Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Appen Ltd (ASX: APX)

The Appen share price is down 8% to $2.12. This has been driven by the completion of the institutional component of the artificial intelligence data services company's equity raising. Appen is raising a total of $60 million to fund its cost reduction program, provide balance sheet flexibility, and general working capital to support Appen's return to profitability. The funds were raised at a 19.6% discount of $1.85 per new share.

Best & Less Group Holdings Ltd (ASX: BST)

The Best & Less share price is down over 4% to $1.86. This morning, this discount retailer released a trading update which revealed that its profits will be lower than expected in the second half. Based on results to date, management now expects to deliver pro forma net profit after tax of between $10 million and $12 million for half. This is down from its previous guidance of between $18 million and $20 million.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 9% to $2.91. Investors have been selling this chemicals company's shares after its half-year results fell short of expectations. Goldman Sachs notes that Incitec Pivot's "1H23 Adj NPAT of A$353m was -8% lower yoy and -22% vs GSe and -23% vs Visible Alpha Consensus Data."

Weebit Nano Ltd (ASX: WBT)

The Weebit Nano share price is down a further 3.5% to $5.88. This meme stock has started to catch the eye of short sellers with its sky high market capitalisation and lack of revenue. In addition, the company operates in a market which is dominated by tech giants with R&D budgets many times larger than the value of Weebit Nano.

The post Why Appen, Best & Less, Incitec Pivot, and Weebit Nano shares are falling appeared first on The Motley Fool Australia.

For example, two All Ordinaries shares that are making big moves in opposite directions are listed below. Here's what's going on:

Temple & Webster Group Ltd (ASX: TPW)

This online furniture retailer's shares are lighting up the All Ordinaries index on Wednesday following the release of a trading update. At the time of writing, the Temple & Webster share price is up 8.5% to $4.10.

The company's update revealed an improvement in its sales performance, with trading in the last four weeks up 10% over the prior corresponding period.

This means that sales are now down 5% over the prior corresponding period for the period 1 Jan to 15 May, which is an improvement on its 7% decline for the first five weeks of the second half.

Another positive is that management has reiterated its full-year EBITDA margin guidance of 3% to 5%. It also continues to have an exceptionally strong balance sheet, with no debt and cash levels remaining at $100 million.

Best & Less Group Holdings Ltd (ASX: BST)

Wednesday hasn't started as positively for this All Ordinaries share. The discount retailer's shares are down 4% in early trade to $1.87.  Investors have been hitting the sell button after the retailer released a trading update which included a profit guidance downgrade.

According to the release, for the 19 weeks of trading to date in the second half, total sales were up 1.8% on the prior corresponding period to $221.9 million.

And while recent trading in May has been encouraging, based on results to date, the company now expects to deliver pro forma net profit after tax of between $10 million and $12 million for the second half. This is down from its previous guidance of between $18 million and $20 million.

The post 2 ASX All Ordinaries shares making big moves on trading updates appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why these ASX shares are falling:

Best & Less Group Holdings Ltd (ASX: BST)

The Best & Less share price is down almost 3% to $1.93. This morning, this retailer confirmed the receipt of a takeover offer at a discount to its prevailing share price. BBRC International has offered $1.89 cash per share to acquire the company. Two major shareholders have revealed that they are willing to accept the offer.

Deep Yellow Limited (ASX: DYL)

The Deep Yellow share price is down almost 4% to 51.5 cents. Investors have been selling this uranium developer's shares following the release of an update on drilling activities at Alligator River. The market may have been expecting stronger results from its drilling program.

Mirvac Group (ASX: MGR)

The Mirvac share price is down 1% to $2.37. This appears to have been driven by a broker note out of Citi this morning. According to the note, the broker has downgraded this property company's shares to a neutral rating with a $2.50 price target. The broker made the move in response to Mirvac's earnings guidance downgrade from last week.

Syrah Resources Ltd (ASX: SYR)

The Syrah Resources share price has continued its slump and is down a further 10% to $1.04. Investors have been selling off this graphite producer's shares since its quarterly update last week. Syrah revealed that its unit costs were higher than the price received for its graphite. This led to management reducing its production plans and raising $150 million through the issue of new convertible notes to AustralianSuper.

The post Why Best & Less, Deep Yellow, Mirvac, and Syrah shares are falling today appeared first on The Motley Fool Australia.

So today, let's discuss four ASX All Ordinaries Index (ASX: XAO) shares that are scheduled to go ex-dividend next week. When a company trades ex-dividend, eligibility for the next dividend payment is cut off to new shareholders.

Thus, we normally see a corresponding drop in share price when this happens. This reflects the loss of value for investors going forward.

So here are four ASX All Ords shares that will trade ex-dividend next week.

Four ASX All Ords shares trading ex-dividend next week

Seven Group Holdings Ltd (ASX: SVW) is first up. Back in February, Seven announced that its interim dividend for 2023 would come in at 23 cents per share, fully franked. That's flat on last year's interim dividend payment, as well as the final dividend that was paid out last October.

Investors will see this dividend arrive on 5 May. But the shares will go ex-dividend next week on 11 April.

Next up is Horizon Oil Ltd (ASX: HZN). This All Ords energy share is set to pay out one of its largest dividends ever later this month. Investors are in line to bag a 1.5 cent per share payout, unfranked, on 21 April. Horizon shares will trade ex-dividend for this payment next week on 13 April.

Let's now consider All Ords retail share Best & Less Group Holdings Ltd (ASX: BST). Best & Less declared an interim dividend of 8 cents per share back in February, a reduction from the 11 cents per share interim dividend investors enjoyed in 2022.

Even so, this fully-franked dividend will be arriving in shareholders' proverbial mailboxes later this month on 28 April. Eligibility for this payout will close next week though, on 13 April.

Finally today, let's check out Duxton Water Ltd (ASX: D2O). Duxton will be sending a final dividend worth a fully franked 3.4 cents per share to All Ords investors on 28 April. That's the company's largest-ever dividend payment.

But once again, eligibility will be shut off next week on 13 April when Duxton shares trade ex-dividend.

The post 4 ASX All Ords shares trading ex-dividend next week appeared first on The Motley Fool Australia.

There are very few businesses that are expected to grow their dividend in the coming years to such a high level.

Sometimes ASX mining shares can pay very high yields when times are good like we've seen from BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) in the last few years.

But, with the fact that retailers do trade on a low price/earnings (P/E) ratio, it means that sometimes those dividend yields can become very high.

What does this ASX All Ords share do?

The business describes itself as a leading value apparel specialty retailer with an omnichannel sales network comprising 245 physical stores and an online platform.

Its aim is to be the "number one choice for mums and families buying baby and kids' value apparel in Australia and New Zealand through its two trusted brands: Best & Less (in Australia) and Postie (in New Zealand)."

Dividend projection for Best & Less shares

Commsec numbers suggest that Best & Less is going to pay an annual dividend per share of 18.1 cents in FY23, which would equate to a grossed-up dividend yield of 12.6% at the current Best & Less share price.

In FY25, it's projected to pay an annual dividend per share of 22.7 cents per share. This would be a grossed-up dividend yield of around 16%.

Why is the dividend yield so high? According to Commsec numbers, Best & Less is valued at under 9 times FY23's estimated earnings and 6 times FY25's estimated earnings.

Will it be able to grow earnings?

I think a key part of being a good ASX dividend share is growing earnings over time so that it's more likely to be able to fund the current dividend and achieve dividend growth.

