$500 buys 148 shares in this 11% yielding ASX income stock!

There is a large volume of ASX income stocks on the Australian sharemarket. And these are a great option for investors seeking easy, no-frills passive income.

Most ASX dividend-paying stocks pay investors every quarter, every six months, or every 12 months. And then there are the select few that pay dividends on a monthly basis. 

There are the long-standing and reliable blue-chip income stocks, growth stocks which pay a modest dividend of around 2% to 5% and offer long-term earnings growth, and then there are your high-yield dividend stocks.

It’s worth noting, though, that chasing the highest yield isn’t always the best strategy. In fact, very high yields can be a red flag that there is something fundamentally wrong with the business or that the share price has fallen sharply.

The aim of the game should be to find a financially sound dividend-paying business that pays a reliable dividend at a good rate.

Here’s one that springs to mind: IPH Ltd (ASX: IPH).

What is IPH, and what does it pay?

IPH provides intellectual property (IP) services through a network of global brands. These subsidiaries include global IP brands AJ Park, Griffith Hack, Pizzeys, Smart & Biggar, and Spruson & Ferguson, as well as IP business Applied Marks.

The group covers ten jurisdictions in 25 countries, including Australia, New Zealand, Southeast Asia, and the US, which makes it the largest IP services provider in the Asia-Pacific region. 

IPH services cover everything from patent filing and trademarks to prosecution, portfolio management, and enforcement. A significant share of its revenue comes from the Asia-Pacific market.

The best part is that the company has a long history of generating consistently strong cash flow from its operations. Most recently, IPH reported a cash conversion of 101% in its first-half FY26 results.

This type of cash flow enables the company to be an established, reliable dividend payer that gradually increases its dividend payment over time.

IPH has historically paid two partially or fully-franked dividends a year, in March and September. Last month, the board paid investors an interim dividend of 10 cents per share, 20% franked, which was an 11.8% increase on the prior corresponding period. 

Analysts forecast that the ASX income stock’s annual dividend could rise to 37.6 cents per share in FY26. That translates into a dividend yield of 11.2%, excluding any franking credits, at the time of writing.

What’s the outlook for the IPH share price? 

At the time of writing, IPH shares are down 0.6% for the day, to $3.36. That means that $500 invested in IPH will buy you 148 shares.

The latest decline also means the shares are now nearly 26% below this time last year. Most of the declines came off the back of the company’s FY25 results announcement in August last year. 

The company delivered solid growth, but it came short of investor expectations, and the news sent the shares crashing 22%.

It looks like we could be close to the bottom, though. Analysts think we’ll see much more upside out of the IP provider over the next 12 months.

TradingView data shows that five out of seven analysts have a buy or strong buy rating on the ASX income stock. 

The average target price is $4.79, and the maximum is $6. That implies a potential upside of 43.4% to 79.6% over the next 12 months, at the time of writing.

The post $500 buys 148 shares in this 11% yielding ASX income stock! appeared first on The Motley Fool Australia.

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