basis, market pricing (A$16.3) could be (1) implying that ANZ NRR decelerates materially below <115% in coming years and that TNE has little success in new product cross-sell; and (2) placing little value on UK, despite recent local government and higher ed customer wins.

The post Buy this ASX 200 tech stock now before it’s too late: Goldman Sachs appeared first on The Motley Fool Australia.

More reading

• These ASX dividend winners keep giving investors a pay rise
• Brokers say this rapidly growing ASX 200 tech stock is a strong buy
• Buy these excellent ASX growth shares for 15% to 20% returns
• These ASX 200 growth shares could rise 12% to 30%
• 5 top ASX growth shares to buy in April

Motley Fool contributor James Mickleboro has positions in Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The QBE Insurance Group Ltd (ASX: QBE) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) insurance company closed yesterday trading for $17.59. At the time of writing in the early morning trade on Friday, shares are changing hands for $17.78 apiece, up 1.1%.

For some context, the ASX 200 is 0.3% at this same time.

This comes following the release of QBE’s performance update for the first quarter of 2024 (Q1 2024).

Here are the highlights.

What did the ASX 200 insurer report?

The QBE share price is marching higher after the company announced a 2% year on year increase in gross written premium for the three months in both a reported and constant currency terms.

Renewal rate increases of 7.3% were in line with the company’s expectations. Management said this “reflected reduced rate increases across certain property and reinsurance lines compared to the prior corresponding period”.

Excluding rate increases, premiums fell 2% in constant currency terms. This was due to lower Crop premium along with property portfolio exits in its North America and Australia operations.

The ASX 200 insurer said it expects organic growth to partially offset the impact of lower commodity prices in its Crop segment. QBE forecasts Crop gross written premium will be around $3.9 billion in FY 2024.

On the claims front, the company had a net cost of catastrophe claims of approximately $300 million in the four months to April. QBE’s catastrophe allowance for 1H 2024 is $609 million.

Management noted that catastrophe costs were driven by a number of storm events, mostly in Australia and North America.

The QBE share price could also be getting some support with the ASX 200 insurer reporting that supportive interest rates and favourable returns in its risk asset portfolio delivered strong investment returns in Q1.

QBE’s first quarter exit core fixed income running yield of 4.7% ticked up from the 4.6% FY 2023 exit running yield.

Total investment funds under management (FUM) of $30.3 billion was up $200 million from FY 2023. Management said risk assets now accounted for some 15% of the portfolio.

The company also noted that higher risk-free rates resulted in a $130 million unrealised loss on its core fixed income securities. Although this was broadly offset by the company’s claims liability discount benefit. The final result was a neutral impact from QBE’s asset-liability management activities for the quarter.

As for what’s ahead for QBE shares, management reaffirmed full-year guidance of constant currency gross written premium growth in the mid-single digits. Premium rate increases are expected to remain supportive.

QBE’s FY 2024 group combined operating ratio is forecast to be approximately 93.5%.

The company is scheduled to release its first half results on 9 August.

QBE share price snapshot

The QBE share price has been a strong performer in 2024, up about 22% year to date.

The post The QBE share price is marching higher on Friday. Here’s why appeared first on The Motley Fool Australia.

More reading

• Morgans names the best ASX dividend shares to buy in May
• 5 ASX dividend shares to buy next week
• Buy NAB and these ASX 200 dividend stocks
• 5 things to watch on the ASX 200 on Friday

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.

The Life360 Inc (ASX: 360) share price is on the slide on Friday morning.

In early trade, the ASX 200 tech stock is down 9% to $14.15.

Why is the Life360 share price sinking?

Investors have been selling the location technology company’s shares today following the release of its quarterly update.

While some of the numbers were pre-released last month in a trading update, the ones that arguably matter most are now public knowledge and investors are responding negatively.

According to the release, Life360 delivered a 15% year on year increase in revenue to US$78.2 million during the first quarter. This was driven largely by a 23% lift in core subscription revenue to US$57 million.

At the end of the quarter, Life360’s annualised monthly revenue (AMR) stood at US$284.7 million, which is up 19% year on year.

This led to the company achieving positive adjusted EBITDA of US$4.3 million for the three months (up from US$0.5 million) and a reported EBITDA loss of US$4.1 million.

What were the drivers of this result?

A record quarter of subscription growth underpinned this solid result.

