The Sonic Healthcare Ltd (ASX: SHL) share price is in the red — and has been for most of today's trading — after the S&P/ASX 200 Index (ASX: XJO) healthcare share went ex-dividend.

Last month was reporting season, when investors learned how their companies had performed in the period to December 2022.

Some businesses also declared their latest dividends.

Sonic Healthcare was one of the businesses that announced its dividend, with another increase for investors.

Sonic Healthcare shares goes ex-dividend

The board of the ASX 200 share decided to declare an interim dividend of 42 cents per share. That represents an increase of 5% compared to the prior corresponding period.

Sonic Healthcare shares went ex-dividend today, meaning that investors who buy shares today aren't entitled to that 42 cents dividend per share. This will be paid on 22 March 2023.

Investors who were too late to buy shares will need to wait another six months for the next half-year dividend. However, the business has a "progressive dividend policy", so the next dividend may also be higher than what was paid in the prior corresponding period of the previous financial year.

How was the ASX 200 share's dividend funded?

The ASX 200 share reported that in the first six months of the 2023 financial year, its total revenue was $4.08 billion and earnings per share (EPS) was 80.9 cents. Those numbers were up 22% and 52% respectively, compared to the pre-COVID result of the FY20 first half.

Those numbers included its base business revenue of $3.7 billion, which was up 9% year over year. The base business margins were "in line" with pre-pandemic levels. It's also benefiting from catch-up testing which is now going up after the pandemic and its extensive COVID testing regimes.

The business is pursuing new contracts and potential acquisitions which could help it grow further from here.

Sonic Healthcare share price snapshot

Since the beginning of 2023, the ASX 200 healthcare share has risen around 10%.

The post Owners of this ASX 200 share are soon going to receive a bigger dividend appeared first on The Motley Fool Australia.

When a share trades ex-dividend, it means that the rights to an upcoming dividend are now settled.

In light of this, if you were to buy one of these ASX 200 shares today, the rights to the dividend would stay with the seller and not transfer to you.

As a result, a share price will tend to decline in line with the dividend payment to reflect this. After all, why should a buyer pay for something that they aren't going to receive?

Which ASX 200 shares are going ex-dividend?

The following five ASX 200 shares have gone ex-dividend on Tuesday:

Lovisa Holdings Ltd (ASX: LOV)

This fast-fashion jewellery retailer's shares have gone ex-dividend for its fully franked 38 cents per share interim dividend. This will be paid to eligible shareholders next month on 20 April.

Northern Star Resources Ltd (ASX: NST)

Last month, this gold mining giant released its half-year results and declared an 11 cents per share fully franked interim dividend. Eligible shareholders can now look forward to receiving this dividend in their bank accounts towards the end of the month on 29 March.

Qube Holdings Ltd (ASX: QUB)

This logistics solutions company will be paying its shareholders a fully franked interim 3.8 cents per share interim dividend next month on 13 April.

Sonic Healthcare Limited (ASX: SHL)

When this healthcare company released its half-year results last month, it declared a fully franked interim dividend of 42 cents per share. This will be paid to eligible shareholders in a couple of weeks on 22 March.

Viva Energy Group Ltd (ASX: VEA)

Finally, this fuel retailer's shares have gone ex-dividend today for its 13.3 cents per share fully franked final dividend. This is scheduled to be paid to eligible shareholders later this month on 24 March.

The post 5 ASX 200 shares trading ex-dividend today appeared first on The Motley Fool Australia.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall on Tuesday despite a relatively decent start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 18 points or 0.25% lower. In late trade in the United States, the Dow Jones is up 0.1%, the S&P 500 is up 0.2%, and the NASDAQ is up 0.15%.

Oil prices rise

Energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a decent day after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 0.6% to US$80.16 a barrel and the Brent crude oil price is up 0.1% to US$85.85 a barrel. Oil prices rose despite concerns over China's economic growth targets.

RBA meeting

It is the first Tuesday of the month, which means the Reserve Bank of Australia will be meeting to discuss the cash rate. According to cash rate futures, the market has priced in a 75% probability of the central bank increasing the cash rate by 25 basis points to 3.6%.

Gold price edges lower

It could be a subdued day for gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (down: RRL) after the gold price edged lower overnight. According to CNBC, the spot gold price is up 0.15% to US$1,851.9 an ounce. Traders were selling gold ahead of the US Fed chief testimony.

ASX 200 shares going ex-dividend

A number of ASX 200 shares are going ex-dividend on Tuesday for their latest payouts and could trade lower. This includes the likes of fast-fashion jewellery retailer Lovisa Holdings Ltd (ASX: LOV), gold miner Northern Star Resources Ltd (ASX: NST), healthcare company Sonic Healthcare Limited (ASX: SHL), and fuel retailer Viva Energy Group Ltd (ASX: VEA).

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here's why they are bullish on them:

Nufarm Ltd (ASX: NUF)

According to a note out of Citi, its analysts have retained their buy rating and $6.90 price target on this agricultural chemicals company's shares. This follows an update from the U.S. Department of Agriculture (USDA) Chief Economist Seth Meyer on the outlook for U.S. agriculture. Citi notes that the USDA expects a 3% increase in corn, wheat, and soybeans acreage to 228 million acres in 2023. It feels this bodes well for Nufarm. The Nufarm share price is trading at $5.70 this afternoon.

Rio Tinto Ltd (ASX: RIO)

A note out of Goldman Sachs reveals that its analysts have put a conviction buy rating and improved price target of $140.40 on this mining giant's shares. Goldman is bullish due to Rio Tinto's iron ore production growth outlook and its potential free cash flow per tonne improvements. Combined with its compelling relative valuation versus peers, the broker feels the miner is a strong buy. The Rio Tinto share price is fetching $125.02 today.

Sonic Healthcare Limited (ASX: SHL)

Another note out of Citi reveals that its analysts have upgraded this healthcare company's shares to a buy rating with an improved price target of $36.00. Citi sees value in Sonic Healthcare's shares at the current level and highlights its strong balance sheet. With its net debt to EBITDA at 0.5x, this is well below its long-term average of 2.5x. Citi feels this gives Sonic plenty of capital to deploy on acquisitions/new contracts or share buybacks. The Sonic Healthcare share price is trading at $33.29 today.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

It's positive news for shareholders of both companies because the broker has improved the rating of those businesses.

