When it comes to buying blue-chip ASX shares for dividend income, Metcash Ltd (ASX: MTS) is often overlooked in favour of its larger and more famous rivals. But while the likes of Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) may be more popular with ASX investors, Metcash appears to have a lot more to offer income investors right now.

Metcash may not be a household name. However, most Australians would be quite familiar with the store networks that they help manage and supply to. These most prominently include IGA and Mitre 10, but also Cellarbrations, FoodWorks, and Thirsty Camel.

This makes Metcash one of the ASX’s most prominent consumer staples stocks, which have long been favourites of dividend investors thanks to their defensive characteristics.

But let’s get into the Metcash dividend.

Do Metcash shares really yield 6% right now?

At the time of writing, Metcash is trading at $3.12 a share. At this pricing, this ASX dividend stock is trading on a trailing dividend yield of 5.76%.

That yield derives from the last two shareholder payments that Metcash has doled out. The first of those was the final dividend worth 9.5 cents per share from August last year. The second was the interim dividend, worth 8.5 cents per share, that investors bagged in January of this year.

Both dividends came with full franking credits, as is Metcash’s habit.

Metcash has also flagged that its; next final dividend, due in August this year, will be kept steady at 9.5 cents per share.

Together, the two dividends that Metcash owners have enjoyed over the past 12 months give this company that trailing yield of 5.76%. That’s significantly more than what any of its larger and more popular rivals are offering right now, so income investors may wish to take note.

It is true that no trailing dividend is a reliable indicator of what a company will pay out going forward. It only ever reflects the past, it doesn’t predict the future.

Saying that, income investors can take comfort that Metcash has already given a heads-up for its next payout. So one could argue that investors will enjoy at least some of the current dividend yield if they buy Metcash shares today.

What do the experts reckon?

Zooming out, the future is more uncertain. However, last month, my Fool colleague covered the views of an ASX broker on Metcash. As we discussed at the time, Shaw and Partners’ Jed Richards did say this:

While growth is modest, [Metcash’s] defensive characteristics and reliable income stream support a hold position. It remains well positioned to benefit from steady consumer demand.

No doubt investors will be hoping that Richards is on the money there, at least from an income perspective. But there’s no doubt that Metcash is one of the S&P/ASX 200 Index (ASX: XJO)’s most eye-catching income stocks right now.

The post Buying Metcash shares? Here’s the yield you’ll get today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Pro Medicus Ltd (ASX: PME) shares started the week on a positive note, rising 1% to $176.64. The healthcare technology stock has delivered an impressive 35% gain over the past month, though it remains down around 36% from its highs of 12 months ago.

After such a strong rebound, investors may be wondering whether it’s time to lock in profits or whether the rally still has further to run.

Why have Pro Medicus shares surged?

The recent share price strength reflects growing confidence in the company’s growth outlook and its ability to continue winning major contracts in the highly competitive healthcare technology market.

Pro Medicus develops medical imaging software used by hospitals and healthcare networks around the world. Its flagship Visage platform enables clinicians to access and analyse medical images quickly, helping improve workflow efficiency and patient outcomes.

The company’s biggest advantage is its competitive moat. Pro Medicus has built a reputation for delivering faster and more efficient imaging solutions than many rivals. Once a hospital adopts its platform, switching providers can be costly and disruptive, creating strong customer retention and annual recurring revenue opportunities.

Turning a corner

The price of Pro Medicus shares turned a corner in early June when Pro Medicus announced three significant contract wins.

These included a new seven-year, $16 million agreement with TidalHealth, a five-year $28 million contract renewal with Allegheny Health Network (AHN), and a five-year $16 million contract renewal with Ohio State University (OSU).

The announcements reinforced the market’s confidence in both the quality of Pro Medicus’ technology and its ability to retain major customers. They also highlighted the company’s growing presence in the US, which remains its most important growth market.

Valuation and competition risk

Despite its impressive track record, Pro Medicus is not without risks.

