As an ASX big four bank, Commonwealth Bank of Australia (ASX: CBA) shares have always been a prominent choice for ASX dividend income investors.

CBA shares have paid out hefty dividends for decades. But does that mean it is a good choice for income investors today?

Well, let's start with the dividends CBA is currently paying out. So Commonwealth Bank shares have doled out two dividends this year, as is the norm.

The first was the March interim dividend of $1.75 per share, fully franked.

The second was the final dividend from September, which was worth $2.10 per share, also fully franked.

That's a total of $3.85 in dividend income per share for 2022. On today's CBA share price of $108.10 (at the time of writing), this gives CBA shares a trailing dividend yield of 3.56%.

Are CBA shares a buy for dividend income?

But let's talk about what might happen going forward from here. After all, knowing what kind of income CBA has paid out only goes so far in terms of what is useful for an investor today.

So, like many ASX dividend shares, CBA has a dividend policy. This tells investors that each year, CBA will strive to "target a full-year payout ratio of 70% – 80%" of its earnings to fund its dividends.

Over FY2022, CBA made $5.57 in earnings per share (EPS), up 14% from the $4.88 it made in FY2021. Of that $5.57 in EPS, the bank paid out $3.85 of those earnings per share as dividends. That's a payout ratio of 69.12%, so just below CBA's ratio target.

Both of these metrics bode well for future dividend income. If CBA can manage to grow its EPS again in FY2023, and keep its payout ratio steady, then shareholders will enjoy a dividend increase. If the bank grows its EPS and ups its payout ratio, then investors will enjoy an even larger dividend rise.

Perhaps this is why brokers at Macquarie have recently decided to swap out Australian and New Zealand Banking Group Ltd (ASX: ANZ) shares for CBA shares in a recent model portfolio reshuffling.

So on the numbers, it looks as though CBA's current dividends are on a sure footing and could increase further. But we shall have to wait and see if CBA can keep up its earnings growth going forward. That's the real key to a rising dividend.

The post Could now be the time for income investors to buy CBA shares? appeared first on The Motley Fool Australia.

Diversifying your portfolio into precious metals can provide a number of financial benefits. While investors often view gold as the metal of choice, silver has many of the same value characteristics and can be a great option for those seeking a viable alternative to gold.  

What are ASX silver shares?

ASX silver shares are companies or units of a fund that trade on the ASX and are reasonably highly exposed to the price of silver. They can be shares in companies involved in silver exploration and mining or units in an exchange-traded fund (ETF) like Global X Physical Silver (ASX: ETPMAG) that aims to track the price of silver.

Some ASX silver shares offer investors a pure play on the price of silver. This means their business operations are focused exclusively on some form of silver production. So their share prices are intrinsically linked to the price of silver. Buying shares in a pure-play silver company is often considered on par with investing in the underlying commodity itself.

The only pure-play silver company currently trading on the ASX is Silver Mines Limited (ASX: SVL). The company owns the Bowdens silver project in central New South Wales, which it claims is Australia's largest undeveloped silver project. 

Because the future profitability of the project is so dependent on the price of silver, the Silver Mines share price tends to follow the silver price quite closely. This means it gives investors similar diversification benefits to owning the physical commodity itself.

The miner South32 Ltd (ASX: S32) is an example of an ASX company with exposure to silver without being a pure play on the commodity. 

Originally spun out of mining giant BHP Group Ltd (ASX: BHP) in 2015, South32 operates in many countries globally. Its mines and refineries produce a range of minerals and other products. One of its major projects is the Cannington silver mine in Queensland, which supplied the silver to make the medals presented at both the Sydney Olympics in 2000 and the Beijing Olympics in 2008.

However, because South32 has a diversified portfolio of projects outside Cannington, it isn't as reliant on the price of silver to boost its revenues. 

Decreases in the price of silver might still hurt South32's bottom line, but there are many other contributing factors – including changes in the prices of other mineral commodities – that could affect its business operations, and consequently its share price. This means that the South32 share price will have a lower correlation with the price of silver than that of a pure-play company like Silver Mines.

Why invest in them?

Investing in silver stocks can help to diversify your portfolio, giving you exposure to different sectors of the economy. It is also an excellent way to add some commodities exposure to your portfolio without having to buy actual silver. This is a particularly good way to diversify your portfolio because many commodities perform very differently to the stock market.  

Some commodities – especially precious metals like gold and silver – even tend to preserve their value in an economic downturn. This could mean that adding silver shares to your portfolio could help protect you from extreme losses in a bear market.

Top silver stocks on the ASX

As we've already mentioned, the only pure-play silver stock currently trading on the ASX is Silver Mines. However, many other companies in the ASX metals and mining category produce silver, in addition to other commodities.

ETFs like Global X Physical Silver are also silver shares, but sit within the financials sector of the market. Here are three examples of ASX silver shares ranked by market capitalisation from high to low.

South32

South32 owns the Cannington silver mine, the largest operational silver mine in Australia and one of the largest globally. However, as we've discussed, South32 also has a diversified portfolio of mining assets and produces large amounts of metallurgical coal, manganese, alumina, aluminium, lead, zinc, and nickel in addition to silver.

South32 is a good choice for investors seeking exposure to a diverse range of commodities and precious metals, in addition to silver. However, bear in mind that the South32 share price will move in response to a range of market factors, not just changes in the price of silver.