The All Ords ASX share is planning to accelerate its investment online, including a new customer data platform, a new mobile app and a consumer website. It's also reviewing its core planning, merchandising and finance systems.

The business is working on a number of growth priorities:

Continued market share growth in baby, kids and womenswear, achieving above market online sales growth and enhancing the store network, underpinned by supply chain transformation.

It's planning to open six new stores in the second half of FY23. This can help FY24 earnings and beyond as the stores mature.

The business is seeing a return to supply chain stability, which will hopefully help its inventory positioning.

Foolish takeaway

While there may be some volatility ahead, I think this retailer can do well in the coming years, particularly if more shoppers look for good-value clothing. This could then help the business fund those huge projected dividends.

The post This ASX All Ords share could pay a 16% dividend yield by 2025 appeared first on The Motley Fool Australia.

Silicon Valley Bank's collapse represents the largest US bank failure since the Global Financial Crisis. Time will tell how this plays out.

However, there are some All Ordinaries ASX shares that could be compelling buys this month.

MyState Ltd (ASX: MYS)

MyState describes itself as a diversified financial services business, consisting of MyState Bank and TPT Wealth, a trustee and wealth management company.

It wouldn't surprise me to see this business hit a 52-week low this week amid all the banking uncertainty.

The business recently announced its FY23 half-year result for the six months to 31 December 2022, which showed net interest income rose 21.3%, while earning per share (EPS) increased 18% to 18.6%. New to bank customers increased 54% on the prior corresponding period.

It's benefiting from the higher interest rate environment. The All Ordinaries ASX share currently offers a grossed-up dividend yield of 8.8%, which is a solid dividend return in my opinion.

The business is focused on growing its market share on a "profitable and sustainable basis", with a target of "reducing its cost to income ratio to less than 60% in the medium term and creating cumulative return on equity (ROE) and EPS growth of 30% over the next three years".

Best & Less Group Holdings Ltd (ASX: BST)

Best & Less describes itself as a leading value apparel specialty retailer with an omnichannel sales network comprising 245 physical stores and an online platform. It aims to be the "number one choice" for mums and families buying baby and kids' 'value apparel' in Australia and New Zealand, both through its own brand in Australia and Postie in New Zealand.

In an environment where household budgets are tightening, I think Best & Less could be one of the businesses that may see resilient demand, or even growth.

The business is planning to keep opening new stores to help its growth, while investing in the business in a number of ways which should help the business become more efficient in the next few years.

In the first seven weeks of the second half of FY23, the All Ordinaries ASX share saw total sales growth of 3.8%, which is useful for the company in my opinion.

Commsec numbers suggest the Best & Less share price is valued at 8x FY23's estimated earnings and 6x FY25's estimated earnings. The prediction is that the grossed-up dividend yield could be 12.9% in FY23.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara says it makes software in a bid to protect families from cancer. The idea is that healthcare providers use Volpara's software to better understand cancer risk and guide recommendations about additional imaging, genetic testing, and other interventions.

The AI-powered image analysis enables radiologists to quantify breast tissue and help technologists produce mammograms.

A new US federal regulation has just been finalised by the US Food and Drug Administration (FDA) "requiring mammography facilities across the country to inform patients whether their breasts are composed of dense tissue".

Within the next 18 months, by September 2024, all patient reports and summaries must include certain language about breast density.

I think this is very positive for Volpara considering it's one of the leaders of breast screening technology in the US. This could enable ongoing average revenue per user (ARPU) growth, which is useful considering the gross profit margin is above 90%.

The business is aiming to achieve positive cash flow as soon as possible, which could be a boost for investor sentiment about the All Ordinaries ASX share. The Volpara share price is down 55% since early February 2021.

The post 3 ASX All Ordinaries shares I'm watching like a hawk in March appeared first on The Motley Fool Australia.

This huge gain compares to the S&P/ASX 200 Index (ASX: XJO) decline of around 0.5%.

The Best & Less share price opened higher at $1.72 and continued to rise through the morning.

Best & Less share price jumps despite tricky first half

Here are some of the highlights for the 26 weeks to 1 January 2023:

• Total revenue grew 13% to $324.8 million
• Pro forma/underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $22.1 million generated
• Pro forma/underlying net profit after tax (NPAT) of $13.7 million generated
• Net cash position of $14.7 million
• Interim dividend per share of 8 cents

The retailer explained that there was weaker consumer demand in the first half, so it reduced prices in key volume lines, which impacted its gross profit margin (which was 47.1% in the first half).

Despite that, the average sales price (ASP) was 9.5% higher than the prior corresponding period.

What else happened in the first half?

The company has been laying the foundations for the next phase of its growth while managing the impacts of the global supply chain uncertainty and inflationary environment.

Best & Less said it's now focused on a number of growth priorities, including market share growth in baby, kids and womenswear, achieving above-market online sales growth, improving its store network and transforming its supply chain.

The business is expecting to open six new stores in the second half. It will have over 250 stores across Australia and New Zealand by the end of FY23.

Best & Less is still searching for a new permanent CEO, with the process "progressing well". Jason Murray will remain as executive chair until a new CEO starts in the role.

What did management say?

The Best & Less executive Chair Jason Murray said:

While trading conditions were inconsistent in the first half, our team remained committed to delivering exceptional value and service for our customers. Our core non-discretionary and baby product lines continued to perform well, reflecting the strength of our differentiated value proposition of 'twice the quality at half the price.'

Trading update

In the first seven weeks of trading in the FY23 second half, total sales were up 3.8%, with like-for-like sales growth of 3.9%. Sales growth can be helpful for the Best & Less share price. Like-for-like store sales growth was 7%, while online sales were down 23%.

Consumer shopping behaviour "continues to normalise", with in-store traffic increasing. The supply chain stability is also improving. The company said its inventory position is "well positioned."

It didn't change its previous guidance which suggested that, assuming no material deterioration in economic conditions that impacts sales, it's expecting to deliver a second-half underlying/pro forma NPAT of between $18 million to $20 million. That compared to $21.4 million in the second half of FY22, which included $1.6 million of NPAT from a 27^th trading week in that half.

Best & Less share price snapshot

While it is up strongly today, the share price is down around 50% since 22 February 2022.

The post Best & Less share price soars 10% on result, improving outlook appeared first on The Motley Fool Australia.

I think that investing in ASX shares is one of the best ways to grow our net worth. Many leading companies on the ASX make good profits, but plenty of them also pay dividends.

Australian companies have the added benefit of attaching franking credits to dividends that are paid, boosting the after-tax returns.

Start by saving

Investors don't need a lot of money to start investing in ASX shares. You can open a share trading account with as little as $500. However, it could make more sense to invest more than $500 at one time so that the brokerage fee is a smaller percentage of the cost.

Bank accounts are finally offering better interest rates, with good ones offering a rate of more than 3%. While we may want to invest our money as soon as possible, our cash can make a decent return while it builds.

Putting aside $30 a week translates to a yearly total of $1,560. Saving this amount each week may be easy for some people and a task for others. It may involve finding cheaper alternatives for products or services, getting extra income from a part-time job, or whatever it takes.

Begin investing

Investing that $1,560 into an ASX share that pays a 5% dividend yield would make $78 of annual dividends in year one. Picking a share with a dividend yield of 10% would generate $156 of annual dividend income. That's not bad for the start of a second income.

There are some quality blue chips that pay dividend yields of around 5% to 7%, such as Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS) and Coles Group Ltd (ASX: COL). These are the sorts of names that could do well with a long-term investment strategy.