Valuation remains the most obvious concern. Even after last year’s pullback, Pro Medicus shares continue to trade on a premium multiple relative to most ASX-listed healthcare stocks. That leaves little room for disappointment.

The business is also heavily reliant on winning and renewing large contracts. While management has consistently delivered in this area, any slowdown in contract activity could weigh on investor sentiment.

Competition is another factor to watch. The medical imaging market remains attractive, and rivals continue to invest heavily in their own technology offerings.

Finally, Pro Medicus generates a significant portion of its revenue from the US. Changes in healthcare spending, hospital budgets, or economic conditions could influence future growth rates.

What do analysts think?

Many market experts believe the rally may not be over.

TradingView data shows that 12 of 15 brokers currently rate the ASX healthcare stock as a buy or strong buy. The average price target sits at $189.47, implying around 8% upside from current levels.

Macquarie is among the most optimistic. The broker has an outperform rating on Pro Medicus shares and a price target of $221 per share. If achieved, that would represent potential upside of approximately 27%.

The post Pro Medicus shares are flying 35% higher. Time to cash out? appeared first on The Motley Fool Australia.

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

Electro Optic Systems Holdings Ltd (ASX: EOS) shares have been among the strongest performers on the Australian share market over the past year.

During this time, the defence and space company’s shares have risen an incredible 293%.

Despite this incredible rise, the team at Bell Potter believes it isn’t too late to invest.

What is the broker saying about Electro Optic Systems (EOS) shares?

Bell Potter was pleased to see the company announce a major order from the UAE this month for one of its Slinger products. It said:

EOS has secured a US$124m (A$175m) Slinger counter-drone (C-UAS) order and entered a binding, conditional joint venture (JV) with Gen5, a 100% UAE-owned defence company, covering its High Energy Laser Weapon (HELW) and Remote Weapon System (RWS) franchises.

The A$175m order comprises the remote weapon system, cannon, spares, training and associated supplies. EOS understands the systems are intended to strengthen defence capability in light of ongoing regional tensions in the Middle East. Manufacturing is expected to be split between Australia and the UAE, with deliveries across 2027 and 2028; the order is subject to Gen5’s customary terms and to export approval requirements.

Another positive from the announcement was news that EOS is looking to form a joint venture with this customer. It adds:

EOS and Gen5 have entered a binding, conditional agreement to establish an incorporated JV covering the development, manufacture and distribution of EOS’s 100-150kW and 200-300kW HELW products and RWS products. The JV is expected to be based in Abu Dhabi on a 50/50 equity and profit-sharing basis, subject to relevant UAE laws and government approvals, and EOS believes it could begin contributing to results from 2027 or 2028 onwards. Under the agreement, Gen5 is obligated to contribute US$40m of equity to the JV while EOS contributes its existing IP.

Both parties will use reasonable endeavours to secure a minimum US$250m order for the 200-300kW HELW within 12 months and a minimum US$290m order for the 100-150kW HELW within nine months, and to progress a solution with UAE government agency Tawazun to grant EOS offset credit benefits. The JV will own the IP for the 200-300kW system, and its scope may be extended to include Command & Control (C2) and Space Control.

More strong returns to come

According to the note, Bell Potter has retained its buy rating on EOS shares with an improved price target of $12.50 (from $10.60).

Based on the current EOS share price of $10.26, this implies potential upside of 22% for investors over the next 12 months.

Commenting on its recommendation, Bell Potter concludes:

We retain our Buy rating and raise our TP to $12.50/sh. EOS is positioned as a market leader across many C-UAS verticals and is leveraged to increasing defence budget allocations to C-UAS technologies. The conditional JV announcement presents a clear path towards producing HELW systems at scale and is therefore a significant development. We expect further JVs to be signed over the coming years. The agreement suggests there is a strong likelihood of major HELW order intake over the next 12 months from the UAE.

The post Up 293%! Can Electro Optic Systems (EOS) shares keep rising? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 Electro Optic Systems. 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.