Healthcare is an interesting sector for investing in. It's seen as defensive because many of them can benefit from ongoing patient demand, regardless of the economic situation – most people don't choose when to get sick. I'd imagine being alive and healthy is a priority for most people, so they'd be willing to spend on healthcare services.

But, there are also some positive tailwinds for the sector, including an ageing population, a growing population and increasingly advanced healthcare treatments.

Let's look at two of the latest ratings.

Pro Medicus Limited (ASX: PME)

Pro Medicus describes itself as a leading medical imaging IT provider. It provides a range of radiology IT software and services to hospitals, imaging centres and healthcare groups around the world.

The broker Citi has just increased its rating on the ASX 200 healthcare share to neutral. Citi's price target on Pro Medicus was raised to $61. A price target is where the broker thinks the share price will be in 12 months from when the call was issued.

Therefore, the broker doesn't think the Pro Medicus share price is going to move much from here.

In the company's FY23 half-year result, it reported that revenue went up 28.3% to $56.9 million, while net profit after tax (NPAT) improved by 31.5% to $27.2 million.

The Pro Medicus boss Dr Hupert said that the company's pipeline remains strong:

We have a very good spread of opportunities across different market segments, with opportunities in academic/IDN, corporate and private markets. Pretty much all of them are cloud-based with a growing number looking for our "full stack" solution which includes all three of our modules, namely Viewer, Archive and Worklist; a trend we see continuing.

Sonic Healthcare Limited (ASX: SHL)

The other ASX 200 healthcare share that Citi likes the look of is Sonic Healthcare, the global pathology business.

Citi increased its rating on Sonic Healthcare to buy. The price target on Sonic Healthcare is $36. That implies a possible rise of 8% for the business.

While the business saw the FY23 half-year earnings drop as COVID-19 testing slowed, its profit is still significantly higher than the FY20 first half – the pre COVID times. Compared to HY20, the FY23 half-year total revenue was up 22%, operating cash flow was up 47% and net profit after tax (NPAT) was up 50%.

Its non-COVID testing revenue and earnings continue to grow, as does the dividend. It has a progressive dividend policy, meaning that the board wants to grow the dividend each year.

The ASX 200 healthcare share is focused on automation and other efficiency gains, as well as procurement savings, which could help it maintain and grow its margins.

Sonic Healthcare is also hoping to win more outsourcing contracts from hospitals and other healthcare providers. It's also progressing "additional acquisition opportunities to add to future growth."

The post 2 ASX 200 healthcare shares just upgraded by Citi analysts appeared first on The Motley Fool Australia.

The laboratory services, pathology, and radiology provider has been very effective at growing its scale, earnings, and dividend over the last two decades.

At one time, it did not have the international reach that it does now. The ASX healthcare share is now a global business with a market capitalisation that's approaching $16 billion. It operates in a number of countries including Australia, New Zealand, Germany, the US, and the UK.

And its business could continue to grow for a very long time thanks to its exposure to tailwinds like ageing demographics and new technology for pathology.

Higher earnings have helped the Sonic Healthcare share price over the last five years — it's up by around 40%. Sonic Healthcare got a pandemic-era boost as it carried out millions of COVID tests. But now the focus is back on its core business.

How to make $200 of weekly income from Sonic Healthcare shares

There are no ASX 200 stocks that pay weekly. I think it's better to think of a company's dividend as an annual income that can be divided by 52.

To make $200 of weekly income, we need to generate $10,400 of annual income.

In FY23, according to Commsec, Sonic Healthcare is forecast to pay an annual dividend per share of $1.01, not including the effect of franking credits. That's a cash dividend yield of 3%.

If we owned 10,298 Sonic Healthcare shares, then we'd receive $10,400 of annual passive income in cash dividends. The franking credits would be a bonus on top of that.

The current Commsec forecasts for Sonic Healthcare suggest that the dividend could be increased to $1.06 per share in FY24. At the current Sonic Healthcare share price, that suggests the ASX stock could pay an FY24 cash dividend yield of 3.2%.

There could be another dividend increase in FY25. Commsec numbers currently predict a dividend per share of $1.115. That's a possible forward cash dividend yield of 3.35%.

If we think about FY25's payout, investors would only need to own 9,327 Sonic Healthcare shares to get $10,400 of annual dividends.

How is the ASX 200 stock performing?

The latest update that investors have seen was the company's FY23 first-half update.

While the drop-off in COVID testing was the cause of total revenue falling 14% and net profit after tax (NPAT) sinking 54%, the company has made a lot of progress since the first half of FY20 – a time when COVID-19 was not impacting Sonic's key markets.

Compared to HY20, base business revenue was up 11% (with organic revenue growth of 8%) and total revenue was up 22% thanks to residual COVID testing in FY23. Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 33% and net profit was up 50%.

The HY23 result saw Sonic Healthcare increase its interim dividend by 5% as it continued its progressive dividend policy for shareholders.

Sonic Healthcare continues to win contracts. It's also considering "several acquisition opportunities, with a rich pipeline" and it is benefiting from post-pandemic catch-up testing.

The post For $200 in weekly passive income, buy 10,300 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

While some investors will use these dividends as income to live from, they can also be reinvested.

It is the latter option that could help you generate significant wealth in the future if you are able to invest consistently over a long period of time. This is thanks to the power of compounding, which is what happens when you earn interest on top of interest.

For example, according to Fidelity, between 1991 and 2021, the Australian share market provided investors with an average total return of 9.6% per annum. Thanks to compounding, this means that a single $10,000 investment generating this return would have grown into $155,000 over 30 years.

And while past performance is no guarantee of future returns, this is in line with historical averages and it would be disappointing if similar returns were not generated in the future.

Investing consistently

The above example was a single investment left to run for 30 years. But what would happen if you kept investing rather than just settling for a single investment?

If you could spare a further $5,000 each year after that initial $10,000 investment, then by investing in ASX stocks and reinvesting your dividends, you could grow your wealth to $1 million after three decades if you generated an average 9.6% per annum return.