Life360’s global monthly active users (MAU) increased by 4.9 million during the three months to 66.4 million. This represents a 31% increase year on year. Management also notes that this was achieved with significant momentum, particularly in a seasonally lower period for MAU growth.

Also increasing strongly was its global Paying Circle metric. It posted net additions of 96,000 for the quarter, which was a record. This was up 21% year on year and brings the total to 1.9 million. Management advised that this was supported by improved conversion and retention.

Life360’s co-founder and CEO, Chris Hulls, was pleased with the record quarter. He said:

Life360’s Q1’24 results showed continued momentum, with net Paying Circles additions nearly doubling to 96 thousand from 54 thousand in Q4’23, achieving a new first quarter record. In addition, our efforts in relation to both our free members and international expansion are paying off, with 4.9 million new Monthly Active Users (also a new first quarter record.

Hulls doesn’t believe the ASX 200 tech stock’s growth is anywhere near over given its massive global market opportunity. He adds:

The market opportunity is on a global scale, and we believe we have significant headroom to grow as we expand to new regions, and launch new features that expand our relevance to different life stages.

Outlook

Pleasingly, Hulls revealed that the second quarter has started strongly for Life360. He said:

This momentum has continued so far in Q2’24 with the achievement of 32 thousand net Paying Circle additions during the month of April.

Looking further ahead, the ASX 200 tech stock has maintained its guidance for FY 2024. It continues to expect to report consolidated revenue of US$365 million to US$375 million, adjusted EBITDA of US$30 million to US$35 million, and an EBITDA loss of US$8 million to US$13 million.

It is likely to be this guidance that has put pressure on the Life360 share price today. Given its exceptionally strong start to the year, the market appears to have been expecting management to lift its guidance with this result. With no guidance upgrade coming, investors have been quick to hit the sell button.

But that doesn’t take away the fact that this is a high quality company growing at a rapid rate.

The post Why is the Life360 share price sinking 9% today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Would I still buy Life360 shares as they hit all-time highs?
• Here are the top 10 ASX 200 shares today
• Brokers say these ASX growth shares are top buys in May
• Here are 4 exciting ASX growth stocks that brokers love in 2024

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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.

Liontown Resources Ltd (ASX: LTR) shares are on course to end the week in a positive note.

In morning trade, the lithium developer’s shares are up 1.5% to $1.42.

Why are Liontown shares charging higher?

Investors have been buying the company’s shares this morning in response to a project update.

According to the release, Liontown has signed an agreement with GR Engineering Services Ltd (ASX: GNG) for the Engineering, Procurement and Construction (EPC) contract at the Kathleen Valley Lithium Project.

This is for the delivery and commissioning of the Paste Plant facility to support the underground mining operations at Kathleen Valley.

The release notes that the Paste Plant will include two trains capable of producing up to 160m3 of paste per hour and has been designed to accommodate future expansion of mining operations to 4Mtpa.

Management highlights that the delivery of cemented paste fill is an integral part of the underground mining cycle at Kathleen Valley. That’s because it maximises recovery of the underground orebody and planned production rates, as well as reduces the size of the surface tailings dam that would otherwise be required.

The Paste Plant has also been designed to facilitate dry stacking and water recovery. This further increases the amount of recycled water the site utilises.

What is the cost?

The EPC is valued at approximately $71 million according to the company.

The good news is that this forms part of planned and budgeted next stage of growth capital costs post first production and funding is covered by the recently announced $550 million financing facility.

And with everything else running on time, investors will be pleased to learn that GR Engineering Services has progressed the design, procurement and initial site works under an early works agreement. This is to ensure timely delivery of the Paste Plant.

Commenting on the agreement with GR Engineering Services, Liontown Resources’ managing director and CEO, Tony Ottaviano, said:

We are pleased to award the contract for the design and construction of the Paste Plant which will support and further de-risk the planned underground production rates at Kathleen Valley. GRES has designed and constructed multiple paste plant facilities throughout Western Australia and the GRES team has mobilised and commenced initial works at Kathleen Valley.

It isn’t just Liontown shares rising today. The GR Engineering Services share price has risen in morning trade on the back of this news. Its shares are now up by 23% since this time last year.

The post Liontown shares charge higher on lithium project update appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Are Liontown shares worth buying right now?
• These are the 10 most shorted ASX shares
• Why did Liontown Resources shares smash the market in April?

