October is almost here, and National Australia Bank Ltd (ASX: NAB) is one ASX bank share I would be happy to buy.

With NAB shares trading around $39.13, I think there is a solid case for adding them to a portfolio next month. Here is why.

A solid earnings outlook

I would not expect explosive growth from NAB. Consensus forecasts point to earnings per share (EPS) of $2.38 in FY26, rising to $2.54 in FY27.

At today’s share price, that values NAB on a PE ratio of around 16 times FY26 earnings and just over 15 times FY27 earnings.

I think that is a reasonable price for one of Australia’s largest banks, particularly given NAB’s strong position in business banking.

That part of the company is one of the main reasons I like it. Australian businesses need banking services across lending, payments, deposits, and other areas, giving NAB another avenue for earnings beyond the highly competitive mortgage market.

What could higher interest rates mean?

The prospect of further Reserve Bank of Australia interest rate rises complicates the outlook somewhat.

Higher rates can be positive for banks if they allow lending rates to rise in a way that supports net interest margins, which measure the difference between what a bank earns on loans and pays for its funding.

But there is another side to that equation.

Higher borrowing costs put more pressure on households and businesses. If rates climb too far, credit growth could slow, customers may become more cautious about taking on debt, and bad debts could eventually increase.

Competition also plays a role. Banks cannot simply assume that every increase in the cash rate will translate into better margins when they are competing for both borrowers and deposits.

For me, that means another RBA rate rise would not automatically strengthen the NAB investment case.

I would instead focus on how the bank manages margins, credit quality, and lending growth through the changing rate environment.

The dividend adds to the case

Passive income is another reason investors may be interested in NAB shares.

Consensus forecasts point to fully franked dividends of $1.70 per share in FY26 and $1.72 in FY27.

At $39.13, the FY26 forecast represents a dividend yield of around 4.3%, before including the benefit of franking credits.

The expected increase in FY27 is small, but the important point for me is that analysts currently expect the dividend to remain well supported with manageable payout ratios of around 71% and 68%.

Foolish takeaway

NAB is not the sort of share I would buy expecting spectacular growth over the next 12 months.

What I see instead is a major bank with a strong business banking franchise, a reasonable forward valuation, and a fully franked dividend that could provide an attractive income stream.

Interest rates could make the next year a little more complicated, particularly if borrowers come under greater pressure. But at around $39, I think there is enough in NAB’s favour for me to be comfortable adding the shares in October and holding them for the long term.

The post Why I’d buy NAB shares 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.

Codan Ltd (ASX: CDA)’s value has surged past $10 billion, up more than 15% just today, after the company announced a large profit upgrade just three months into the new financial year.

Firing on all cylinders

The technology manufacturer has two main divisions – metal detection and military communications – with both expecting to grow significantly over the full year.

Codan had already issued a trading update on 20 August, saying strong demand for unmanned systems meant that its communications division expected to significantly exceed the previous year’s performance in the first half.

The company said on Tuesday that orders had continued to strengthen during the first quarter and it now had better visibility for results through the second quarter.

Codan said demand outside of conflict regions was strong, and revenue was expected to be up 20% on the previous corresponding period, “with broad-based growth across regions and markets reinforcing the global relevance of our technologies”.

The company added:

Demand from conflict regions is currently exceptionally strong, reflecting the proven performance and reliability of our technology in these contested environments. With this elevated demand, Codan expects revenue generated from conflict regions to represent approximately 50% of Communications segment revenue in H1 FY27 (vs. approximately 20% in the previous corresponding period). Codan now expects the Communications segment to deliver H1 FY27 revenue of between $400 million and $410 million. This compares to $221.8 million in the pcp and $506.2 million in full year FY26.  

The strong demand could also translate into a better EBIT margin of about 40% in the first half, compared to 26% in the first half last year.

Codan said demand from conflict regions was difficult to predict over the full year, “and accordingly it is too early in the financial year to determine if demand and margin will continue at similar levels in H2 FY27”.

Metal detection also performing well

The Minelab metal detection division was also performing strongly, driven by demand for the recently launched GPZ8000 and Gold Monster 2000 detectors, Codan said, as well as by the favourable gold price.

On August 20, Codan said that Minelab was tracking broadly in line with second-half FY26 levels.

Minelab’s revenue run rate is now slightly above those levels, Codan said.

In terms of group profit, Codan is expecting a net profit of not less than $160 million for the first half, compared to $71.2 million in the first half of FY26 and $175.2 million for the full year.

Codan shares traded as high as $61.30 before settling back to be 16.8% higher at $60.73.

The post This ASX tech company just surged past the $10 billion valuation mark after a major profit upgrade appeared first on The Motley Fool Australia.

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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.

The ASX stock Charter Hall Long WALE REIT (ASX: CLW) looks like it could be one of the most effective picks for passive income.

I think investors would be well served by looking at the real estate investment trust (REIT) sector for opportunities right now, given how low share prices have fallen.

There’s an obvious headwind for REITs right now – higher interest rates. It’s a key tactic by central banks to try to reduce inflation by hiking interest rates and trying to take some heat out of the economy.

Higher interest rates are a significant headwind for REITs because they increase borrowing costs and can hurt property valuations.

For Charter Hall Long WALE REIT, this could be the right time to pounce.

Significant diversification

Plenty of Australian investors may have a significant sum of money invested in a single property, whether that’s a residential property or commercial property.

With a REIT like Charter Hall Long WALE REIT, investors can buy exposure to a portfolio of over 500 properties in a single investment, while providing great passive income.

The ASX stock is invested across numerous areas, including government buildings (like Geosciences Australia), hotels, grocery and distribution, data centres, telecommunications exchanges, service stations, banking and professional services, food manufacturing, healthcare, Bunnings properties and so on.

I like how the business can provide exposure to all of those areas with just a single investment. How good is that?

It could become even more diversified in the future, since the ASX stock has the flexibility to invest anywhere for potential returns.

Large dividend yield

Charter Hall Long WALE REIT has a very generous distribution payout ratio of 100% of rental earnings. This means investors can fully benefit from the REIT and earn a higher yield than many other investments currently offer.

Despite the headwind of higher interest rates, the ASX stock expects to maintain its distribution at 25.5 cents per security in FY27, the same as the 2026 financial year.

At the time of writing, its projected payout translates into a forward distribution yield of 7.8%, which is a huge starting yield.

Its organic rental growth could help support the distributions in the coming years. The rental income is growing either in line with inflation or at a solid fixed annual rate. During FY26, the ASX stock achieved average annual net property income growth of 3.1%.

$800 per month of passive income

The ASX stock does not pay monthly, but it does pay quarterly, which I’d describe as pleasingly frequent.

However, we should think of the monthly goal as an annual goal and then divide that by 12. The annual goal is $9,600.

As mentioned, the business expects to pay an annual distribution of 25.5 cents per security. To generate $9,600 of annual passive income, we’re talking about needing 37,648 Charter Hall Long WALE REIT units.

Given it’s trading at a 30% discount to its net tangible assets (NTA) of $4.71 as at 30 June 2026, this looks to me like a great time to invest.

The post I’d buy 37,648 shares of this ASX stock to aim for $800 a month of passive income appeared first on The Motley Fool Australia.

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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 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.