At that point, you could construct your portfolio so that it contains ASX dividend stocks that provide 5% yields. And then instead of reinvesting your dividends, you could take your $50,000 dividend pay check as a source of income to live from. All without ever having to lift a finger.

But which ASX dividend stocks could be top options?

Investors may want to look for ASX dividend stocks that have strong business models, sustainable dividends, positive long term growth outlooks, and competitive advantages. These are qualities that Warren Buffett looks for when investing, and given his track record, it's hard to argue against this strategy.

Companies such as Goodman Group (ASX: GMG), Sonic Healthcare Limited (ASX: SHL), and Treasury Wine Estates Ltd (ASX: TWE) tick a lot of these boxes and could be worth a closer look.

The post 3 ASX dividend stocks to try and turn $10,000 into $1 million! appeared first on The Motley Fool Australia.

Earnings for this healthcare giant were slashed by a colossal 54% in the first half, yet I'm hungrier than ever for more Sonic Healthcare Ltd (ASX: SHL) shares.

On Thursday, shares in the laboratory, pathology, and radiology services provider blasted 14.2% higher despite revenue and profits cratering. On top of that, the figures presented missed consensus estimates by 1%.

So, why on earth would I be wanting to increase my stake in Sonic Healthcare now?

At present, the company holds a 1% weight in my portfolio. Ideally, I'd now like to grow that position to between 2% to 3%… and here's my reasoning.

The COVID comedown

It's no secret that COVID-19 testing provided a temporary tailwind to Sonic's top and bottom lines. We are now seeing that fade away as we return to our 'new normal'. The diminishing COVID revenues have been an anchor on the Sonic Healthcare share price over the past year.

This might be unnerving for some shareholders. However, I take solace in the fact the core business is now fundamentally stronger than it was prior to the PCR testing frenzy.

As noted in its first-half results, Sonic's 'base business revenue' — comprising of laboratory, pathology, radiology, etc. revenue excluding COVID-19 testing — increased by 9% compared to the prior corresponding period to $3.7 billion.

Prior to 2020, the company had been growing its top line at around 10% per annum on average. I think there is an underappreciation for this base revenue. While it's not a trendy new industry, the diagnostic services market is incredibly large and estimated to grow at a compound annual growth rate (CAGR) of 13% out to 2030.

Where will Sonic Healthcare find growth?

I believe Sonic Healthcare will be able to sustain its 10% revenue growth by expanding into higher value — and possibly more in-demand — areas of diagnostics such as genetic, microbiome, and molecular diagnostics.

Molecular diagnostics

Speaking of molecular diagnostics: this is an area of diagnostics that Ark Invest highlighted in its Big Ideas 2023 report.

Analysts at Ark estimate the total addressable market for this type of diagnostic testing for cancer alone could be US$95 billion. Likewise, annual revenue derived from this form of testing is forecast to grow above 20% per annum through 2030 and beyond.

My guess is this played a key role in Sonic's decision to acquire ProPath in 2021. ProPath is a specialist in molecular pathology, serving 1,000 physicians and more than 20 hospital groups in the United States.

Hence, the addition of ProPath taps into the potential growth engine of molecular diagnostics — enabling a path for more upside in Sonic Healthcare shares.

Aging population

In my opinion, Sonic Healthcare could also grow faster for longer than most investors think due to an aging population. As people live longer as a byproduct of medical advancements, the rate of occurrence of cancers could trend higher.

As pictured above, the burden of cancer is estimated to increase by more than 60% from 2018 to 29.4 million new cases globally in 2040. In turn, I believe the demand for genetic predisposition testing, diagnosis, and prognosis of cancers will similarly expand over the next two decades.

There was an early indicator of the high growth rate in this market within Sonic's half-year presentation. In the US, revenue growth from ThyroSeq (thyroid cancer genetic test) was above 25%.

The potential reacceleration of earnings growth from this structural tailwind plays a significant role in my desire to buy more Sonic Healthcare shares.

What else is appealing about Sonic Healthcare shares?

There are a few others reasons why I personally see more upside to this global healthcare giant. To avoid this article becoming more of a novel, I'll list these additional positive factors below:

• Despite COVID-19 testing revenue diminishing, molecular testing for various viruses will undoubtedly persist in the future.
• The company is positioned for further inorganic growth as management utilised COVID-19 profits to deleverage its balance sheet.
• Plenty of runway for increased dividends or more buybacks

Lastly, my ultra bull case for Sonic Healthcare shares is centred around where value will accumulate along the value chain in the future.

I believe there is potential for laboratory testing to absorb a greater proportion of attributed value as the industry pivots to a preventive approach, rather than reactive. Greater margins could be recognised by the likes of Sonic as a result.

This is quite a speculative assumption. Realistically, such a scenario is purely the 'cream on top' of my investment thesis.

The post Why I'm more eager than ever to buy Sonic Healthcare shares following earnings appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) bounced back with a bang on Thursday, rising 0.79% to close at 7,410.3 points.

It came amid the release of the Australian Bureau of Statistics' latest employment data, finding unemployment rose to 3.7% in January. That's likely good news for those wishing inflation to ease.  

Leading the market higher today was the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ). The sector leapt 2.7% today.

It was also a good day for S&P/ASX 200 Information Technology Index (ASX: XIJ) stocks – the tech sector rose 2.7%.

However, fans of ASX 200 energy shares were likely left disappointed. The S&P/ASX 200 Energy Index (ASX: XEJ) slumped 0.7% as coal shares weighed amid earnings from Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC).

The coal producers also responded to the NSW Government's price cap and coal reservation policy today.

So, with all that in mind, let's take a look at the 10 shares that outperformed all others on Thursday.

Top 10 ASX 200 shares countdown

Today's biggest gain on the ASX 200 came from Orora Ltd (ASX: ORA) shares. They surged 15% to close at $3.33 on the back of the company's first-half earnings.

These shares made today's biggest gains:

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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

Bapcor Ltd (ASX: BAP)

The Bapcor share price is up 5.5% to $6.55. Investors have been buying this auto parts retailer's shares following the release of its half year results. Bapcor reported an 11.2% increase in revenue to $1 billion and a 2.3% increase in pro-forma net profit after tax to $146.3 million. Both were records for the period. This allowed Bapcor to boost its interim dividend by 5% to 10.5 cents per share.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price has jumped 10% to $10.37. This is despite the struggling fund manager delivering a terrible half year result. Magellan reported a 67% decline in net profit after tax to $83.8 million. This was driven by the halving of its average funds under management since this time last year. Investors appear to have been expecting an even worse update or are attracted to its 46.9 cents per share interim dividend.