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

The iShares S&P 500 ETF (ASX: IVV) has been a top-performing exchange-traded fund (ETF) since the start of 2024, as we can see on the chart below. In this article, we’re going to look at how much money an investor with $5,000 might have made if that money was invested in the IVV ETF at the start of the year.  

What has happened?

It has been a great time to own a piece of the US share market. Some of the biggest global tech companies have been top performers. The iShares S&P 500 ETF owns 500 of the largest and most profitable businesses that are listed in the US.

Since the start of 2024:

The Microsoft share price has risen 10.7%

The Alphabet share price has gone up 22.6%

The Amazon share price has soared 25.4%.

The Meta Platforms share price has shot higher by 36.5%.

The Nvidia share price has jumped 87.7%.

These are among the biggest businesses in the IVV ETF holdings, so they have had the biggest influence on the IVV ETF’s overall returns. An ASX ETF’s return is dictated by the performance of the underlying holdings. This portfolio has 500 holdings.

Since the start of 2024, the IVV ETF has risen by 12.7% in Australian dollar terms. If we look at the S&P 500 Index (SP: .INX), which measures the S&P 500 in American dollar terms, it experienced a rise of 9.4%.

How much $5,000 invested would be worth now

With a 12.7% capital gain, $5,000 would be worth roughly $5,635. That’s a pretty good gain in just four months and nine days.

The IVV ETF has also paid distributions amounting to approximately 30 cents per unit, which translates into a distribution return of around 0.64% based on the ASX ETF’s unit price at the start of 2024. That’s a cash return of around $32 since the start of the year.

So, in total, an investor’s wealth would have increased by $667, with most of that return being capital growth (on paper). Volatility could be just around the corner and send the IVV ETF unit price even higher, or lower.

Past performance is not a guarantee of future performance, but the IVV ETF has done very well over the years, rising by an average of 16.2% per annum in the last decade thanks to the strength of the underlying businesses.

The post If I’d put $5,000 in iShares S&P 500 ETF (IVV) at the start of 2024, here’s what I’d have now appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 reasons the iShares S&P 500 ETF (IVV) is a great long-term investment
• 4 quality ASX ETFs to buy after the market sell-off

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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, Amazon, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. 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, Amazon, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Comparing two popular ASX 200 blue-chip shares from the same sector can be a great exercise for any Australian investor. Not only can you get a good look under the hood of two dominant businesses, but you can also see exactly how the market is valuing two sets of cash flows coming out of the same industry.

It’s hard to compare the dividends and earnings of a bank, for example, against a tech stock and come to a coherent valuation case for both. But when two companies are both deriving their earnings from the same base, things get a lot more interesting.

So today, let’s put this into action by comparing the valuations of the two largest supermarket operators and grocers in Australia – Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

Woolworths and Coles are great companies to compare, as they are direct competitors in the grocery space. Although both companies have auxiliary earnings streams – Coles’ bottle shops and Woolies’ Big W chain – both derive the lion’s share of their earnings from their supermarket businesses.

Normally, it would be easy to compare these two companies’ valuations by looking at their price-to-earnings (P/E) ratios on an annualised basis.

Woolies vs. Coles

But thanks to some unusual disruptions in Woolies’ recent earnings, this isn’t very useful right now. At of yesterday’s close, Woolies seems to trade on a ridiculous P/E ratio of 1,965.5, whilst Coles is on a far more normal 20.87.

So instead, what we will do is take both companies’ earnings per share from their recently-announced half-year results covering the six months to 31 December, and see how they compare.

For those six months, Woolies revealed a basic earnings per share (EPS) of 76.2 cents, which was up 2% from the same period in 2021.

At the last Woolworths share price of $30.78, this would give the company a P/E ratio of 40.49, or 20.2 on an annualised basis.

In Coles’ case, the company reported a basic EPS of 44.5 cents for the half year, which was down 8.5% on the prior corresponding period.

At the last Coles share price of $16.28, this would give the company a P/E ratio of 36.58, or 18.29 on an annualised basis.

So, on a like-for-like basis, Coles shares are currently cheaper than Woolworths shares. Put another way, investors are being asked to pay more for $1 in Woolworths earnings than $1 in Coles earnings.

That’s despite Woolworths shares having an awful year compared to its arch-rival. 2024 to date has seen the Coles share price rise 0.74%. In contrast, Woolies stock has collapsed by 17.94%.

We can see this reflected in both companies’ dividend yields. Right now, Woolworths is trading on a dividend yield of 3.41%, but Coles offers a lot more with its 4.05% yield.

