I’d describe Medibank Private Ltd (ASX: MPL) shares as one of the most underrated ASX dividend stocks for passive income based on three factors, which I’ll get into below.

Medibank Private is one of the largest private health insurers in Australia, with its Medibank Private and ahm brands. It also has a growing (via acquisitions) healthcare division.

It could be a top pick for passive income in the years ahead, generating $200 per month (or more). Let’s look at how that could be done.

Strong and growing dividend

One of the main reasons I think Medibank is an underrated business for dividend income is how consistently it has increased its payout.

In FY26, the business grew its annual dividend per share by 6.7% to 19.2 cents, following a 6.7% rise in the group operating profit to $813.5 million.

At the time of writing, its FY26 grossed-up dividend yield is 6%, including franking credits.

Since it started paying dividends in 2015, the business has increased its payout every year except 2020 due to COVID-related impacts. Therefore, it has increased its payout for six consecutive years, building a solid dividend growth streak.

Further dividend growth is expected in the years ahead.

The projection on CommSec suggests the business could hike its annual dividend by 12% in FY27 to 21.5 cents per share. That would translate into a grossed-up dividend yield of 6.7%, including franking credits.

There are not many S&P/ASX 200 Index (ASX: XJO) shares offering passive income as high as that while also growing the dividend at a good pace.

Rising profits

In my view, the most important element of a growing dividend is that it’s funded by rising profits.

Aside from the tailwind of ageing demographics, the company expects several positives in FY27.

It aims to grow its resident policyholder market share in a “disciplined way”, including improved volume momentum in the Medibank brand.

On top of that, the non-resident private health insurance gross profit is predicted to see “solid” growth in FY27.

The Medibank healthcare segment is forecast to see segment profit growth of around 25% in FY27, including a full-year contribution from Better Medical.

Finally, the company is open to making further acquisitions to boost its business, and it has the financial capacity to do so.

It’s valued at 17 times FY27’s estimated earnings.

$200 per month of passive income

The business doesn’t pay an annual dividend every month, so it’s better to think of the goal as an annual $2,400 target.

The amount of Medibank shares required for the dividend goal depends on whether franking credits are included or excluded. Excluding franking credits, an investor would need 11,163 Medibank shares for the goal. But with franking credits, an investor would only need 6,462 Medibank shares.

I think it’s a solid business to consider for passive income, though it’s not the only ASX stock that could produce good returns.

The post I’d buy 6,462 shares of this ASX stock to aim for $200 a month of passive income appeared first on The Motley Fool Australia.

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• Is the Medibank share price a buy for its 6% dividend yield?
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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.

Shares in Electro Optic Systems Holdings Ltd (ASX: EOS) are up more than 15% after the company announced it had won a $700 million contract.

The anti-drone technology company said it had struck an agreement with a Middle Eastern gulf state for the provision of a nation-wide, counter-drone defence system valued at £370m (~A$700m).

This is the largest contract secured by the company to date.

Increase in drone warfare driving need for countermeasures

Electro Optic Systems said in a statement to the ASX that recent conflicts in the Middle East had highlighted the importance of being prepared for anti-drone warfare.

The company added:

Drone attacks have inflicted significant physical and economic damage and traditional air-defence systems based on expensive interceptor missiles have faced challenges. More effective and sustainable solutions are being sought. EOS’ NiDAR counter-drone system, acquired as part of the recent MARSS acquisition, is an advanced AI-enabled command and control system (C2), designed specifically for counter drone defence, embracing both airborne and coastal seaborne drone detection. As required, systems fielded by MARSS in the Middle East are showing throughout the recent crisis to be an effective and economical counter-drone system.

Electro Optic Systems said it expected 80% of the revenue to be earned in the first 12 to 24 months after the contract becomes unconditional, with the rest of the revenue related to ongoing support over a four-year period.

The company said it also believed that the deal could lead to future sales opportunities.

Milestones yet to be overcome

Electro Optic Systems has to fulfil certain conditions before the deal becomes unconditional, including obtaining relevant export licences.

The company added:

The Contract is expected to be profitable and cashflow positive over its term, noting that, as is the nature with integration projects such as this, there will be a significant short-term working capital funding requirement in the early stages of the Contract which is expected to turn positive during mid-2027. While noting that the nature of this Contract is similar to others fulfilled by EOS and existing MARSS resources in the Gulf region, EOS believes that this Contract represents an inflection point for the Company in its strategy to become a major player in the global integrated, counter drone market as it represents a significant expansion of both the products and services previously provided.