Investors may consider ASX shares with higher dividend yields than that, but ideally, those names could grow earnings over the long term. Companies with very high dividend yields include Adairs Ltd (ASX: ADH), Shaver Shop Group Ltd (ASX: SSG), Best & Less Group Holdings Ltd (ASX: BST) and Pacific Current Group Ltd (ASX: PAC).

The second income can benefit from compounding

One year of investing is unlikely to unlock all of the passive income that investors are looking for.

Starting off with $75 of annual income after year one is good. Building that to $150 in year two, $225 in year three and so on, by continuing to invest, would build an impressive stream of dividends.

Good businesses tend to keep growing their profit and dividends. If a $100 dividend payment grows by 5% each year because the company increased the dividend, it would be $105 in the second year, $110.25 in the third year, $115.76 in the fourth year and so on.

Investors can benefit from organic dividend growth from their investments, as well as adding more money over time.

The more time we give — and the more money we add — to our investment portfolio, the bigger the dividend cash flow that can be created.

The post Here's how I'd start building a second income this February, for $30 a week appeared first on The Motley Fool Australia.

A) Contemplating retirement and worrying about whether you'll have enough income to live on?

B) Keen to help offset the soaring cost of living without having to work longer hours?

C) Hoping to benefit from franking credits like countless other Aussies have been doing over the past 30+ years?

D) Disillusioned by the interest rate your bank is offering in exchange for locking up your hard-earned cash? 

E) Not really sure but just love the idea of getting paid for doing not much of anything?

If you answered yes to any of the above, you may be in the market for some ASX dividend shares. These types of stocks regularly divvy out a portion of their profits to their owners — the shareholders! And, with any luck (as well as top-notch management!), will also deliver share price gains over the long term as well.

But the ASX is awash with dividend shares so the decision on what to buy can be daunting.

For their thoughts, we asked our Foolish writers which income-paying stocks they are loving the look of right now. Here is what they said:      

6 best ASX dividend shares for February 2023 (smallest to largest)

• Best & Less Group Holdings Ltd (ASX: BST), $238.82 million
• Nick Scali Limited (ASX: NCK), $967.95 million
• Transurban Group (ASX: TCL), $42.47 billion
• Rio Tinto Ltd (ASX: RIO), $47.01 billion
• ANZ Group Holdings Ltd (ASX: ANZ), $75.35 billion
• Commonwealth Bank of Australia (ASX: CBA), $185.83 billion

(Market capitalisation as of 1 February 2023)

Why our Foolish writers love these ASX passive-income stocks

Best & Less Group Holdings Ltd

What it does: Best & Less describes itself as a value apparel specialty retailer with around 250 stores and an e-commerce offering. It wants to be the number one choice for families buying baby and kids' value apparel in Australia and New Zealand through Best & Less in Australia and Postie in New Zealand.

By Tristan Harrison: The Best & Less share price is down around 50% since the start of February 2022. This has had the effect of boosting the company's possible payout ratio.

Commsec numbers suggest this ASX All Ords share could pay an annual dividend per share of 23.5 cents in FY24, translating into a FY24 grossed-up dividend yield percentage in the mid-teens.

While FY23 may be tricky for profitability, I think FY24 could be positive, particularly as Best & Less adds to its store network. Six new stores are scheduled for opening in the second half of FY23, and the company is also refurbishing some existing stores. It is committed to paying a dividend of 60% to 80% of net profit.

Motley Fool contributor Tristan Harrison does not own shares in Best & Less Group Holdings Ltd.

Nick Scali Limited

What it does: Nick Scali is a furniture retailer and owner of an eponymous brand as well as the Plush – Think Sofas brand. It has more than 100 stores across Australia and New Zealand as well as a successful e-commerce platform.

By Bronwyn Allen: The Nick Scali share price has had a great start to 2023, with a 15% gain already, so I reckon value investors are already onto this one. Despite this, I believe the trailing gross dividend yield is still very attractive at 8.3%.

Sales are increasing, partly due to the company's first major acquisition — the purchase of Plush in November 2021, with integration largely completed at the end of FY22.

I'm excited to see the FY23 first-half (1H FY23) numbers due out next Monday (6 February) to get a better picture of how Plush is growing the company's earnings. Nick Scali has guided a 57% to 66% increase in net profit after tax (NPAT) in 1H FY23 compared to 1H FY22.

Motley Fool contributor Bronwyn Allen owns shares in Nick Scali Limited. 

Transurban Group

What it does: Transurban is a large-scale operator of tolled roads. It has a near monopoly on Sydney's toll roads but also owns roads in other capital cities, as well as in North America.

By Sebastian Bowen: Transurban's reputation as one of the ASX 200's safest dividend shares was trashed during the pandemic years. But the company has bounced back steadily ever since the dark days of 2020.

What I believe makes Transurban such an attractive dividend share is its resistance to inflation.

Most of Transurban's toll roads are contractually permitted to increase their tolls in line with inflation, protecting the company's earnings base from erosion.

As such, I think this is a useful company to have in any income portfolio – especially with its dividend yield closing in on 4% at recent pricing.

Motley Fool contributor Sebastian Bowen does not own shares in Transurban Group.

Rio Tinto Ltd

What it does: Rio Tinto is one of the globe's largest miners with a portfolio of world-class operations across a range of commodities.

By James Mickleboro: I think Rio Tinto could be a top option for ASX income investors in February. That's because China's reopening looks set to support robust demand for copper and iron ore, which bodes well for commodity prices.

In fact, as things stand, Rio Tinto is generating significant free cash flow, which is expected to underpin some big dividends in the near term.

Goldman Sachs, for example, is currently forecasting fully-franked dividends per share of US$4.40 (A$6.25) in FY 2023 and US$5.70 (A$8.10) in FY 2024. This equates to yields of 4.9% and 6.35%, respectively, at the time of writing.

Goldman has a buy rating and a $134.40 price target on the mining giant's shares.

Motley Fool contributor James Mickleboro does not own shares in Rio Tinto Ltd.

ANZ Group Holdings Ltd

What it does: The ANZ we know and, arguably, love was born more than 50 years ago and is now one of Australia's 'big four' ASX 200 banks. Nowadays, it provides banking and financial services to millions of retail and business customers across 32 markets.

By Brooke Cooper: ANZ is both the highest-yielding and cheapest of the big four banks on a price-to-earnings (P/E) ratio basis. It currently boasts a 5.9% dividend yield and a P/E ratio of 10.65, according to CommSec data.

I also like the company's proposed acquisition of Suncorp Group Ltd (ASX: SUN)'s banking division – set to bring greater exposure to the Queensland market. The sunshine state was crowned Australia's best-performing economy by CommSec's latest State of the States report.

Finally, ANZ is favoured by both Macquarie and Citi. They each have an equivalent buy rating on the stock, while the latter has given it a $29.25 price target and expects the bank to grow its dividends in the future.

Motley Fool contributor Brooke Cooper does not own shares in ANZ Group Holdings Ltd or Suncorp Group Ltd.

Commonwealth Bank of Australia

What it does: CBA provides a range of financial services including retail and business banking, funds management, superannuation, insurance, and broking services. With a market cap of some $185 billion, it's Australia's largest bank and the second-biggest stock trading on the ASX.

By Bernd Struben: CBA is well-respected as a long-term, reliable dividend stock.

The bank has delivered two fully franked dividends per year for well over a decade, including during the pandemic-addled 2020 market turmoil.

CommBank also offers a dividend reinvestment plan (DRP).