Sonic Healthcare Limited (ASX: SHL)

The Sonic Healthcare share price is up almost 14% to $33.03. Investors have been buying this healthcare company's shares despite its half year result falling ever so slightly short of consensus estimates. They may be focusing more on news that the company is looking at making some acquisitions.

Telstra Group Ltd (ASX: TLS)

The Telstra share price is up 2% to $4.23. This follows the release of the telco giant's first half results. Telstra delivered a result ahead of expectations with its 6.4% increase in total income to $11.6 billion and 11.4% jump in EBITDA to $3.9 billion. This allowed the Telstra board to increase its fully franked interim dividend by 6.3% to 8.5 cents per share.

The post Why Bapcor, Magellan, Sonic Healthcare, and Telstra shares are charging higher appeared first on The Motley Fool Australia.

In morning trade, the healthcare company's shares are up 9% to $31.74.

This follows the release of Sonic Healthcare's half year results.

Sonic Healthcare share price jumps despite profit decline

• Total revenue down 14% to $4,082 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) down 40% to $920 million
• Net profit down 54% to $382 million
• Fully franked interim dividend increased 5% to 42 cents per share

What happened during the half?

For the six months ended 31 December, Sonic Healthcare reported a 40% decline in total revenue to $4,082 million. This reflects a 72% decline in COVID-19 revenue to $379 million, which offset a 9% lift in base business revenue to $3,703 million.

When compared to its performance in the first half of (pre-pandemic) FY 2020, revenue would have been up 22%.

It was a similar story for Sonic Healthcare's earnings, which fell heavily year over year but rose strongly compared to pre-pandemic times. The company's net profit of $382 million was down 54% over the prior corresponding period but up 50% from the first half of FY 2020.

Despite the year over year profit decline, Sonic Healthcare has maintained its progressive dividend policy and increased its interim dividend by 5% to a fully franked 42 cents per share.

How does this compare to expectations?

Given the Sonic Healthcare share price performance today, you might expect that this result was ahead of expectations.

However, the company's sales and net profit were actually 1% below consensus estimates.

Management commentary

Sonic's CEO, Dr Colin Goldschmidt, described the company's profit as 'amazing'. He commented:

At face value, Sonic Healthcare's result for the half-year shows declining revenue and earnings as a result of a dramatic reduction in revenue from COVID-19 related services against the same period in the prior year. Taking a longer-term view, our net profit for the half-year is an amazing 50% higher than in the most recent pre-pandemic comparable period, being H1 FY 2020.

The reduction in COVID related revenues also tends to mask the performance of our base business, which remains strong and is gaining further momentum. Base business revenue grew 6% organically versus H1 FY 2022 and 8% versus H1 FY 2020. For the month of January 2023 base business organic growth for the group was 10% versus January 2020. I am particularly pleased with the growth momentum of our Australian Pathology business, where growth in January was 16% versus January 2020. Comparing our own Australian base business Medicare billings to the national Medicare data over the last decade shows that Sonic has been consistently growing market share organically.

Outlook

No guidance has been provided for FY 2023. However, the company did advise that revenue was up 10% in January compared to the same period in 2020.

Furthermore, management appears positive on the outlook for the base business. Dr Goldschmidt added:

We are well-positioned to capitalise on the accelerating trend towards higher value tests and modalities in both laboratory medicine and radiology. We expect ongoing strong growth in genetic testing, including prenatal tests, and through exclusive or limited provider tests such as ThyroSeq, Oncotype DX, microbiome testing and others. Our base business organic growth is assisted by strong underlying industry drivers and is expected to be enhanced by post-pandemic catchup testing.

With the worst of the pandemic seemingly now behind us, we look forward to continuing to provide world-leading medical diagnostic services to our patients and their physicians.

And with the company ending the period with available liquidity of $1.5 billion, management revealed that it is progressing several acquisition opportunities. This could be what has got investors excited and boosted the Sonic Healthcare share price today.

The post Sonic Healthcare share price surges 9% on 'amazing' profit result appeared first on The Motley Fool Australia.

It's true that term deposits are now offering much better interest rates compared to 12 months ago.

Savers can now get very competitive rates on their savings. For example, when looking at term deposits from the big banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ), we can now see a few term deposit percentage rates starting with a 4.

But, despite the much better interest rates, I think ASX 200 dividend shares are more likely to make us wealthy.

Stronger income compounding potential than term deposits

If I put $10,000 into a term deposit with an interest rate of 4%, in 12 months I'd receive $400 in interest.

To benefit from the power of compounding, I'd need to leave the $400 of interest with the bank and re-invest the $10,400 for another 12 months. At the end of year two, I'd be paid $416 of interest, leaving me with $10,816.

But, ASX 200 dividend shares can deliver more growth, in theory.

If I put $10,000 into an ASX 200 dividend share that had a share price of $10, I'd get 1,000 shares. If that business had an expected 4% dividend yield, I'd get $400 in dividends after the first year. I could re-invest the dividend and let's say I could buy another 40 shares (probably using a dividend re-investment plan), leaving me with 1,040 shares if the share price is still $10.

Let's say that when the company reported its next full-year result it decided to grow the dividend by 10% after achieving earnings growth, resulting in $440 from my original 1,000 shares and $17.60 from my extra 40 shares, meaning a total of $457.60 of income paid in year two.

Assuming the share price didn't change, my original $10,000 investment has turned into $10,858.

It's the ability of a company to grow the dividend alongside earnings that can supercharge passive income combined with re-investment, rather than simply relying on re-investing the income each year.

Of course, it's not just income that makes up the returns of ASX 200 dividend shares. Capital growth is a big part of the picture.

Capital growth adds to returns

Let's use the biggest ASX exchange-traded fund (ETF) as an example. The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the S&P/ASX 300 Index (ASX: XKO), which is very similar to the ASX 200 and owns many of the same ASX 200 dividend shares.

