REA Group vs CAR Group: Which is best for income investors?

REA Group vs CAR Group shares: Which is better for income?

Comparing REA Group Ltd (ASX: REA) and CAR Group Ltd (ASX: CAR) might seem like splitting hairs at first—both are digital advertising powerhouses offering online marketplaces in property and automotive, respectively. But for income-focused investors, there are some clear differences between REA and CAR shares worth digging into. If you’re searching for franked dividends, capital growth or just a reliable yield, here’s how these two stack up.

The case for REA Group

REA Group runs the dominant realestate.com.au platform in Australia, a go-to site for property buyers, sellers, and renters. The company also has exposure to complementary businesses such as mortgage broking and property data, adding some diversification to its earnings.

Looking at the fundamentals, REA is a $20.84 billion business with a P/E ratio of 30.98, making it a premium-priced market leader. Its 1.88% dividend yield won’t knock your socks off, but it’s underpinned by 100% franking—perfect for Aussie investors who can use those tax credits. REA’s earnings per share (EPS) sits at $5.106, and dividend history shows steady growth over recent years, with payments fully franked as far back as the records go.

REA’s business is solid, especially with its dominant market position in online property listings and services. According to its most recent public description, it’s got a stronghold over the residential and commercial property websites sector in Australia and growing reach overseas.

The case for CAR Group

CAR Group, most familiar to Aussies as the owner of carsales.com.au, is a leader in online automotive classifieds. But CAR has expanded beyond Australian shores, with stakes in major auto marketplaces across South Korea, the US, Chile and Brazil. This international reach gives it multiple growth levers that don’t depend solely on the local market.

Fundamentally, CAR Group has a $9.09 billion market cap—smaller than REA but still substantial. Its P/E ratio is 29.01, a touch lower than REA’s, and its dividend yield is a standout at 3.58%. The shares come with only partial franking (recent dividends ranged from 30–50%), so the after-tax yield for Australian shareholders isn’t quite as attractive as a fully-franked payout, but the grossed-up yield still compares favourably. The latest annual dividend per share is $0.87, and the company has lifted dividends steadily in recent years.

CAR Group’s diverse earnings base across multiple countries and digital marketplaces adds some resilience in case the Australian car or job market slows.

Valuation comparison

Here’s a side-by-side of the key numbers:

REA is pricier on most measures, but CAR delivers a higher headline yield. However, REA’s fully franked dividends make it more tax effective for some income-driven investors.

Recent share price performance

Both companies have seen share price declines in 2026 so far, but REA has held up a bit better.

REA’s share price history (18 August–17 September 2026) shows a drop from $178.62 (on 18 August) to $159.22 (17 September): a fall of about 11%.

CAR Group’s price history (same 18 August–17 September 2026 period) starts at $29.10 and ends at $23.97, a decline of roughly 18%.

So over this snapshot, both have tracked down with the broader market, but CAR Group has seen a steeper fall.

Which is the better buy?

For income investors, I’m leaning towards CAR Group. While REA Group’s fully franked dividends are gold for some—especially for retirees or those keen to maximise franked income—the yield is modest at 1.88%. With CAR now offering a 3.58% yield (albeit with only partial franking), the gross cash return is much stronger.

That said, if you place a high value on franking credits, or you want the perceived safety that comes with REA’s virtual monopoly on real estate listings (and you don’t require much income), REA is hard to beat in terms of stability and after-tax benefit.

But if income is truly the goal and you can live with 30–50% franking, my pick would be CAR Group for its significantly higher yield and solid record of dividend growth.

The post REA Group vs CAR Group: Which is best for income investors? appeared first on The Motley Fool Australia.

More reading

• Why this expert believes it’s time to exit positions in REA Group shares
• Buy, hold, sell: James Hardie, REA Group, and Ramelius shares
• 5 things to watch on the ASX 200 on Friday
• Buy, hold, sell: Aurizon, Car Group, Guzman y Gomez shares
• 3 ASX 200 shares forecast to fly 30% to 40% higher

Motley Fool contributor Laura Stewart 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 CAR Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.