At the current share price, CBA pays a 3.6% trailing dividend yield, having paid out $3.85 per share in 2022. But that could well grow.

Morgan Stanley is forecasting the CBA dividend to increase the most of any of the big four banks this year to $4.50 per share, up 17% year on year.

The CBA share price has also been a strong performer, gaining almost 9% so far in 2023 and around 17.2% over the past 12 months.

Motley Fool contributor Bernd Struben does not own shares in Commonwealth Bank of Australia. 

The post Top ASX dividend shares to buy in February 2023 appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Best & Less Group Holdings Ltd (ASX: BST)

The Best & Less share price is down 7% to $1.96. Investors have been selling this discount retailer's shares following the release of a disappointing trading update. Although the retailer reported a 13% jump in half year revenue, it expects to record a first half profit after tax of $13.7 million. This will be down 32% over the prior corresponding period due to significant margin pressure.

Evolution Mining Ltd (ASX: EVN)

The Evolution Mining share price is down almost 4% to $3.28. A number of brokers have responded negatively to this gold miner's quarterly update. One of those was Ord Minnett, which has downgraded Evolution's shares to a hold rating with a $3.20 price target. It was a touch underwhelmed with the company's performance during the December quarter.

Mineral Resources Ltd (ASX: MIN)

The Mineral Resources share price is down 4% to $92.57. This follows the release of the mining and mining services company's quarterly update. Although Mineral Resources reported a strong increase in lithium shipments, its iron ore shipments fell quarter on quarter. The company also revealed that its Mt Marion expansion has been delayed.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 13.5% to 77 cents. Investors have been hitting the sell button after the gold miner delivered another disappointing quarterly update. For the three months ended 31 December, the company delivered gold production of 60,976 ounces at an all-in sustaining cost of A$2,666 per ounce. The latter is higher than the A$2,591 per ounce it received for its gold during the period.

The post Why Best & Less, Evolution, Mineral Resources, and St Barbara shares are dropping appeared first on The Motley Fool Australia.

The elevated volatility last year has opened up a number of opportunities for investors to find some strong passive income.

It's hard to say when share prices will get back to their former heights, but I believe that good businesses will be able to grow their earnings over the long term and this will encourage investors.

I don't know how long investors will remain pessimistic – there are already signs that confidence is returning despite inflation remaining relatively high. I'd want to jump on these cheap ASX shares while they still offer great income potential.

Metcash Limited (ASX: MTS)

There are three segments to this business – food, liquor and hardware.

In food, it supplies IGAs around the country. The liquor division supplies independent liquor stores around the country, including IGA Liquor, Bottle-O, Cellarbrations, and Porters Liquor. The hardware division owns brands like Mitre 10, Home Timber & Hardware and Total Tools.

Using the numbers on Commsec, Metcash is priced at just 13 times FY23's estimated earnings with a possible grossed-up dividend yield of 7.5%.

It grew its FY23 half-year dividend by 9.5% to 11.5 cents per share. The second half of FY23 has started strongly, with group sales up 6.2% "as consumers continue to be driven by robust underlying demand and inflation."

The hardware division is now the division making the biggest profit. It's expected to continue to see strong underlying demand in the second half of FY23.

This business trades on a lower price/earnings (P/E) ratio compared to Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES), which is one of the reasons why it seems like a cheap ASX share to me.

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the largest furniture sellers in Australia – it owns both the Nick Scali and Plush businesses after an acquisition.

The Nick Scali share price has dropped by around 20% over the last year, pushing up the prospective dividend yield.

According to Commsec, it's valued at just 10 times FY23's estimated earnings with a potential grossed-up dividend yield of 9.8%. In FY24 it might pay a grossed-up dividend yield of 8.5%.

While there may be fewer sofas bought in 2023, the cheap ASX share could keep generating good profits in the coming years.

The cheap ASX share has a number of initiatives to grow profit over time, including a store rollout, increasing online sales and a range expansion.

Best & Less Group Holdings Ltd (ASX: BST)

Best & Less sells value apparel to families. The business has a focus on kids and women – it says it has better quality than cheap retailers and better value than specialty retailers. Baby products are the 'entry point' and it's looking to grow its market share in baby, kids and womenswear. It also wants to achieve faster-than-the-market online sales growth and grow its store network.

Using the numbers on Commsec, the Best & Less share price is valued at under 7 times FY23's estimated earnings with a possible grossed-up dividend yield of almost 15%.

This business is projected to grow its earnings and dividend in FY24 and FY25, which could make it seem like a very cheap ASX share at the current level.

The post 3 cheap ASX shares that can help me easily build a second income appeared first on The Motley Fool Australia.

Companies listed in Australia paid out U$28.6 billion in dividends last quarter, according to the latest Janus Henderson Global Dividend Index.

The likes of BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) were among the world's top 10 dividend payers in the September quarter, while Commonwealth Bank of Australia (ASX: CBA) and Fortescue Metals Group Limited (ASX: FMG) made the top 20.

But there are plenty of ASX dividend shares likely flying under the radar. Here are five Aussie stocks you may not have known pay investors dividends.

5 under-the-radar ASX dividend shares

The first ASX share one may not have noticed pays dividends is oOh!Media Ltd (ASX: OML).

The out-of-home advertising company has been handing shareholders a portion of its profits since 2015, with a short break during the pandemic.

It has paid out 2.5 cents per share over the last 12 months, leaving it with a 1.8% trailing dividend yield.

Perhaps surprisingly, ASX newbie Best & Less Group Holdings Ltd (ASX: BST) also pays dividends.

The clothing retailer listed in July 2021 and has since offered shareholders two dividends, worth 11 cents and 12 cents, respectively. That leaves the stock with a notable 9.9% yield.

Interestingly, Lynch Group Holdings Ltd (ASX: LGL) is in a similar boat to Best & Less.

The floral grower and wholesaler floated on the ASX in April 2021 and has since offered two 6-cent dividends per share. Right now, it trades with a 7% dividend yield.

Another under-the-radar ASX dividend payer might be trucking share Lindsay Australia Ltd (ASX: LAU).

It's consistently paid dividends for decades, handing out 3.2 cents per share over the last 12 months. That leaves Lindsay's stock with a 4.8% dividend yield.

Finally, newly crowned S&P/ASX 200 Index (ASX: XJO) stock Lovisa Holdings Ltd (ASX: LOV) also offers investors a portion of its profits. Indeed, it nearly doubled its offerings over the last 12 months.

The fashion jewellery retailer has handed shareholders 74 cents per share over that time, leaving it boasting a 3.2% yield.

The post 5 ASX shares you probably didn't know pay dividends appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Bell Direct market analyst Grady Wulff names the two ASX shares that are ripe to buy now.

Investment style

The Motley Fool: How would you describe your services to a potential client?

Grady Wulff: I'm Grady Wulff, the market analyst at Bell Direct, which is an investment platform for buying and selling shares listed on the ASX. Our goal is to make the lives of all Australians better by making their investment journey nice and easy, and intuitive. My role is to source information, identify different market trends, produce timely market updates, create analysis pieces to help our clients save time and stay informed on what's happening on the markets.

MF: At Bell Direct, when you're helping clients invest in Australian shares, what's the investment philosophy you take?

GW: It really depends on the investment goal of our clients. So we're very intuitive and very tailored to the client's investment goals. So whether they're a trader, whether they're investors, whether they are looking for high yields or just growth stocks, value stocks. We've got the strategy builder on our platform, which helps you identify different sectors and different stocks that will meet your investment needs.