Since the ETF's inception in May 2009, the fund has produced an average return per annum of 9.21%. Around half of that was from income – an average of 4.64% per annum, more than the dividend yield in my above example – and half of the total return was from capital growth. This shows how the ASX as a whole has performed, and the split of returns.

We don't know what share prices are going to do this month or this year. But, if earnings keep growing then I think ASX 200 dividend shares give themselves a great chance of growing the share price (and the dividend payout).

Which ASX 200 dividend shares to buy?

I like the look of businesses that are capable of producing long-term earnings growth and dividend growth. For example, in this article, I mentioned Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Sonic Healthcare Ltd (ASX: SHL), and APA Group (ASX: APA) and I also cover Wesfarmers Ltd (ASX: WES) shares sometimes.

I believe these are the sorts of names that can make better income returns and total than term deposits.

The post Banking on term deposits to retire rich? I'd buy ASX 200 dividend shares instead appeared first on The Motley Fool Australia.

When compelling businesses hit 52-week lows, that could be a good signal for investors to take advantage of lower prices.

This year could lead to a difficult economic situation for some businesses, but that doesn't mean it's going to last forever.

There could be an opportunity with these ASX 300 shares that could have been oversold by the market.

Dicker Data Ltd (ASX: DDR)

Earlier today, the Dicker Data share price hit a 52-week low. Over the past year, it has fallen around 40%.

For readers that haven't heard of this business, it acts as a distributor of a wide range of products including Cisco Systems, Dell, HP, Microsoft and many more. It's also expanding in other areas such as cybersecurity.

The ASX 300 share recently reported its result for the 12 months to December 2022. It said that revenue was up 25% to $3.1 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) went up 9.3%, operating profit before tax increased 0.8% to $106.9 million and net profit after tax (NPAT) declined 0.3% to $73.4 million.

Management said that the company suffered from higher costs, particularly higher wages and finance costs. Higher costs were incurred as the acquired businesses Exceed and Hills were integrated. It's yet to achieve significant cost synergies with these acquisitions.

Earnings are expected to rise noticeably to FY24. Commsec numbers suggest that earnings per share (EPS) could be 52.4 cents, putting the Dicker Data share price at 17 times FY24's estimated earnings. In that year it could pay an annual dividend per share of around 50 cents per share, translating into a grossed-up dividend yield of 8%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a leading global pathology business with a presence in a number of countries including Australia, the UK, the USA, Germany and so on.

It played an important part during COVID-19 by carrying out millions of tests. In October 2022 it generated $57.7 million of COVID-19-related revenue, so FY23 will also include earnings from testing.

While the ASX 200 share's profit is likely to be lower than in FY22 because of the significantly reduced COVID-19 testing in FY23, there are still positive signs. In the four months to October 2022, base (non-COVID) revenue had increased from $2.29 billion to $2.45 billion, up 6.7%.

EBITDA in the four months to October 2022 was $621 million, up 32.7% compared to the four months to October 2019 – pre-COVID times.

I think that healthcare treatments delayed because of the pandemic will now flow through Sonic Healthcare's financials. Despite that, the Sonic Healthcare share price is down almost 40% since the start of 2022.

According to estimates on Commsec, the Sonic Healthcare share price is valued at under 19 times FY23's estimated earnings. It has a trailing grossed-up dividend yield of around 5%.

The post 2 quality ASX 300 shares trading at bargain-basement prices today appeared first on The Motley Fool Australia.

It might have been a green day for the S&P/ASX 200 Index (ASX: XJO), but not all shares were showered with praise.

The benchmark caught its breath today after being rattled by hawkish commentary on interest rates yesterday. Despite the Tuesday wobble, the market is perched 8.4% above its 2022 endpoint — already outdoing the historical average annual return of 8%.

Still, there are high-quality ASX shares that toppled to their lowest point in a year today. Here's a look at three notable companies that are in the doldrums.

Three solid ASX shares taking a towelling

Elders Ltd (ASX: ELD)

Shares in the Australian agribusiness sank 5.9% to $8.83 on Wednesday without any news from the company. The swift unexplained drop prompted the ASX to issue a price query to Elders, to which it provided a response this afternoon.

While there was no price-sensitive information released, Elders noted that it had conducted multiple investor briefings with institutional investors yesterday. A collection of sector-wide factors were mentioned in these briefings, including:

• Declining livestock prices from historic highs
• Unseasonably wet conditions affecting eastern Australia
• Softer real estate activity amid rising interest rates
• Strong winter cropping outlook

One would need to trace back to early 2020 to find Elders shares trading this low on the ASX.

Bluebet Holdings Ltd (ASX: BBT)

Sportbetting company BlueBet managed to finish the day 1.6% higher at 32.5 cents apiece, but not before setting a new 52-week low. Shares in the microcap reached a low of 31 cents, its lowest on record since hitting the ASX.

There wasn't any clear negative news to explain a new 52-week low from BlueBet today.

Last month, shareholders were supplied with the company's results for the second quarter of FY23. While active customers were up by 32.3% to 59,632 compared to the prior corresponding period, more than $10 million worth of cash was consumed during the quarter.

Sonic Healthcare Limited (ASX: SHL)

Shares in ASX healthcare giant Sonic took a 3% hit on Wednesday, nudging down to $29.21. The last time the company reached a share price this low was around mid-2020 as it was beginning to catch the COVID-19 tailwind.

Earlier in the week, analysts at Goldman Sachs named Sonic as one ASX share it suspects will surprise to the downside this ASX reporting season. According to Goldman analyst Chris Cooper, investors are underestimating the impact of inflation on the business.

The Sonic Healthcare share price is down 24.6% over the past year.

The post Bargain alert? 3 high-quality ASX shares that just hit 52-week lows appeared first on The Motley Fool Australia.

Overall, it's been a fairly positive day for ASX shares and the S&P/ASX 300 Index (ASX: XKO) this Wednesday. At market close, the ASX 300 gained a healthy 0.36%, putting the index at just over 7,740 points. But let's talk about the massive losses of one ASX 300 healthcare stock – Polynovo Ltd (ASX: PNV)

Polynovo shares evidently did not get an invite to the ASX 300's party this Wednesday. In fact, the healthcare stock plunged by a nasty 12.08% to close at $2.33 a share. That was after the Polynovo share price closed at $2.65 yesterday and opened at $2.68 this morning.

