The share Rural Funds Group (ASX: RFF) looks like an excellent ASX stock to buy to me because it’s significantly undervalued.

Rural Funds is a real estate investment trust (REIT) that owns farmland across a number of sectors including cattle, almonds, macadamias, vineyards and cropping.

In a period when the RBA interest rate has increased multiple times, I think the market is underappreciating the business, presenting an opportunity to invest.

Let’s take a look at why I’m so interested in investing.

Significant discount

One of the main ways to value a REIT is to look at the net asset value (NAV) – that includes the value of property, the debt, the cash and so on. Rural Funds regularly reports its adjusted NAV to take into account the market value of its water entitlements.

If the unit price of the REIT is significantly below the NAV, then that means we can buy exposure to its portfolio of assets at a compelling discount.

Rural Funds reported that its adjusted NAV was $3.22 at the end of FY26, representing a 4.5% year-over-year increase, driven by property revaluations and the value of its interest rate swaps.

We’d have to pay a lot more to go and buy the farms today in our own names. With Rural Funds, we can buy exposure at a much lower price.

Currently, the Rural Funds unit price is trading at a 35% discount to its stated value.

Resilient distribution

Even if the market doesn’t recognise the value of the business by sending the Rural Funds unit price higher any time soon, we can benefit by getting a sizeable distribution yield. The yield is much larger now than it would be if the Rural Funds unit price was trading at parity with its adjusted NAV.

Its distribution history is pleasing. Rural Funds grew its distribution every year between FY14 and FY22 and has since been maintained despite higher interest rates.

The business has provided guidance that it will pay an annual distribution of 11.73 cents per unit again in FY27, representing a distribution payout ratio of 100%.

At that level, it offers a distribution yield of 5.6%.

I think the business can deliver rising payouts in the coming years because of the ASX stock’s organic rental growth.

Pleasing rental income

I think every business worth investing in needs to have organic drivers that can increase its value over time.

There are two aspects that are helping increase its rental income.

More than half of its rental income is linked to CPI inflation, while another 29% is growing annually at a fixed rate. Regular rental growth is a compelling element, in my opinion.

Another driver is development investing at the farms. Some of the investments help increase the productivity of the farm, while other investments are turning some farms to other crop types for better, more economic use.

I think Rural Funds will pay larger dividends in the coming years.

The post Why I’m planning to buy this cheap ASX stock next! appeared first on The Motley Fool Australia.

More reading

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• Rural Funds Group FY26 earnings: Asset sales boost profit
• 3 top ASX dividend shares to buy now
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• How much is needed in superannuation to target a $2,000 monthly passive income?

Motley Fool contributor Tristan Harrison has positions in Rural Funds 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 positions in and has recommended Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Friday, Qualitas Real Estate Income Fund (ASX: QRI) reported a 6% increase in operating profit to $70.9 million for the year ended 30 June 2026, with monthly distributions rising to 8.60% p.a. by year-end.

What did Qualitas Real Estate Income Fund report?

• Total investment income up 9.5% to $88.3 million
• Operating profit grew to $70.9 million (from $66.9 million in FY25)
• Net assets attributable to unitholders rose 3.6% to $1.01 billion
• Distributions paid totalled 11.45 cents per unit, up from 13.21 cents in the prior year in dollar terms but lower per unit due to capital raising
• Entitlement offer raised $34.6 million in new capital

What else do investors need to know?

The trust’s portfolio remains 100% floating rate, with monthly cash distributions hitting an annualised 8.60% by June 2026. The manager reported no impairments or arrears across the loan book, with over 95% of exposure in senior loans and a weighted average loan-to-value ratio of 65%.

QRI units traded at a 3.75% discount to net asset value as at 30 June 2026, closing at $1.54 per unit against a NAV of $1.60, reflecting broader sector sentiment rather than a shift in underlying fundamentals. The year also saw the trust complete an entitlement offer, expanding and diversifying the loan portfolio in line with its investment strategy.