MF: You used to be a finance journalist, but now you're on the investment side of the fence. How did that come about?

GW: I actually started in sports journalism, then I moved into news journalism, and then I got headhunted to go into finance journalism in Perth with a very retail focus at [finance app] Grafa. That was tailored towards new investors and retail investors who are just starting out their journeys. 

Then I got headhunted to come to Bell Direct. So very, very lucky, and I feel like I've learned so much since hitting the ground running in Sydney, but I'm very lucky to be here, and I love it so much.

Hottest ASX shares

MF: What are the two best stock buys right now?

GW: I'm going by Bell Potter research, given it's in-house. For me, having looked through them, Nufarm Ltd (ASX: NUF) is a really strong stock for me moving forward. Bell Potter maintains a buy rating on it with a price target that's been raised to $7.15. Shares in the company are up 21% year to date. 

The reason that the house has a buy rating on it is because of the strong FY22 results that were released. The company had pretty strong headwinds in the way of deregistrations in Europe and dry conditions across the Mediterranean and North America in the second half particularly, but we expect those headwinds to be mitigated in FY23 and drive normalised demand in the US and Europe.

The company also has really strong continued growth and revenue for the Omega3 products. I think it's through the canola. So they're doing really well, and they've got a really positive year-end outlook. So we are really, really bullish on this one. They've got strong cash flow, revenue's going up, operating EBIT went up 24%. So yeah, we're really bullish on Nufarm at the moment.

MF: Great. What's your second pick?

GW: My second one's Best & Less Group Holdings Ltd (ASX: BST). I love this stock. 

We've seen retail stocks recently being beaten down this year amid rising interest rates, and obviously consumers are a lot more conscious about what they're spending their money on.

But this positions Best & Less to really capitalise and benefit from the change in consumer behaviour from luxury shopping back in the pandemic, when we had all that money when we were sitting at home doing nothing, and we had so much money to spend, to now being more value shoppers — buying things that are less discretionary, have less replacement cycle and more sustainable products.

So Best & Less is really, really positioned well to capitalise from this.

They're also looking to open 11 new stores in FY23, so they're on the expansion front. They have healthy inventory positions, strong margins compared to peers, and the pricing power that they have is really strong because they're a stock developer as well. 

So yeah, Best & Less, I think, is one that we are very bullish on at Bell Potter, with a buy rating and a price target of $2.60. One to watch in 2023.

MF: It's interesting to get your insights about Best & Less because it's one retail stock that we don't hear that much about.

GW: Exactly. I actually love looking at it.

The post The world is shifting into the sweet spot for these 2 ASX shares: analyst appeared first on The Motley Fool Australia.

Nor does it stop the so-called professionals, including Goldman Sachs.

According to a Reuters report, the investment banking giant – famously described in 1999 by Rolling Stone journalist Matt Taibbi as a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" – warned the US equity bear market is not over yet.

This is despite the S&P 500 having rallied 10% off its recent lows, with the ASX 200 index up 11% since the beginning of October. Excerpt:

Goldman Sachs on Monday warned that the global equity bear market is not over as the markets are yet to see a trough in the momentum of global growth deterioration, a peak in interest rates and valuations lowered to reflect a likely recession.

"We continue to think that the near-term path for equity markets is likely to be volatile and down before reaching a final trough in 2023", Goldman Sachs said in a note.

2) According to the Australian Financial Review, Morgan Stanley equity strategist Chris Nicol has set an ASX 200 index target at 7200 with a total return of 7 per cent. Excerpt: 

The range of outcomes is wide with a bullish forecast of 8100 or a 20 per cent return and a bearish forecast of 5900 or a negative 11 per cent return.

The firm is overweight energy, healthcare and diversified mining companies, and underweight banks, housing and consumer stocks.

"2023 looms as a year of peaking signals and stress. Australia lags in terms of tightening impact, with earnings and activity still to adjust. Index target [is] seen at 7200," Mr Nicol says.

At the close of trade on Tuesday, the S&P/ASX 200 Index (ASX: XJO) finished at 7181, almost bang on the target set by Morgan Stanley.

It seems Nicol is banking on the big dividends from the likes of BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Woodside Energy Group Ltd (ASX: WDS) continuing into next year to get to his total return target of seven per cent.

3) A trading update today from discount apparel retailer Best & Less Group Holdings Ltd (ASX: BST) makes sombre reading for shareholders like myself. It also delivers pain to shareholders, with the Best & Less share price plunging more than 13% lower to $2.35. Excerpt:

After reporting +38.0% total sales growth for the first eight weeks of FY23, sales growth has since moderated, reflecting the delayed start to summer weather and supply chain delays.

While unaudited year to date (YTD) earnings to the end of October are in line with the prior corresponding period (PCP), a significant increase in sales growth from current levels is required to maintain this result for the first half.

Last week, I named Best & Less as "one consumer discretionary stock I'm playing for the coming economic slowdown". 

Today's update suggests trading has fallen off a cliff in recent weeks. I'm hopeful it's weather related, although subdued consumer confidence largely as a result of rising interest rates will no doubt have played a role. The big unknown is the competitive threat from the likes of Wesfarmers Ltd (ASX: WES) owned K-Mart, something that will be far more enduring than a bout of soggy weather.

Buying something because it's cheap – Best & Less shares previously traded at less than nine times earnings and on a fully franked dividend yield of over 9.1% – offers some level of downside protection, but not enough to offset a poor trading update and the real possibility that profits will fall. 

It's yet another reminder to myself that…

• Investing in the retail sector is incredibly tough, courtesy of the competitive and economic environment. 
• You are better to pay up for a quality company with a sustainable competitive advantage – one that can steadily compound earnings for years to come – than buying a mediocre company on the cheap, hoping it will re-rate before the inevitable profit warning.
• Investing is hard.

I'm holding onto my Best & Less shares for now. They are a small position in my diversified portfolio, and I hold out hope that trading will improve in the run-up to Christmas. I'm most certainly not adding to my position – even after today's sell-off, the risks are to the downside for Best & Less shares.

4) Crypto investors are in a world of hurt, with the Bitcoin price down 72% over the past 12 months.

Writing on Livewire, Coolabah Capital's Christopher Joyce says the crypto crash "bears the hallmarks of a standard non-bank financial crisis that inevitably arises every time there is a liquidity shock. Unfortunately, it is likely to get worse." Excerpt:

Non-banks, including many crypto concerns such as exchanges and coins, have almost no regulation and/or scrutiny. And they tend to be murky private businesses, run by anonymous individuals, often located in dubious jurisdictions, that are protected from the reporting demands of public market enterprises.

Most of what we see today in the crypto universe will die. There will surely be some residual winners, and there are doubtless some impressive technological innovations that will sustain. But anything of serious value will likely be absorbed by the traditional banking system. The dominant digital currencies of the future will be those issued and guaranteed by nation states.

As an equities person, I've happily let the whole crypto craze pass me by, not tempted by the once seemingly easy money on offer in months and years gone past. I've had no problems losing money this past year without adding crypto to my list of things to worry about.

Still, I never like to see people losing money, especially those who trusted the now-bankrupt FTX exchange with their crypto assets. They are staring down the barrel of a near-total loss.

I'd warn against trying to bottom-fish the crypto space. The current lack of trust in the asset class combined with a potential liquidity crunch means future returns are highly unpredictable and incredibly risky. There are surely easier ways to make money. 