So what went on with Polynovo shares today that elicited this rather horrible share price drop?

Why did ASX 300 healthcare stock Poynovo tank today?

Well, to be exact about it, it's a darn-tootin' mystery.

There was no news or announcements out of Polynovo today. Nor has there been since 17 January.

So we can rule that out.

What we do know, however, is that ASX healthcare stocks were some of the worst-performing shares on the ASX boards today. Indeed, the ASX 200 healthcare sector was the worst-performing sector on the entire market. Other ASX healthcare stocks took a hammering today too, as you might expect.

Ramsay Health Care Ltd (ASX: RHC) shares finished 0.27% lower. Nanosonics Ltd (ASX: NAN) shares lost 1.5%. The Sonic Healthcare Limited (ASX: SHL) share price shed close to 3%, while Healius Limited (ASX: HLS) tanked more than 5%.

So it looks as though Polynovo was just caught up in the wave of pessimism that engulfed most ASX healthcare stocks this Wednesday.

There is another factor to consider as well though. In 2023 so far, the Polynovo share price has risen by a whopping 15.8%. And that's after today's fall.

Over the past 12 months, this company has gained a rather incredible 89%:

When a company has had this much success, especially over a short period of time, investors can tend to get itchy fingers when it comes to taking profits off the table.

This could well be a factor in why Polynovo shares tanked so dramatically today. And selling does often beget more selling. Yesterday saw the Polynovo share price put on an impressive 3.52%. So maybe this was the trigger for investors to start taking some profits.

We can't really know what was behind the Polynovo share price's poor performance on the ASX 300 today. But this scenario is certainly a strong possibility.

The post Why did ASX 300 healthcare stock Polynovo tumble 12% today? appeared first on The Motley Fool Australia.

Interest rates have shot higher to try to tame inflation and dampen what's seen as excessive demand in the economy.

Yesterday, the Reserve Bank of Australia (RBA) decided to increase the official cash rate by another 25 basis points (0.25%) to 3.35%.

In theory, a higher interest rate should push down asset prices. So, the decline we've seen with some assets is probably justified.

So, not only do shares become cheaper than they used to be, but investors get the opportunity to boost their passive incomes.

That's because when share prices fall, it has the effect of increasing dividend yields.

Passive income boosted by higher dividend income

Here's an example. If a company had a dividend yield of 5%, investing $1,000 into that ASX share would achieve $50 of annual passive income.

If the share market turns into a bear market, sending that share price 10% lower, the dividend yield would translate into a 5.5% dividend yield. Investing $1,000 would achieve $55 of annual income. Certainly, an extra 0.5% return each year can add up over the years.

Of course, dealing with bigger sums would make a bigger difference. Investing $1 million with that extra 0.5% would be an additional $5,000 of annual income.

The higher the starting dividend yield, the more of a boost investors get from falling share prices. For example, a 10% dividend yield would turn into an 11% dividend yield after a 10% share price drop.

I don't think that some of these businesses are going to experience deteriorating conditions forever. Retailers may be facing a tricky 2023, but the longer term could see the economy return to normal-ish trading conditions.

ASX dividend shares that are now paying a bigger yield

There are many examples of ASX companies taking a hit to their share prices, including Wesfarmers Ltd (ASX: WES) as seen below.

Since August 2021, the Wesfarmers share price has fallen around 25%. Commsec numbers suggest that the owner of Bunnings and Kmart might pay a grossed-up dividend yield of around 5.25% in FY23.

From November 2021, the Nick Scali Limited (ASX: NCK) share price has declined by around 35%. Commsec numbers suggest the furniture retailer could pay a grossed-up dividend yield of around 11% in FY23.

Pathology giant Sonic Healthcare Ltd (ASX: SHL) has seen its share price decline 20% over the past year and 35% since the end of 2021. Commsec numbers suggest a grossed-up dividend yield of 4.75% could be the payout in FY23.

Foolish takeaway

This period of time seems like a great chance for investors to make passive income from ASX dividend shares while they're offering boosted dividend yields. Certainly, I'm on the hunt for much cheaper opportunities that could deliver outperformance and income growth over the coming years.

The post Why right now is a once-in-a-decade opportunity to make passive income from ASX shares appeared first on The Motley Fool Australia.

Dividends are not at all guaranteed payments. But, some dividend payments are more volatile than others because of the nature of their profits.

It's normal to see dividends from mining and energy shares go up and down because of the volatility of resource prices, which is why I wouldn't count on the dividends from Rio Tinto Limited (ASX: RIO) and Woodside Energy Group Ltd (ASX: WDS) being strong forever.

During recessions and major economic dislocations, it's normal for bank shares to cut their dividends like we saw during COVID-19 from names like Commonwealth Bank of Australia (ASX: CBA) and ANZ Group Holdings Ltd (ASX: ANZ).

So, with that in mind, I'm about to run through some ASX dividend shares that could continue to pay good dividends in the coming years. I'd love to invest $10,000 evenly between these four names.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I think this ASX dividend share is the king of passive income. While it's unlikely to have the biggest dividend yield, its consistent dividend growth is impressive, in my opinion. It has grown its ordinary annual payout every year since 2000.

The company has a diversified portfolio, which is spread across a number of ASX shares and industries, including TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), New Hope Corporation Limited (ASX: NHC), Aeris Resources Ltd (ASX: AIS), Macquarie Group Ltd (ASX: MQG) and BHP Group Ltd (ASX: BHP).

Unlisted investments include agriculture, luxury retirement living, swimming schools and electrical parts.

Soul Patts pays expenses from the dividend income it receives and then distributes the majority to shareholders. It invests the retained cash into other businesses.

According to Commsec, this company could pay an ordinary grossed-up dividend yield of 3.9%

Rural Funds Group (ASX: RFF)

Rural Funds is a leading real estate investment trust (REIT) that owns a portfolio of farmland across Australia, with cattle, vineyards, almonds, macadamias, sugar and cotton.

It aims to grow its distribution by 4% per annum, which is typically more than inflation. The business is funding the higher shareholder passive income through contracted rental increases and productivity improvements (which unlocks further rental growth and improved farm values).