So Coles shares are cheaper. But does that make them a better ASX 200 buy today?

Which ASX 200 stock to buy?

Normally, investors would feel justified in paying a higher share price relative to earnings for a higher-quality business. Until this year, it was obvious that Woolworths was the better ASX 200 blue-chip share compared with Coles, thanks to its higher market share.

But recent updates from both companies have muddied the waters of that assumption.

Earlier this month, Woolworths reported a 2.8% rise in total sales to $16.8 billion over the quarter ending 31 March. For the first three months of 2024, Woolies enjoyed a 1.5% rise in Australian food sales and a 1.4% uptick in New Zealand food sales. The company’s B2B business stood out though, banking a 3.2% spike in sales.

However, Coles put up some far more impressive figures over the same period. Coles revealed that its sales revenue for the quarter rose 6.4% over the previous year’s equivalent quarter to $10.03 billion.

Supermarket sales were up 5.1%, whilst liquor sales fell 1.9%.

Foolish takeaway

If I were deciding between these two blue-chip ASX 200 shares today for an investment, I would probably want to wait until I saw the next quarter’s numbers before making a final decision. I would want to see Coles’ superior quarter as part of a long-term trend, not just a one-off fluke. If this is the case, Coles could be the pick of the two today, given its lower P/E ratio and higher dividend yield.

However, if I had to make the decision today, I would probably go for Woolworths shares. The company is trading at its lowest share price in years today, and yet remains the dominant grocer in the Australian market. The difference in earnings multiples between the two companies has rarely been as close as it currently is, at least going off the figures we used earlier.

So, although Coles’ recent numbers almost make it more appealing than Woolworths, I would still have to wait for a clear trend to emerge before taking the plunge with Coles today.

The post Which of these ASX 200 shares is the better bargain in May? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 4 ASX retirement shares to buy in May
• Looking for ASX All Ords shares to buy? Top broker reveals 4 best ideas this month
• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost
• Here’s the current ASX dividend yield on Woolworths shares
• 3 safe ASX dividend shares to own for the next 10 years

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.

Superannuation is the primary vehicle for retirement savings for most Australian workers, but new research shows a generational divide in its perceived importance.

A survey by financial advisory and accounting company Findex reveals 40% of baby boomers consider superannuation a key wealth-building investment compared to 22% of Millennials and 13% of Gen Z.

The youngsters see bank savings as a more compelling investment, with 38% of Gen Z and 20% of Millennials ranking savings as the most important type of investment for lifetime wealth-building.

In a statement, Findex commented:

While it is fair to say that this is a natural reflection of differing life stages, as a long-term investment, even small early-top ups to superannuation are more likely to deliver greater benefits in retirement.

 Ultimately, this gap underscores the varying approaches to long-term financial planning and the need for heightened awareness among younger Australians.

Millennials and Gen Z have a super advantage

The survey findings are particularly interesting given Millennials and Gen Zs are the first generations that will have received superannuation contributions from their employers over their entire working lives.

This means they enjoy a default advantage over the older generations, as they will have received more superannuation monies by the time their retirement age of 67 years rolls around.

The baby boomers were born between 1946 and 1965 and Gen X was born between 1966 and 1980. Millennials were born between 1981 and 1995 and Gen Z was born between 1996 and 2010.

Superannuation was introduced in Australia in 1992. The mandatory contribution rate for employers has risen from 3% in 1992 (or 4% for employers with an annual payroll above $1 million) to 11% today.

Most superannuation funds are primarily invested in ASX shares and international equities.

In 2023, Chant West figures show that the standard ‘growth’ superannuation fund comprised of 61% to 80% growth assets, like shares, delivered a median return of 9.9%.

Time on their side to build retirement savings

Time is considered a key component to investing success, especially when simple strategies like compounding are adopted.

The trick is to start investing as early as possible in life and invest more money as often as you can.

Findex co-CEO Tony Roussos said:

The current level of superannuation literacy presents a clear opportunity for Australians to proactively take charge of their financial future – especially Millennials and Gen Zs who will have had super contributions throughout their careers and also have the benefit of a longer runway towards retirement.

Roussos encouraged Millennials and Gen Z Australians to, “Take advantage of the time you have on hand by exploring ways to build your balance so that your super works hard for you in retirement.”

Key actions to ensure a secure retirement

Findex recommends the following key investment actions for Millennials and Gen Z Australians to take now to ensure a good retirement in the future.