5) That said, Cathie Wood of Ark Investment Management is wading into the space, scooping up shares of struggling cryptocurrency exchange Coinbase Global Inc (NASDAQ: COIN), despite the collapse of Sam Bankman-Fried's FTX. 

According to Bloomberg…

Wood's Ark Investment Management funds have bought more than 1.3 million shares of Coinbase since the start of November, worth about $56 million based on Monday's trading price, according to data compiled by Bloomberg. The shopping spree, which started just as FTX's demise began, has boosted Ark's total holdings by roughly 19% to about 8.4 million shares. That equates to around 4.7% of Coinbase's total outstanding shares.

The Coinbase share price has fallen almost 84% so far this year, outpacing the 64% fall in Cathie Wood's flagship ARK Innovation ETF. It's been a very tough year for growth investors, crypto and stocks alike.

The post Bear market not done yet says Goldman Sachs, while Morgan Stanley predicts dividends will be the driver of returns in 2023 appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are dropping:

Best & Less Group Holdings Ltd (ASX: BST)

The Best & Less share price is down 12.5% to $2.38. This morning the retailer released a trading update and revealed that like for likes (LFL) sales are down 7.4% during the first 20 weeks of FY 2023. The damage is being done predominantly online, with online LFL sales down 32.9% and LFL store sales down a modest 2.3%.

Cettire Ltd (ASX: CTT)

The Cettire share price is down a further 9% to $1.29. Investors have been selling this online luxury products retailer's shares in recent sessions following news that its CEO was selling down his holding again. Cettire's CEO, Dean Mintz, sold 41 million shares at a 13% discount of $1.46 per share for a total consideration of approximately $60 million. Cettire's shares have now dropped 23% since the sale.

Life360 Inc (ASX: 360)

The Life360 share price is down 5% to $6.40. This morning this location technology company announced the completion of a $50 million institutional placement. These funds were raised at a 6.4% discount of $6.30 and will be used to shore up its balance sheet given the uncertain macroeconomic environment. Not even news that Life360 has received takeover interest has been able to keep the Life360 share price from falling today.

Paradigm Biopharmaceuticals Ltd (ASX: PAR)

The Paradigm share price is down 11% to $1.51. Investors have been selling this pharmaceutical company's shares after it announced the exit of its CEO after less than five months in the role. No reason was given for the exit. Paradigm has acted fast and named its founder and former CEO, Paul Rennie, as its new leader.

The post Why Best & Less, Cettire, Life360, and Paradigm shares are sinking today appeared first on The Motley Fool Australia.

"US producer price growth stepped down in October by more than expected in the latest sign that inflationary pressures are beginning to ease," reports Bloomberg.

Bullish investors are hoping inflation has peaked, meaning the Federal Reserve will moderate the pace of its interest rate hikes.

The S&P 500 Index (SP: .INX) has jumped 6.5% higher in just the past four trading days, whilst the NASDAQ-100 Index (NASDAQ: NDX) has soared almost 10% higher in the same period.

Here in Australia, markets have been a little more subdued, partly because the ASX hasn't fallen as far as US indexes, partly because the S&P/ASX 200 Index (ASX: XJO) is dominated by big miners and banks, and partly because the RBA has already shown its hand by easing the pace of interest rate rises. 

The ASX 200 index is now down a very modest 3.9% over the past 12 months.

2) Not everyone is convinced it's all plain sailing ahead, and the Federal Reserve will be able to pull off an economic soft landing. From Bloomberg…

"Markets appear to be pricing in a best case scenario of a soft landing and falling inflation triggering a Fed pause," Venu Krishna, head of US equity strategy at Barclays Plc. 

"In our view, this is not a given and remains a low probability scenario – these are just a few data points on inflation and it needs to be sustained. Even if the Fed eventually pauses, it might not be able to prevent a shallow recession."

3) Recession or not, soft or hard, Warren Buffett is buying, the Sage of Omaha taking a roughly $US5 billion stake in Taiwan Semiconductor Manufacturing Co (NYSE: TSM), the chip supplier to companies like Nvidia, Qualcomm and Apple. 

Marketwatch headlines the story with…

"Warren Buffett's chip-stock purchase is a classic example of why you want to be 'greedy only when others are fearful.'"

According to Bloomberg…

"TSMC shares at home in Taiwan had dropped 28% this year through Monday's close, as demand for chips has slowed with the economic downturn and investors fretting about oversupply. The company said in October it pulled back on capital spending to about $US36 billion this year, which would still be a record high, down from at least $US40 billion planned previously."

The 92 year old Buffett has famously said his ideal holding period is forever, a period which will encompass many economic cycles. Such thinking has served him well, given his net worth of over $US100 billion, the vast majority of which was accumulated later in his life, courtesy the power of compounding returns.

4) Conventional wisdom, perhaps built up over the 30 years since Australia had a "proper" recession is that the lucky country will once again keep growing in 2023 and beyond. 

Unemployment remains low, immigration is starting to pick up again and commodity prices are high. The banking sector, as demonstrated by Commonwealth Bank of Australia (ASX: CBA) saying yesterday that credit quality indicators improved in the most recent quarter, remains strong.

Pushing against that goldilocks scenario are falling house prices, high inflation, higher interest rates and weak consumer confidence.

What's it all mean? It's a given the Australian economy will slow next year. 

The International Monetary Fund (IMF) has forecast economic growth will slow from 3.7% this year to just 1.7% in 2023-24 as those headwinds hit our shores. But, according to the AFR, it warned "that a deeper plunge in global growth than forecast, more persistent inflation, and a faster-than-expected decline in house prices could push the economy off course."

"Australia is expected to steer clear of a recession, but with significant downside risks."

5) What's all this mean for stock market investors?

We've already seen what Warren Buffett thinks.

As for a mere investing mortal like myself, it certainly doesn't change my view that consumer discretionary stocks – largely retailers – are likely in for a tougher time ahead.

The market always looks forward, and such pessimism could already be priced into a number of retail stocks. 

JB Hi-Fi Limited (ASX: JBH) shares trade on just 9 times earnings and a fully franked dividend yield of 7.3%.

Nick Scali Limited (ASX: NCK) shares trade on 10 times earnings and a fully franked dividend yield of 7.2%.

Super Retail Group Ltd (ASX: SUL) shares trade on 10 times earnings and a fully franked dividend yield of 10.8%.

I'm happy to sit on the sidelines and watch the action play out for those companies. In really tough times, a halving of profits is absolutely possible, turning the share price from cheap to expensive, and dividends can be cut to zero. 

One consumer discretionary stock I'm playing for the coming economic slowdown is Best & Less Group Holdings Ltd (ASX: BST). 90% of its items sold retail for less than $20 and their average selling price is a modest $8.33.

Babies and kids grow, and as they do, need replacement clothes, so there's a repeat purchase element to the Best & Less business… unlike JB Hi-Fi where you can live with your TV for an extra year, or Nick Scali where you can live with your current sofa for a few more years.

Recent commentary from US discount retailer Walmart strengthens the case for a company like Best & Less with Chief Financial Officer John Rainey saying Walmart is winning new business from higher-income shoppers searching for bargains amid a challenging economic environment.

Best & Less shares trade at less than 9 times earnings and on a fully franked dividend yield of 9.1%.

6) Yesterday saw a nice payday for the Jackson Portfolio, with microcap MSL Solutions Ltd (ASX: MSL) share price jumping 70% higher on an all-cash takeover agreement. 

There's plenty of value in the microcap sector, if investors are willing to stomach the volatility and lack of liquidity. 

