Qantas Airways Ltd (ASX: QAN) shares have had a difficult few months.

The airline has been navigating a challenging environment, with higher operating costs and uncertainty surrounding international travel.

But with the share price coming under pressure, could October be a good time to invest?

Here’s what I think.

Why have Qantas shares fallen?

Qantas shares are trading around $8.32 on Monday, having fallen more than 20% since late June.

I think one of the biggest reasons for the weakness is the sharp increase in aviation fuel costs.

The conflict in the Middle East has pushed energy prices higher, leaving airlines facing a substantial increase in one of their largest operating expenses.

Qantas has already felt the impact. In FY26, underlying profit before tax declined to approximately $2.06 billion, with management reporting that the Middle East conflict had an estimated $420 million impact on operating earnings during the second half.

That is a significant amount of money, and it helps explain why investors have become more cautious.

Qantas has responded by increasing fares, adjusting capacity, and making changes to its international operations.

But there is a limit to how much additional cost airlines can pass on to passengers before demand starts to weaken.

With Australian households also facing higher living costs and interest rates, I think the next few months could remain challenging.

Why I still like the business

Despite these pressures, I think Qantas has some important strengths.

Its position in the Australian aviation market is particularly valuable. Through Qantas and Jetstar, the company serves different parts of the market, allowing it to cater to business travellers, holidaymakers, and more price-conscious customers.

I also like the contribution from its loyalty division. Qantas Loyalty generated underlying earnings of $625 million in FY26, demonstrating that the group’s profitability extends beyond selling airline tickets.

There is also the airline’s fleet renewal programme to consider.

Newer aircraft should gradually improve fuel efficiency and the customer experience, potentially helping Qantas become more competitive over time.

Of course, replacing aircraft requires substantial investment, so those benefits will take time to emerge.

Would I buy today?

I think Qantas shares are becoming increasingly interesting after their recent decline.

The business remains profitable, has strong positions in the Australian travel market, and is investing in its long-term future.

My main concern is how long elevated fuel prices could persist. If costs remain high and travellers become more cautious, the earnings recovery could take longer than investors expect.

But if fuel prices eventually moderate and travel demand remains reasonably resilient, I think Qantas could be earning considerably more in a few years.

Foolish takeaway

I would be prepared to buy Qantas shares around $8.32 with a long-term view.

I don’t expect an immediate recovery, particularly given the uncertainty surrounding fuel prices.

But I think the company’s market position and longer-term growth opportunities make the recent weakness worth considering.

The post Are Qantas shares worth buying in October? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Quality ASX passive income shares could be the right investment during this uncertain time. Dividend-paying businesses could produce $700 per month of passive income.

I think it’s important that investors consider how resilient dividends could be from their ASX dividend share. If I’m relying on dividend income for my personal finances, I’d want to be confident that dividend cash will keep flowing to my bank account, even in a downturn.

With that in mind, I’ll highlight two appealing ASX passive income shares that I’d buy today (and already own because of how much I like them).

Future Generation Australia Ltd (ASX: FGX)

The listed investment company (LIC) structure is very effective at delivering regular dividends. LICs make money by investing in other shares and generating investment profits. They can ‘bank’ investment returns in good years to help pay dividends in leaner years.

Future Generation Australia has impressively grown its dividend every year since it started delivering payments to shareholders in 2015. That’s more than a decade of continuous dividend increases.

In the 2026 financial year – which ends in December 2026 – the annual dividend is guided to rise by 5.6% to 7.6 cents per share. That’s an inflation-beating rise for a dividend yield that’s already large.

The guided annual dividend translates into a forward grossed-up dividend yield, including franking credits, of 8.1% at the time of writing. That’s a big yield from the ASX passive income share.

How does the LIC actually invest? It’s invested in the funds of more than a dozen fund managers, so there’s significant diversification with numerous different shares as those managers invest with different styles.

Pleasingly, each of those fund managers works pro bono – for free – so that Future Generation can donate 1% of its net assets to youth charities. In other words, there are no management fees or performance fees involved. That’s great for the net investment return and it’s a wonderful cause.

L1 Long Short Fund Ltd (ASX: LSF)

The other ASX passive income share I want to highlight is also an LIC. The fund manager L1 Group is actually one of the fund managers that supports Future Generation Australia.

L1 Long Short Fund invests in both ASX shares and international shares, using both normal investing and short-selling to generate returns.

