S&P/ASX 200 Index (ASX: XJO) shares rose 2.77% and delivered total returns, including dividends, of 7% in FY26.  

The financials sector underperformed in FY26, which was in stark contrast to its outperformance in FY25.  

Financials were actually the best performer of the 11 market sectors in FY25, delivering a near-30% total return to investors.  

Things changed dramatically in FY26. 

The S&P/ASX 200 Financials Index (ASX: XFJ) fell 1.89%, but the 3.58% dividend yield lifted it into the green for a total return of 1.69%. 

Here are the top five ASX 200 financial shares for capital growth in FY26. 

1. Infratil Ltd (ASX: IFT)

Infratil is a New Zealand-based infrastructure investment company.

This ASX 200 financial share lifted 28.8% to finish the year at $12.61 apiece. 

One of the highlights of FY26 was Infratil’s data centre business, CDC Data Centres (CDC), signing Australia’s largest-ever data centre contract.  

CDC was already the largest data centre provider across Australia and New Zealand before the deal was done. 

The 30-year, 555MW agreement with a US customer highlighted the structural global theme of surging demand for artificial intelligence (AI) infrastructure. 

Infratil also delivered impressive earnings growth for FY26.

The company reported an 11% rise in proportionate operational EBITDAF to NZ$989 million. The company also raised its FY27 guidance by 21%.  

2. AMP Ltd (ASX: AMP)

The AMP share price rose 27.4% to close out the year at $1.61. 

AMP has been on a multi-year comeback journey following the Banking Royal Commission in 2018.

AMP was amongst the companies exposed for the worst conduct, prompting a multi-year restructure of the business. 

Brokers appear positive on the outlook for this ASX 200 financial share from here.  

As my colleague Samantha reports, AMP is focused on improving its operational leverage and looking at new capital relief strategies to boost returns. 

Out of 10 analysts rating AMP shares on the TradingView platform, eight have a strong buy or buy rating on AMP shares.

Nine analysts have provided a 12-month target price ranging from $1.68 to $1.94.

Thus, there is a uniform expectation of a further share price rise for AMP in FY27.

3. Challenger Ltd (ASX: CGF)

The Challenger share price rose 23.8% to finish at $10 on 30 June. 

This ASX 200 financial share went up on increased investor confidence that Challenger is gaining market share as Australia’s leading retirement income provider.

Arguably, the biggest catalyst for Challenger’s share price in FY26 was the 1H FY26 report.

Challenger reported record annuity sales of $3.8 billion, up 32% year over year.

The company also bumped up its fully-franked interim dividend by 7%, and launched a $150 million buyback.

This reinforced investor confidence in the earnings outlook ahead.

4. ANZ Group Holdings Ltd (ASX: ANZ)

The ANZ share price rose 21.2% to $35.35 on 30 June. 

New CEO Nuno Matos has been restructuring the business and integrating Suncorp Group Ltd (ASX: SUN)’s banking division post-acquisition. 

In 1Q FY26, ANZ achieved a quarterly cash profit of $1.94 billion, up 75% from the 2H FY25 quarterly average.

Management said the strong profit was driven by a 4% increase in operating income and a 21% cut in operating expenses.

The ASX 200 bank share rose 8.5% on the day of the report, and hit a record high of $41 the next day. 

This ASX 200 financial share is also attractive because it offers the highest trailing dividend yield of the big banks. 

5. Magellan Financial Group Ltd (ASX: MFG) 

The Magellan share price rose 13.2% to $9.69 on 30 June. 

The defining event in FY26 was Magellan’s proposed merger with the highly successful boutique investment bank, Barrenjoey Capital Partners.

Magellan and Barrenjoey completed the merger on 1 July. 

Former UBS bankers Matthew Grounds and Guy Fowler OAM founded Barrenjoey in 2020.

Magellan was a seed investor in Barrenjoey, and will seek shareholders’ approval to rebrand as Barrenjoey Group Limited at the October AGM.

Magellan received more than 90% approval from shareholders at the merger vote in April. 

This ASX 200 financial share has crumbled almost 80% over five years. The stock entered a downward spiral in 2021 after losing a major client. Its co-founder, Hamish Douglass, also resigned.

Assets under management have dropped from $113 billion in July 2021, when Magellan shares traded at $50 apiece, to $38 billion as of the last update in March. 

The post 5 best ASX 200 financial shares of FY26 appeared first on The Motley Fool Australia.

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• Top ASX 200 share of each market sector in FY26
• This is the ASX bank stock I would buy today for franked dividend income
• How much passive income can I earn off a $100,000 portfolio?

Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. 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 Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

AMP Ltd (ASX: AMP) shares climbed higher at the end of June, recouping losses shed earlier on in the month.