And there are plenty of value traps too, some of which I've found, to my cost, although position-sizing and downside protection has limited my losses. The key, as with any investing, is to buy quality companies that have at least some sort of competitive advantage and have at least an element of recurring revenue. 

MSL Solutions – a company that operates point of sale solutions at major sporting arenas – fits the bill nicely, given the long-term nature of its contracts. 

If only I'd backed myself more, taking an even bigger position. That's investing, where the fear of the unknown can impact your decision making, and where, despite a large monetary gain, you can still be dissatisfied. I'll get over it!

The post Buffett buys up big amidst recession fears. One cheap ASX share I'm backing, plus why I'm dissatisfied despite a huge one-day windfall appeared first on The Motley Fool Australia.

Lots of investors go for big ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), miners such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), and others like Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES) and Woodside Energy Group Ltd (ASX: WDS).

But, I think that there are plenty of other names that could deliver a pleasing amount of dividend income in the coming years, and hopefully deliver better total returns than some of the bigger names I've mentioned.

With that in mind, I'm going to outline three ideas that could be good sources of dividends.

APA Group (ASX: APA)

APA Group is an energy infrastructure business that delivers half of the nation's (natural) gas usage through 15,000km of pipelines that connect sources of supply and markets across mainland Australia. It also owns, or has interests in, gas storage, gas-fired power stations and renewable energy (wind and solar).

The last year has shown how important energy is. I believe the business has an attractive future for cash generation, particularly if it can start transporting some hydrogen in its pipelines.

The ASX dividend share has grown its distribution to investors every year for more than a decade and a half. I think it can keep growing as more pipelines and assets are added to the portfolio, such as the power cable called Basslink that connects Tasmania to the mainland.

Based on an estimated distribution of 55 cents per share in FY23 (growth of 3.8%), this translates into a forward distribution yield of 5%.

Best & Less Group Holdings Ltd (ASX: BST)

This is an ASX retail share that describes itself as a "leading value apparel specialty retailer with an omnichannel sales network comprising 244 physical stores and a fast-growing online platform".

It wants to be the "number one choice for mums and families" that buy baby and kids' value apparel in Australia and New Zealand through its brands Best & Less in Australia and Postie in New Zealand.

In FY22, the business had a dividend payout ratio of around 80%, meaning it still kept 20% of its profit to reinvest back into the business. It can use its profit to grow its store network. At the time of the FY22 result, it had agreements to open 11 new stores during the year, with three additional stores being relocated to larger sites.

The ASX dividend share is expecting the inflationary environment to accelerate the "migration to value", which it provides.

At the end of FY22, it had net cash of $36.7 million, meaning it has plenty of cash on hand to invest for growth (and to keep paying dividends).

In the first eight weeks of FY23, total sales were up 38%. Largely because stores were closed in the first few weeks of FY22. But, it's a boost for FY23 growth statistics nonetheless.

According to Macquarie, Best & Less could pay a grossed-up dividend yield of almost 13%.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)

This is an exchange-traded fund (ETF) invested in high dividend yield, "quality" companies based on Morningstar's economic moat rating. These businesses are also screened on Morningstar's 'distance to default' measure.

If it's hard for an investor to pick one particular ASX dividend share, this ETF could be a way to get a diversified investment with 25 holdings.

As of 15 November 2022, these were some of the biggest holdings: AUB Group Ltd (ASX: AUB), Ansell Limited (ASX: ANN), IPH Ltd (ASX: IPH), Wesfarmers Ltd (ASX: WES), Computershare Limited (ASX: CPU), Deterra Royalties Ltd (ASX: DRR), Jumbo Interactive Ltd (ASX: JIN), and Telstra Corporation Ltd (ASX: TLS).

Excluding franking credits, over the year to 30 September 2022, the VanEck Morningstar Australian Moat Income ETF paid an income return of around 5.4%. ETFs just pass through the dividend income that the underlying businesses pay.

The post 3 impressive ASX dividend shares you've probably never heard of appeared first on The Motley Fool Australia.

Investors still expect the Fed to raise rates by three-quarters of a percentage point during its meeting next week. But recent economic data is already showing that Fed tightening has started to weigh on the US economy, leading investors to speculate that the central bank may be approaching the end of its aggressive tightening campaign. This renewed expectation of less hawkishness from the Fed, as well as a better-than-expected earnings season so far, have pushed stocks higher in recent days.

2) Earnings from Coca-Cola and General Motors topped estimates. But the wheels fell off after the market close, with Google parent Alphabet missing earnings estimates and fellow tech-giant Microsoft reporting a disappointing revenue forecast.

In after-market trading, both the Alphabet share price and the Microsoft share price fell more than 6%.

It was only yesterday when I said "earnings risk" might usurp the risk of higher interest rates as the dominant driver of equity markets. 

Most of the heavy lifting has already been done on interest rates. Although there's a lag, the desired effect – a slowing of economic growth – is starting to show up in corporate results. If Alphabet and Microsoft are feeling it, you can bet your bottom dollar companies with much less of a competitive advantage will be paddling upstream.

This bear market rally may be about to run out of steam.

3) Turning to Australia, the ASX 200 is largely flat in afternoon trade, at first following Wall Street's lead higher, then falling back after Q3 headline inflation jumped to an annual rate of 7.3%, higher than expectations.

Naturally, Australian bond yields rose as talk of the RBA raising interest rates by 50 basis points on Melbourne Cup day came back into play. That said, according to the Australian Financial Review, interbank futures are implying only a 25% chance of the RBA hiking by 50 basis points. 

Markets have been hanging on the prospect of central banks slowing their rate of interest rate increases. For the time being, inflation is winning the battle, with equities, despite their recent bounce, coming a long second.

4) Speaking of earnings risk, one of today's victims is Codan Ltd (ASX: CDA), the company best known for its gold metal detectors.

The Codan share price is being taken to the woolshed today after it forecast a significant contraction in first-half sales at its dominant Minelab division. Here's what the company said:

Like many businesses we are operating under challenging market conditions, with geopolitical issues, a high inflationary environment and an increasing risk of global recession. The risk of declining sentiment may impact sales in the short term and management continues to monitor this risk closely.

The company expects sales for Minelab to be in the region of $75 to $80 million in the first half of FY23, compared to $138 million in the prior corresponding period. The reduction primarily relates to the disrupted nature of the African market, normalisation of sales as we transition to living with COVID…

Codan joins a long line of COVID beneficiaries – government stimulus in some African countries was seemingly spent on buying gold detectors – turned post-COVID flops. 

Codan shares are now down 80% from their June 2021 high. Ouch.

5) One of the other high profile COVID boom-to-bust stocks is Kogan.com Ltd (ASX:KGN). 

Unlike Codan, the Kogan share price is on the rise today despite reporting first-quarter gross sales falling 38.8%, cycling a quarter in the prior year that was heavily impacted by COVID-19 lockdown orders, a period when online retailers saw booming sales.

Investors today were buoyed by Kogan accelerating the sale of its final excess inventory, with the ever-optimistic Ruslan Kogan saying he does not believe the first quarter trading result is indicative of its projected trading performance.

Inflation and rising interest rates are putting pressure on households across Australia and New Zealand. It's in the Kogan.com DNA to obsess over delivering the most in demand products and services at the best possible prices. We know that during periods of belt tightening like this, our responsibility to be the best place for Aussies and Kiwis to get a bargain on their key household items is more important than ever.