I like how the investment team are willing to invest with a contrarian and opportunistic mindset. Avoiding thinking like the crowd can be where the good returns are, particularly when it comes to cyclical sectors.

It noted in August how it’s investing, which I think describes well the sorts of opportunities it’s looking at:

We continue to focus on company-specific opportunities where valuation and earnings delivery can drive returns across a range of market environments. We believe the portfolio looks well placed at present, with the median long position trading on 10x P/E, supported by double-digit EPS growth and modest debt levels.

In October, the investment team wrote:

The S&P/ASX 200 Index (ASX: XJO) has been relatively flat over the past year, given a difficult Australian macro backdrop. We believe this backdrop is well suited to active stock pickers (like L1), where strong specific companies can outperform a relatively flat broader stock market. The increased global stock volatility from higher oil prices, higher bond yields and constant AI sentiment changes is providing us with a better than usual opportunity set of mispriced stocks.

Past performance is not a guarantee of future returns, but the portfolio has returned an average of 15% per year over the past five years.

Some of those returns have been used to pay a growing dividend. Since it started paying dividends in 2021, it has increased the payout every financial year.

I expect the next 12 months of dividends could come to 16.2 cents per share, which is a grossed-up dividend yield of 5.3%, including franking credits.

$700 per month of passive income

These two ASX passive income shares don’t pay monthly, so I think it’d be better to think of the goal as an annual target of $8,400.

Between the two businesses I highlighted, the average dividend yield is 6.7% (including franking credits).

With a 6.7% yield, it’d take a portfolio value of $125,374 across the two stocks to generate $8,400 (of annual income), or $700 per month on average. Along with a few other dividend names, I think the above options are great for passive income.

The post 2 ASX passive income share ideas I'd use to generate $700 a month in 2027 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, L1 Group, and L1 Long Short Fund. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Arena REIT (ASX: ARF) has increased its FY27 distribution guidance by more than 10% after positive progress on its portfolio of assets occupied by Edge Early Learning Centres.

Business failure put dividend at risk

The childcare operator was placed in administration in August, casting doubt over whether Arena would continue to receive rent for the 27 centres it owned which were occupied by Edge.

Arena originally provided guidance to the market that it would pay distributions of 18 cents per share in FY27, based on not receiving any rent from the Edge centres.

It has now increased this guidance to 19 cents to 20.2 cents per share, based on progress it has made on that front.

Based on the share price at the time of writing, this would result in the company paying a dividend yield of 8.2% at the upper end of the range.

The lower end of the distribution guidance assumes no income after October 31 from Edge properties for which the administrator has yet to complete business sale agreements with the new operators.

It also assumes no new acquisitions and no material change in current market or operating conditions.

The company added:

The upper end of the guidance range reflects the balance of announced transactions proceeding, including the transaction announced by Goodstart Early Learning (Goodstart) and the Administrator for the acquisition of 20 Edge early learning businesses operating from Arena owned centres. The proposed Goodstart transaction remains subject to confirmatory due diligence and final transaction documentation. All transactions remain subject to the transfer of service approvals and assignment of leases. Arena is continuing to undertake due diligence on the Edge portfolio transactions, including the proposed Goodstart acquisition, as it considers its consent to the assignment of Edge leases.

Separate to the Edge matters, Arena said it was continuing to improve the quality of its portfolio through the divestment of properties that offer lower prospects for long-term rental growth.

In the first quarter, the company sold three assets worth $16.6 million.

Arena added:

Arena currently has a fully funded development pipeline and will continue to consider the best use of the proceeds from its ongoing asset recycling program, having regard to progress on the resolution of the Edge portfolio, as well as Arena’s balance sheet position, cost of capital and capital management program.

Rate rises taking their toll

Many ASX-listed real estate investment trusts are currently trading near their 12-month lows, with the recent interest rate increase pushing share prices lower.

Arena is valued at $1 billion.

The post This ASX real estate investment trust has just boosted its dividend by more than 10% appeared first on The Motley Fool Australia.

More reading

• Arena REIT upgrades FY2027 distribution guidance on Edge portfolio progress
• Dividend yields in focus as seven ASX real estate companies hit 12-month lows
• Arena REIT provides Edge Early Learning update
• How much is needed in superannuation to target $2,000 a week in passive income
• 3 ASX real estate investment trusts paying a dividend yield of more than 7%

Motley Fool contributor Cameron England 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.