The company also noted that the contract contained financial and operational risks, “some significant, which EOS will seek to manage”.

Electro Optic Systems shares traded as high as $12.91 on the news before settling back to be 16.3% higher at $12.30.

The company is valued at $2.55 billion.

The post Which ASX drone company is up more than 15% on big contract news? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has positions in Electro Optic Systems. 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.

Super Retail Group vs JB Hi-Fi shares

Are you tossing up between Super Retail Group Ltd (ASX: SUL) and JB Hi-Fi Ltd (ASX: JBH) shares for your first retail stock? Both are giants on the ASX with well-known brands and loyal shoppers—but their size, business focus, and investment fundamentals are actually more distinct than you might expect. Let’s weigh them up side by side so you can make a confident choice as a beginner investor.

The case for Super Retail Group

Super Retail Group is a powerhouse behind some of Australia’s favourite specialist retail chains: Supercheap Auto, Rebel, BCF, and Macpac. The group is all about automotive parts, sporting goods, outdoor, and adventure equipment, run both in-store and online across Australia and New Zealand. With a large, established store network (797 stores), Super Retail has carved out a strong niche catering to DIY car lovers, weekend warriors, and active Aussies alike.

Notably, Supercheap Auto delivers the largest chunk of sales, while Rebel drives much of its sporting goods revenue.

A few fundamental highlights stand out for Super Retail Group:

• Attractive dividend yield: The current 5.08% fully franked dividend yield is generous, especially for income-focused beginners—this means more of the dividend is kept in your pocket after tax.
• Lower price-to-earnings (P/E) ratio: Its P/E of 14.13 is lower than JB Hi-Fi, which might hint at better relative value, though comparing directly has its complications.
• 100% franked dividends: All recent and upcoming dividends are fully franked, boosting their after-tax value for Aussie shareholders.

The case for JB Hi-Fi

JB Hi-Fi is synonymous with home entertainment and tech gadgets at competitive prices. With its core stores plus JB Hi-Fi Home, The Good Guys, and newly added e&s stores, the company is a leader in consumer electronics and household appliances. JB Hi-Fi now operates both in Australia and New Zealand, and its online platform keeps growing as shopping habits change.

For those new to investing, JB Hi-Fi brings a few standout traits:

• Larger, more established company: JB Hi-Fi sports a $7.69 billion market cap, more than double Super Retail Group, with a dense store network and massive brand recognition.
• Solid earnings: With a reported earnings per share (EPS) of 4.467, the business is currently pumping out robust profits.
• Consistent, franked dividends: Its 4.82% fully franked dividend yield remains solid for income-seeking investors. Regular and special dividends come through like clockwork.

Valuation comparison

With both companies firmly in the ASX retail heavyweight camp, let’s line up their key metrics:

Metric	Super Retail Group	JB Hi-Fi
Market Cap	$2.94 billion	$7.69 billion
P/E Ratio	14.13	15.64
Dividend Yield	5.08% (100% franked)	4.82% (100% franked)
Earnings per Share (EPS)	0.906	4.467
Dividend per Share	0.65	3.37
Year To Date Return	-16.1%	-23.9%

It’s worth noting that Super Retail Group’s lower P/E ratio could appeal to value-focused investors, and its slightly higher yield offers a bit more on the income front. JB Hi-Fi boasts far stronger EPS and a much bigger overall size.

Recent share price momentum

Comparing recent share price performance up to 6 October 2026:

• Super Retail Group: Closed at $13.03, up 1.8% on the day, but down 16.1% year to date.
• JB Hi-Fi: Closed at $70.29, up 0.63% on the day, but off 23.9% since the start of the year.

So, both have lagged the market recently, but JB Hi-Fi’s drop has been steeper.

Which is the better buy?

If I had to choose a retail stock for a beginner investor, my pick would be Super Retail Group. Here’s why:

You’re getting a business with a slightly cheaper-looking P/E, a higher dividend yield, and 100% franking—great for maximising after-tax returns. While JB Hi-Fi is the much bigger name and has an enviable track record, its shares have fallen further year-to-date, and its yield is a bit lower for incomers. Both have strong brands and essentially zero franking drag, so the choice comes down to value and yield. Based on the available figures, I think Super Retail Group is better positioned to offer steady income with a potentially less demanding valuation for a new investor’s first step into retail shares.

The post Super Retail Group vs JB Hi-Fi: Which retail stock is better for beginners? appeared first on The Motley Fool Australia.

More reading

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• Buy, hold, sell: Corporate Travel Management, JB Hi-Fi, BHP shares
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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 positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. 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.