Good luck to Mr Kogan and his Kogan.com business. Kogan.com shares have fallen 86% from their October 2020 peak, although they have bounced almost 30% higher off their July 2022 low.

Whilst Kogan does indeed compete on price, it's not the only discount retailer on the web. And when belts are being tightened, replacement cycles for cheap TVs and the like just might blow out a little.

6) The consumer discretionary stock I'm playing for the coming economic slowdown is Best & Less Group (ASX: BST). 

50% of its sales are in the baby and kids market. As children grow, they need bigger clothes, so there is a repeat purchase element to the business. 90% of its items sold retail for less than $20 and their average selling price is a modest $8.33.

Best & Less is profitable, has net cash on its balance sheet, and pays an attractive fully franked dividend.

Best and Less shares trade on eight times earnings with a fully franked dividend yield of 9.5%. Whilst not immune to an economic slowdown and having formidable competitors in the likes of Big W and Kmart, there does appear to be a decent level of downside protection for Best & Less shareholders.

The post The bear market rally has seen the ASX 200 jump five percent higher in October. It could all be about to run out of steam appeared first on The Motley Fool Australia.

Let's have a look at some of the declines we've seen so far this calendar year.

Performance so far this year

The Wesfarmers Ltd (ASX: WES) share price has fallen by more than 25% this year, though it's up 6.4% since the end of June 2022.

The JB Hi-Fi Limited (ASX: JBH) share price is down 17.6% in 2022, but it's 4.6% higher in FY23.

The Harvey Norman Holdings Limited (ASX: HVN) share price is down 17.5% for the year yet it has risen 12% from the end of June 2022.

The Woolworths Group Ltd (ASX: WOW) share price has fallen 13% in 2022 and is down 6.3% in FY23.

The Premier Investments Ltd (ASX: PMV) share price has fallen 21% in 2021 but it's up 25% since 30 June 2022.

How does the ASX 200 Index compare to all of these numbers? In 2022 to date, it's down by 10.9%. Since 30 June 2022, it's up by 3%. So, largely, ASX 200 retail shares have performed worse in 2022 but have done better over the past three and a bit months.

Should investors be looking at ASX 200 retail shares?

That's the big question.

There are plenty of other retailers outside the ASX 200 that have also suffered sizeable falls like Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Universal Store Holdings Ltd (ASX: UNI), Best & Less Group Holdings Ltd (ASX: BST), and Shaver Shop Group Ltd (ASX: SSG).

Yet every retailer is different. The revenue and net profit after tax (NPAT) growth performance of Wesfarmers is likely to be quite different to JB Hi-Fi's.

I also think it's likely that FY23 and perhaps FY24 won't show the strength that FY20 and FY21 did. Households may not have as much money to spend in the retail sector because of the impacts of inflation and rising interest rates.

However, some of these retailers have seen their share prices drop 30%, 50%, or even more.

Businesses are naturally going to try to find ways to protect and grow their profits. Same-store sales may decline, but retailers can open new stores which might lessen the overall blow. They can also sell more items online. Retailers can expand their ranges and look to grow internationally. They may be able to find ways of being more efficient with costs.

It's possible that retail sales may not fall as much as some investors are expecting.

Another thing that could work in retailers' favour this year is that many of them could report strong growth in the first half of FY23. Don't forget, a year ago, a substantial portion of the Australian population was under lockdowns. This also meant that many retail stores faced restrictions.

Currently, we're seeing good trading updates from businesses for the first few weeks of FY23. Examples include Wesfarmers, Premier Investments, and Shaver Shop.

So, in summary, I think that generally, ASX 200 retail shares could be long-term opportunities. However, there could still be plenty of volatility and FY23 may well show sizeable profit declines for a number of them. But I think we may have already seen the worst of the share price pain.

The post Have ASX 200 retail shares been worth buying so far in FY23? appeared first on The Motley Fool Australia.

There are two key ways investors can make money from the share market: capital growth (i.e., share price rises), and dividends.

So, with capital growth taking a back seat amidst the volatility, ASX dividend shares are well and truly in the spotlight.

We know Aussies love their dividends, especially when they are fully franked.

With this in mind, I've rounded up the five highest-yielding ASX retail shares right now with a market capitalisation above $250 million.

Let's check them out.

Peter Warren Automotive Holdings Ltd (ASX: PWR)

To kick things off, ASX car dealership group Peter Warren is currently sitting in fifth place.

After hitting the ASX boards last year, Peter Warren declared maiden dividends in FY22.

The group declared total dividends of 22 cents across the financial year, fully franked, with the final dividend of 13 cents set to be paid on 7 October.

Based on these dividends, Peter Warren shares are flashing a trailing dividend yield of 7.7%. Including franking credits, this yield jacks up to 11%.

JB Hi-Fi Limited (ASX: JBH)

Just edging out Peter Warren for fourth place is the nation's largest entertainment retailer, JB Hi-Fi.

JB Hi-Fi grew its net profit after tax (NPAT) by 8% in FY22, which helped the ASX 200 retail share hike its annual dividends by 10% to $3.16, fully franked.

As a result, JB Hi-Fi shares are currently printing a trailing dividend yield of 7.7%. Throwing in franking credits dials up this yield to 11.1%.

Harvey Norman Holdings Limited (ASX: HVN)

JB Hi-Fi's biggest rival Harvey Norman has pipped it at the post, starting off our podium finishers.

Harvey Norman delivered a marginal dip in profits in FY22. However, this didn't stop the ASX 200 retail share from raising its annual dividends by 7% to 37.5 cents, fully franked.

At current levels, this puts Harvey Norman shares on a chunky trailing dividend yield of 8.9%, which grosses up to 12.7%.

Harvey Norman is the only ASX retailer on this list that is yet to trade ex-dividend. Its fully franked final dividend of 17.5 cents will be on offer until 13 October, before shares turn ex-dividend the following day.

This final dividend alone equates to a dividend yield of 4.1%.

Adairs Ltd (ASX: ADH)

Taking out the silver medal is homewares and furnishings retailer, Adairs.

In FY22, the company struggled to match its record results from the prior year. Cycling strong comparisons, NPAT slid by 30% to $45 million.

While Adairs kept its final dividend steady, it slashed total FY22 dividends by 22% to 18 cents, fully franked.

Nonetheless, Adairs shares are spinning up an eye-catching trailing dividend yield of 9.9%, which is boosted to 14.1% with the addition of franking credits.

Best & Less Group Holdings Ltd (ASX: BST)

Topping this list as the highest-yielding ASX retail share right now is value apparel business Best & Less.

It was a tale of two halves for Best & Less in FY22, battling COVID-19 restrictions and reduced foot traffic in the first half.

Overall, the company's sales backtracked by 6% to $622 million, while NPAT dropped by 13% to $41 million.

In its first year as a listed company, Best & Less declared annual dividends of 23 cents, fully franked.

This means that Best & Less shares are currently trading on a meaty trailing dividend yield of 10.3%. Including franking credits, this yield cranks up to an even meatier 14.8%.

A word of caution

It's important to note these are trailing dividend yields. As such, they reflect what's happened in the past. 

And as we're often reminded, past performance is not a reliable indicator of future performance. 

This can be especially true in industries such as retail, which are often overly susceptible to the peaks and troughs of the economic cycle.

ASX shares can cut their dividend payments with little to no warning.

So, heed caution on taking trailing dividend yields at face value. It's also important to assess the sustainability of these yields into the future.

The post 5 ASX retail shares spruiking the highest dividend yields right now appeared first on The Motley Fool Australia.