The ASX dividend share has increased its distribution by at least 4% every year since it listed several years ago.

With a guided 5% total distribution yield in FY23, I think this is a solid option for steady passive income and long-term growth in the coming years.

Sonic Healthcare Ltd (ASX: SHL)

I don't think the need for healthcare and pathology will disappear. Sonic's role in the healthcare process is very important, as we saw during the worst of the COVID-19 years as it conducted millions of COVID tests in places like Australia, the US and Europe.

The ASX healthcare share has a stated 'progressive dividend policy', so the board tries to reward investors with pay rises each year.

Sonic Healthcare is benefiting from elevated organic growth as delayed healthcare procedures due to the pandemic are finally carried out.

I like that the company has been making acquisitions to diversify and grow its earnings, giving it more financial firepower to hopefully pay bigger dividends.

According to Commsec, it could pay a grossed-up dividend yield of 4.5%.

APA Group (ASX: APA)

APA is a leading energy infrastructure business that owns a national gas pipeline, delivering half of the country's natural gas usage. The company also owns other gas assets, like storage and power generation.

It has a growing portfolio of renewable energy and electricity transmission assets. For example, it recently acquired Basslink, a cable asset that connects Tasmania with mainland Australia, enabling the export of renewable energy across the Bass Strait.

The company has grown its passive income every year for the past decade and a half, thanks to its steadily-growing cash flow, which is funding bigger payouts. It continues investing in projects, which will hopefully enable even bigger payments.

APA expects to pay a distribution of 55 cents per security in FY23, which translates into a forward distribution yield of 5.2%.

Foolish takeaway

An average dividend yield of 4.6% would generate $460 of dividend income per year. It's not the biggest yield, but it would hopefully grow every year. I believe these dividend payers can be resilient in downturns.

The post How to invest $10,000 this year to create 'safe' passive income appeared first on The Motley Fool Australia.

If the latest monthly CPI data is anything to go by, rising inflation is still proving stubbornly difficult to quash. As a result, many Aussies are really starting to feel the pinch of surging prices across life's everyday essentials. 

Yes, wages have also been climbing. But for most of those fortunate enough to have received a boost to their take-home pay, this has generally been eradicated (and then some!) by the need to shell out more at the checkout.

So, what's the solution? Start a side hustle? Take a second job? Hit up the boss for a pay rise?

If you're looking for a slightly less labour-intensive way to boost your income, ASX dividend shares could be the answer. Unlike investment properties, which can take considerable time and effort to maintain, dividend stocks have the potential to provide a truly passive income stream.

So sit back and relax! Because we asked our Foolish contributors which ASX dividend shares they reckon are worth buying with your hard-earned cash right now. Here's what the team came up with:

5 best ASX dividend shares for January 2023 (smallest to largest)

Universal Store Holdings Ltd (ASX: UNI), $394.34 million

Vanguard Australian Shares High Yield ETF (ASX: VHY), $2.68 billion

Sonic Healthcare Limited (ASX: SHL), $14.65 billion

ANZ Group Holdings Ltd (ASX: ANZ), $71.24 billion

Westpac Banking Corp (ASX: WBC), $82.15 billion

(Market capitalisations as at market close on 11 January 2023)

Why our Foolish writers love these ASX dividend shares

Universal Store Holdings Ltd

What it does: Universal is a retailer of clothing and accessories aimed at dressing Australia's youth. The company operates 80 stores across Australia, as well as two separately-branded online stores, and its newly acquired Thrills brand.

By Brooke Cooper: The Universal Store share price was hit hard, alongside those of many retailers, in 2022. The stock fell 25% over the 12 months ended 31 December.

However, as Goldman Sachs notes, the economic headwinds that spurred much of the downturn among ASX consumer dictionary shares are unlikely to majorly impact Universal's target market. Thus, I believe the stock's struggles may have brought about a buying opportunity.

Universal Store shares have paid 21.5 cents of dividends over the last 12 months and are currently trading at $5.14. That leaves the stock boasting a 4.17% dividend yield.

Motley Fool contributor Brooke Cooper does not own shares of Universal Store Holdings Ltd.

Vanguard Australian Shares High Yield ETF

What it does: The Vanguard Australian Shares High Yield ETF is an exchange-traded fund (ETF) that invests in a basket of ASX-listed dividend-paying shares.

By Sebastian Bowen: This ETF from reputable provider Vanguard aims to provide investors with high levels of dividend income and franking credits. It holds a relatively concentrated basket of only ASX dividend shares.

These mostly consist of the blue-chip shares income investors know and love, spread across different industries. They include banking and finance, mining, energy, infrastructure, and consumer staples.

As such, this investment could well be worth considering for income investors in 2023 who are seeking a diversified, income-producing investment in one single and simple fund.

This ETF also pays out dividend distributions quarterly, which some investors might appreciate. On recent pricing, the Vanguard Australian Shares High Yield ETF offered a trailing distribution yield of more than 6%.

Motley Fool contributor Sebastian Bowen does not own units of the Vanguard Australian Shares High Yield ETF.

Sonic Healthcare Limited

What it does: Sonic is a global pathology healthcare business that operates in a number of countries including Australia, the USA, Germany, the UK, and Switzerland.

By Tristan Harrison: Sonic Healthcare has a stated progressive dividend policy. It has increased its dividend every year for a decade.

According to Commsec, the company is expected to pay an annual dividend per share of $1.04 in FY24. This translates to a forward, grossed-up dividend yield of almost 5%.

Sonic management points to "strong underlying industry drivers and market share" with a backlog of testing postponed during the pandemic. This implies solid, non-COVID testing revenue growth over the short-to-medium term.

I like the company's recent acquisitions, including the 19.9% stake it bought in Microba Pty Ltd (ASX: MAP). I believe this is a good use of the company's COVID-testing cash flow and can help grow its profit and dividend in future years.

Motley Fool contributor Tristan Harrison does not own shares of Sonic Healthcare Limited.

ANZ Group Holdings Ltd

What it does: ANZ is the smallest of the big four Australian banks, servicing both Australia and New Zealand across its retail, commercial, and institutional divisions. As of September 2022, the bank held $283.1 billion worth of Australian home loans on its balance sheet.