Millennials  

Findex recommends the following actions for Millennials to retire well:

Balancing homeownership and super savings

Investigate ‘rentvesting’ as an alternative to traditional homeownership, allowing you to invest in property while maintaining flexibility and your superannuation contributions.

Career progression and super contributions

As income increases, take advantage of growth strategies, and periodically review and increase superannuation contributions to ensure they align with your retirement goals.

Family planning and superannuation

Plan for potential career breaks for family reasons. Consider strategies like spousal contributions or government co-contributions to maintain super growth during these periods. 

Gen Z  

Findex recommends the following actions for Gen Zs to retire well:

Assess your risk appetite and investment diversification

Exploring options within superannuation that align with a longer investment timeline can enhance growth. Superannuation typically defaults to ‘balanced’ options, so younger generations might benefit from ‘growth’ strategies, aiming to optimise fund performance over time. 

Early engagement with superannuation to build retirement savings

Start contributing to super as early as possible. Even modest contributions can grow significantly over time due to the power of compounding interest. 

Financial literacy and digital tools

Leverage digital platforms like Young Money from the Findex Community Fund for financial education, and apps to help with budgeting and investment tracking. Understanding the basics of superannuation, investment strategies, and tax advantages is crucial. 

The post Key actions for Millennials and Gen Z to take now for a good retirement appeared first on The Motley Fool Australia.

More reading

• 4 ASX retirement shares to buy in May
• The little known ASX uranium stock that could rise 35%
• Does the VanEck Wide Moat ETF pay a decent ASX dividend?
• Forget Pilbara Minerals and buy this ASX 200 lithium stock instead
• Guess how many Australians know their superannuation balance?

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.

When building a retirement portfolio, many investors will look for ASX shares with defensive qualities, attractive dividend yields, and strong business models.

The good news is that there are plenty of these trading on the Australian share market, making life easier for retirees.

But which ASX retirement shares are analysts tipping as buys right now? Let’s take a look at four:

APA Group (ASX: APA)

This energy infrastructure company could be a great ASX retirement share to buy. Especially given its defensive earnings, long track record of growth, and big dividend yield.

In respect to the latter, Macquarie is forecasting dividends of 56 cents per share in FY 2024 and 57.5 cents per share in FY 2025. Based on the current APA Group share price of $8.69, this equates to 6.4% and 6.6% dividend yields, respectively.

Macquarie has an outperform rating and $9.40 price target on its shares.

Coles Group Ltd (ASX: COL)

Supermarkets are another generator of defensive earnings. As providers of our daily essentials, consumers fill their trolleys each week no matter how much they raise their prices.

Morgans believes the company’s growth can continue and is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on the current Coles share price of $16.28, this implies dividend yields of 4% and 4.2%, respectively.

Morgans has an add rating and $18.95 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

We can’t go without food and, for many of us, we can’t go without our phone or internet. This makes Telstra another very defensive ASX share that could be worth considering for a retirement portfolio.

Especially with its shares falling heavily recently, making its valuation and dividend yields even more attractive. In respect to the latter, Goldman Sachs is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.64, this equates to yields of 4.9% and 5.2%, respectively.

Goldman has a buy rating and $4.55 price target on Telstra’s shares.

Woolworths Limited (ASX: WOW)

Finally, investors might want to consider another supermarket operator, Woolworths. For the same reasons as Coles, it could be a great option for an ASX retirement portfolio.

Goldman Sachs certainly believes this is the case. Much like with Telstra, Woolworths shares have pulled back meaningfully recently, which the broker believes has created a compelling buying opportunity. Particularly given that its analysts “forecast WOW 2-yr sales CAGR FY24-26e of +3.2% and EBIT growth of +4.8%.”

It expects this to support fully franked dividends of $1.08 per share in FY 2024 and $1.14 per share in FY 2025. Based on the current Woolworths share price of $30.78, this implies yields of 3.5% and 3.7%, respectively.

Goldman has a buy rating and $39.40 price target on its shares.

The post 4 ASX retirement shares to buy in May appeared first on The Motley Fool Australia.

More reading

• Are Telstra shares a top buy for dividend income?
• Looking for ASX All Ords shares to buy? Top broker reveals 4 best ideas this month
• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost
• Here’s the current ASX dividend yield on Woolworths shares
• Top brokers name 3 ASX shares to buy today

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