The same can’t be said for the year-to-date, though. 

After a strong start to the year, AMP shares crashed by around 26% in February following the financial services company’s FY25 results. It came in far below expectations, and investors were disgruntled.

The decline marked the company’s largest one-day fall since 2003, when its value tanked 36%.

Ongoing geopolitical tensions and concerns about Australia’s inflation data rate also weighed heavily on financial shares like AMP throughout the first half of the year.

Thankfully, AMP’s first-quarter update was a little more positive. The company reported 45% growth in Platforms’ net cash flows and improved Superannuation & Investments (S&I) net cash outflows in April. The result proved that business growth is underway and revealed momentum across several key divisions. 

It looks like AMP is still viewed as a potential turnaround story by the experts, too.

Many think that if management successfully executes its strategy, improves profitability, and restores market confidence, the share price could benefit from both earnings growth and a higher valuation multiple.

Market Index data shows the majority of brokers have a strong buy rating on AMP shares. The $1.72 average target price implies a potential 7% upside at the time of writing.

The outlook for AMP shares looks positive. But it’s not the only reason investors should think about adding the stock to their portfolio.

AMP shares are a great passive-income opportunity

While AMP is inherently financial cyclical stock, it does have some defensive qualities.

The company is well-known for its superannuation funds, home loans, and everyday/savings accounts. But, a significant portion of its revenue comes from the AMP’s wealth management and superannuation accounts.

Superannuation is often considered defensive because it is an essential financial service, the customer relationships are generally sticky because this type of customer doesn’t usually switch providers, and AMP also benefits from recurring fees.

What dividend does AMP pay its shareholders?

AMP typically pays its investors twice-yearly dividends: an interim dividend in September and a final dividend in April.

AMP’s latest dividend payment in April was 2 cents per security, with 20% franking. Shareholders were also paid an interim 2 cents per security, 20% franked, in September last year.

At the time of writing, that translates to a trailing dividend yield of around 2.5%. 

 

The post Are AMP shares a good buy for passive income? appeared first on The Motley Fool Australia.

More reading

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• 3 reasons to buy AMP shares today

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 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.

Telstra Group Ltd (ASX: TLS) shares may be one of the most popular dividend options due to the company’s perceived stability and dividend yield.

The ASX telco share usually has a higher dividend yield than the ASX bank shares of Commonwealth Bank of Australia (ASX: CBA) and Macquarie Group Ltd (ASX: MQG), though typically lower than names like Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).

Telstra has consistently increased its annual payout since the onset of the inflationary period in FY22.

Plus, the FY26 half-year result was yet another example of the bank providing investors with stability and growth – it hiked its interim dividend by 10.5% to 10.5 cents per share.

The HY26 result also showed the business is capable of growing earnings. It reported total income of 0.2% to $11.8 billion, operating profit (EBITDA) rose 4.7% to $4.4 billion, net profit for Telstra shareholders increased 9.4% and earnings per share (EPS) climbed 11.2%.

The cash profit was particularly good. Cash operating profit (EBIT) rose 14%, cash earnings grew 17%, and cash EPS increased 19.7%.

In this article, we’re going to look at the annual FY27 dividend, which will be paid in 2027.

2027 dividend projection for owners of Telstra shares

According to the projection on CMC Invest, the ASX telco share is projected to pay an annual dividend per share of 22 cents in the 2027 financial year.

At the time of writing, this forecast translates into a dividend yield of 4.4% excluding franking credits and a grossed-up dividend yield of approximately 6.1%, including franking credits.

If someone were to invest $8,000 in Telstra, they would be able to buy 1,603 Telstra shares (with a little bit of money left over).

With those 1,603 Telstra shares, investors could receive $352.66 of cash and approximately $136.03 franking credits.

Is this a good time to invest in the ASX telco share?

According to CMC Invest, there have been six analyst ratings calls on the business in the last three months.

Of those six, one was a buy rating and five were hold ratings. So, the investment professionals are largely neutral on the appeal of the company’s valuation right now.

The average price target of those six ratings is $5.33. That means, collectively, those analysts are predicting the Telstra share price could climb by around 7% within the next year (at the time of writing).

The Telstra share price was above $5.33 earlier this year, though it has clearly dropped back since then.

Telstra looks like a solid option for dividends, though there seem to be more compelling ASX shares out there to buy.

The post If I invest $8,000 in Telstra shares, how much passive income will I receive in 2027? appeared first on The Motley Fool Australia.

More reading

• How much do I need in superannuation to receive $5,500 per month in passive income?
• How to get started with a portfolio delivering $500 a week in passive income
• How much passive income can I earn off a $100,000 portfolio?
• Should I invest $5,000 in Telstra shares in July?
• These ASX shares could generate $5,000 per year in passive income

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.