What’s next for Qualitas Real Estate Income Fund?

Looking ahead, the trust will continue focusing on capital preservation and reliable income generation for unitholders, supporting its strategy through active portfolio management and a disciplined approach to risk. Market reforms in housing policy and shifting investor demand are expected to support future growth, with QRI well positioned to capture increased investment opportunities in the residential property financing sector.

A distribution of 1.0875 cents per unit was declared post-balance date for August 2026, maintaining the trust’s monthly income focus. The management remains vigilant about changing market dynamics and remains committed to stability and risk-adjusted returns.

Qualitas Real Estate Income Fund share price snapshot

Over the past 12 months, Qualitas shares have declined 5%, trailing the All Ordinaries Index (ASX: XAO), which is flat over the same period.

View Original Announcement

The post Qualitas Real Estate Income Fund FY26 earnings appeared first on The Motley Fool Australia.

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• Qualitas Real Estate Income Fund announces July 2026 distribution

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 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. 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.

Your superannuation is more than just a nest egg for retirement, it can also be a fantastic tool to generate a consistent passive income for when you stop working.

But how much passive income could a $900,000 balance actually generate each month?

Let’s take a look.

What passive income can I earn off my $900,000 superannuation balance?

To calculate your potential passive income, you simply need to multiply your total superannuation balance by the overall dividend yield of your portfolio.

But the catch is that the answer varies widely depending on what dividend yield you pick.

For example, $900,000 x 3% = $27,000 per year in dividend payments.

But if your portfolio has a slightly higher dividend yield of around 4%, your passive income will be higher. That’s because $900,000 x 4% = $36,000 per year in dividend payments. 

If your superannuation portfolio yields closer to 5%, you could earn $45,000 every year in dividend payments off the same superannuation balance ($900,000 x 5% = $45,000).

At a 6% yield, you could earn an annual passive income of around $54,000, and at 7%, it could be even higher, at around $63,000.

And so on… 

As your dividend yield increases, the passive income you can earn from your $900,000 superannuation balance also increases.

These figures are based on cash dividends before any tax or franking credit benefits.

I want to earn around $45,000 per year in passive income off my superannuation. What ASX shares should I invest in?

To earn around $45,000 per year in passive income from a $900,000 superannuation balance, you’d need a portfolio yielding around 5%. There is a large range of good-quality ASX shares around this level. 

Here are some of my top picks.

Transurban Group (ASX: TCL), Origin Energy Ltd (ASX: ORG), Woodside Energy Group Ltd (ASX: WDS) and Harvey Norman Holdings Ltd (ASX: HVN) are all good-quality ASX shares which yield around 5% at the time of writing.

What are my options if I want to go for an even higher yield around 7% or 8%?

Again, there are several options, but you need to be aware that higher yielding ASX shares are generally associated with higher risk.

But the good news is that your passive income will be higher if you strive for this target. A 7% or 8% yielding superannuation portfolio, around $900,000 in size, can earn between $63,000 and $72,000 in passive income over the course of a year.

There are still some good options to consider too. WAM Leaders (ASX: WLE), Atlas Arteria Ltd (ASX: ALX) and Beach Energy Ltd (ASX: BPT) all yield around the 7% to 8% level at the time of writing.

Diversification is key

If you want a portfolio yielding around 5% or even 7%, it doesn’t mean that every investment in that superannuation portfolio has to yield that level. It can be a combination that yields 5% or 7% overall.

And remember, you don’t need to invest the whole sum in one go. Start with a monthly investment and let compounding do some of the hard work for you.

I’d look at splitting my superannuation portfolio into investments across several different yielding assets, preferably across different sectors.

This diversification strategy means that if one asset drops in value, its performance can be offset by other ASX shares, leading to a more consistent overall result.

The post How much passive income can I earn off a $900,000 superannuation balance? appeared first on The Motley Fool Australia.

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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 positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Harvey Norman and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.