By Mitchell Lawler: The market appears to be discounting ANZ shares compared to its peers. Right now, big blue is trading at roughly 10 times earnings.

In comparison, the rest of the banking giants fetch 14 to 19 multiples. Perhaps investors aren't keen on the bank's expenses chewing up 45% of its revenue – the highest of the big four.

However, I'm of the opinion the proposed merger between ANZ and Suncorp Group Ltd (ASX: SUN) will go through… eventually. The mergers of the past – Commonwealth Bank of Australia (ASX: CBA) and Bankwest, Westpac and St. George – have set precedents that will be hard for the ACCC to argue against.

A merger of ANZ and Suncorp would help create business simplification and improved pricing power. I believe this would provide justification for ANZ shares to trade more in line with the industry average.

In my opinion, ANZ shares offer an attractive blend of income (6.14% yield currently) and potential share price growth.

Motley Fool contributor Mitchell Lawler does not own shares of ANZ Group Holdings Ltd but does own shares of Commonwealth Bank of Australia.

Westpac Banking Corp

What it does: Westpac is one of Australia's big four banks. As well as the eponymous Westpac brand, it operates the Bank SA, Bank of Melbourne, Rams, and St George brands.

By James Mickleboro: I think Westpac could be a top dividend option in January. Thanks to the positive impact of rising interest rates on margins and the bank's bold cost-reduction target, I feel that Australia's oldest bank is well-placed to deliver solid earnings and dividend growth in the coming years.

I'm not alone in this view. Goldman Sachs is forecasting fully-franked dividends per share of $1.48 in FY 2023, $1.59 in FY 2024, and $1.69 in FY 2025. This represents yields of 6.3%, 6.8%, and 7.2%, respectively, based on the current share price. Goldman also sees plenty of upside with its conviction buy rating and $27.60 price target.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp.

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

The Australian Financial Review reported that over the next decade, around 3.6 million Australians will move from the accumulation phase to the retirement phase with their superannuation, according to deputy chair of the Australian Prudential Regulation Authority (APRA) Helen Rowell. This could affect $750 billion in savings.

The newspaper quoted the principal of Moran Partners Financial Planning, Paul Moran, who said:

Average punters have no idea about how retirement income works. They understand saving for their retirement but are not sure how they get an income.

There are a number of different sources of potential income. Online savings accounts and term deposits are finally offering a good interest rate. Property rental yields are getting better and improving every month as property prices fall. However, remember that the gross rent yield and net rent yield for property are not the same.

ASX dividend shares can also play a very useful role in developing a passive income stream.

Each household's circumstances are different, with different goals and objectives. This is where a financial planner could be very useful to create a plan.

How ASX dividend shares can help

There are plenty of ASX dividend shares that are able to offer investors a higher dividend yield than other assets can typically offer.

For example, Westpac Banking Corp (ASX: WBC) is expected to pay a grossed-up dividend yield of 8.4% in FY23, which is much higher than what its term deposits are currently offering. But term deposits are guaranteed, and the capital is also protected. Share prices can be very volatile.

Historically, share prices for plenty of businesses have gone on to recover from a widespread market drop. Just look at what happened after the GFC and the COVID-19 crash – the market went on to new heights. But that doesn't mean that it's not painful when investors go through volatility.

Not only can ASX dividend shares pay a good dividend yield, but some of them also have the ability to grow profit over time. This enables them to grow dividends and, hopefully, lead to a rising share price over time.

Examples of businesses that have grown their dividend for a number of years include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Sonic Healthcare Ltd (ASX: SHL), Rural Funds Group (ASX: RFF), and APA Group (ASX: APA).

Investors could also use ASX exchange-traded funds (ETFs) to invest in a broad range of businesses on the ASX, or internationally, to achieve significant diversification through one investment.

Foolish takeaway

ASX dividend shares can be a great way for an investor to generate more passive income from their investments but, generally, the higher the yield, the less consistent that dividend may be.

I'm building a portfolio of ASX dividend shares that I believe can keep growing dividends and pay for my life expenses in the future, so I fully believe in this strategy.

The post How ASX dividend shares can solve retirement income needs appeared first on The Motley Fool Australia.

For a few names, the pandemic saw elevated earnings. COVID testing produced a lot of extra profit and cash flow for names like Sonic Healthcare Ltd (ASX: SHL), as illustrated below, and Australian Clinical Labs Ltd (ASX: ACL).

But the COVID-testing businesses have seen their share prices plunge over the past year as COVID testing has reduced.

Many other ASX 200 healthcare shares actually suffered because surgeries and other forms of healthcare were delayed. Two examples of such delays impacting earnings during COVID include Ramsay Health Care Limited (ASX: RHC) and Cochlear Limited (ASX: COH).

CSL Limited (ASX: CSL) also suffered because the pandemic increased the cost of blood plasma and also reduced collections.

What's the outlook for ASX 200 healthcare shares?

The companies that saw surgery delays now have waiting lists, so they can benefit from that strong demand in FY23.

While COVID testing is dropping, it's still happening. For the month of October 2022, Sonic Healthcare reported that it generated $57.7 million of COVID-related revenue, which suggests that testing cash flow can still benefit those companies involved.

The investment giant Blackrock is one of the investors that likes the healthcare sector at the moment.

Blackrock said that healthcare is benefiting from a structural transition amid ageing populations. It said that healthcare has "appealing valuations and likely cash flow resilience during downturns".

The fund manager suggested that it also likes healthcare because it's "developing medicine and equipment to help meet ageing population needs".

Valuations

While some ASX 200 healthcare shares have fallen, they still don't have incredibly low price-to-earnings (P/E) ratios, reflecting investor confidence in their defensive nature.

Using the Commsec earnings projections for FY23, these are some of the valuations:

The CSL share price is valued at 35 times the estimated earnings.

The Ramsay Health Care share price is valued at 39 times the estimated earnings.

The Sonic Healthcare share price is valued at 19 times the estimated earnings.

The Cochlear share price is valued at 45 times the estimated earnings.

The ResMed CDI (ASX: RMD) share price is valued at 31 times the estimated earnings.

The post Are healthy returns on the horizon for ASX 200 healthcare shares in 2023? appeared first on The Motley Fool Australia.