Silver Mines

As we mentioned earlier, Silver Mines provides a genuine pure play on the price of silver due to its flagship asset, the undeveloped Bowdens silver project in NSW. The project is in the final stages of development approvals with the NSW Department of Planning and Environment after receiving no objections from any other NSW government agencies. The proposed mine would have a life of 16.5 years. The company expects it will produce approximately 66 million ounces of silver.¹ 

Global X Physical Silver 

ETFs trade on the ASX more or less like ordinary stock, only you don't buy a share in a company, you buy a unit in a fund. The fund manager then invests the money raised from the unitholders according to the fund's mandate. ETFs are a great way for everyday investors to gain exposure to different asset classes, including commodities like silver.

Global X Physical Silver gives investors quick, cheap, and easy exposure to the price of silver. It is backed by physical silver bullion, held by the fund's custodian, JPMorgan Chase Bank in London. The return unit holders in the fund receive on their investment should closely match the return they would receive had they actually bought and sold the physical asset (only with the ETF, they don't have to actually store the silver themselves!).

But beware, ETFs charge a management fee, which diminishes the potential return on investment (ROI). The fee for Global X Physical Silver is 0.49% per annum – for every $1,000 invested, you pay $4.90 each year in fees.

Benefits of investing in silver stocks

Investing in companies that produce precious metals like silver and gold can provide many benefits to your portfolio. Some of these are listed below:

• Diversification: The prices of precious metal commodities like silver are not highly correlated with the prices of most shares and other asset classes, meaning they can provide diversification benefits for your portfolio. This is because silver and gold prices often rally when share prices fall.

• Inflation hedge: Many investors see silver as a good store of value, making it an ideal 'safe haven' asset to hold during periods of economic uncertainty – like when inflation is high, and stock prices are falling (sound familiar?). As investors flock to these assets, prices are pushed up, which effectively provides a hedge against the negative impacts of inflation.

• Multiple uses: Silver has many industrial applications in addition to its status as a precious metal. It is used in many sought-after technologies, like touch screens, solar panels, and even water purification. High demand for silver from a number of different industry segments helps to stabilise its price.

And the cons…

There are also some drawbacks to investing in silver shares:

• Low returns: While they provide a dependable store of value over time, precious metals like gold and silver don't typically surge in price. This means silver stocks may not offer the same share price growth potential as companies in other sectors of the economy.

• Share prices may not fully reflect the price of silver: Depending on the type of investment, not all silver shares will give you full exposure to the price of silver. Companies have unique risks that will also play into the valuation that investors place on their shares. For example, one silver miner may have more debt than another, meaning their share prices perform differently, even if they are both considered pure-play silver companies.

Are ASX silver shares a good investment?

Investing in silver shares can provide excellent diversification benefits for your portfolio. The returns on silver have historically not been strongly correlated with the returns on the stock market, meaning that holding silver shares in your portfolio may help to protect you in an economic downturn.

The ASX offers many options for investing in silver shares, from diversified companies like South32 to pure plays like Silver Mines and Manuka Resources Ltd (ASX: MKR), to physically-backed commodity funds like Global X Physical Silver. 

Before investing, always understand the risks involved, and consider whether the investment will fit your personal investing goals.

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The post Investing in ASX silver shares appeared first on The Motley Fool Australia.

At the time of writing, the Openpay Group Ltd (ASX: OPY) share price is up 16% to $3.77 after the company released an announcement advising it has formed a partnership with MSL Solutions Ltd (ASX: MSL).

What was in the announcement?

According to the announcement, Openpay signed a partnership with MSL Solutions that will allow customers to use Openpay when buying MSL's golf and membership products. Member subscribers will be able to pay membership fees using Openpay's platform. 

The agreement will initially run for 3 years and Openpay's partners will be excluded from offering buy now, pay later (BNPL) services to MSL's customers in Australia.

Openpay's agreement with MSL Solutions involves revenue sharing and Openpay will pay MSL an annual rebate of fees paid to Openpay by customers each year.

Openpay Chief Commercial Officer, Dion Appel stated; 

"Openpay prides itself on creating partnerships that support our customer network; merchants and in this case, members. MSL is one of the leaders in the golfing and hospitality industry. We are proud to announce this exclusive partnership that will enable a smarter way for hundreds of gold clubs on MSL's platform to offer Openpay's buy now, pay later for the purchase of golf memberships. MSL has been an innovator in the golfing industry and we are pleased to have been selected to further solidify its position as an industry leader."  

About the Openpay share price

Openpay is a BNPL provider that offers services in Australia, New Zealand and the United Kingdom. The company partners with merchants to offer its payment platform in stores, in apps and online.

In July, Openpay announced a partnership with 1st Group Ltd (ASX: 1ST) to make its platform available to patients of medical practices within the MyHealth1st network. This partnership also included a revenue sharing agreement.

In the final quarter of the 2020 financial year, Openpay announced record growth with active customers up 141% relative to the prior corresponding period . The number of active merchants was also up 52% relative to the prior corresponding period. Openpay had total transactions of $62.6 million during the June quarter.

At 30 June, Openpay had $70,059,000 cash versus $45,559 at the end of the previous quarter.

The Openpay share price is up 1078% since its 52 week low of 32 cents. It has returned 204% since the beginning of the year. The Openpay share price is up 183% since this time last year.

The post Openpay share price up 16% on partnership with MSL Solutions appeared first on The Motley Fool Australia.