The Mercury NZ Ltd (ASX: MCY) share price is in focus after reporting a robust fourth quarter, with trading margin up 33% to $390 million and higher renewable generation volumes compared to the prior corresponding period.

What did Mercury NZ report?

• Trading margin for Q4 was $390 million, up 33% on the same quarter last year.
• Year-to-date (YTD) trading margin rose $269 million to $1,421 million.
• Q4 generation volume climbed 339GWh to 2,344GWh; YTD up 1,163GWh to 9,070GWh.
• Hydrological inflows for Q4 were at the 61st percentile, slightly lower than 79th percentile PCP (YTD: 83rd percentile, up from 12th PCP).
• All turbines at the Kaiwera Downs Stage 2 Wind Farm are now installed, with reliability testing underway.
• Fast-track consent was granted for Puke Kapo Hau Wind Farm, strengthening Mercury’s renewable pipeline.

What else do investors need to know?

Mercury highlighted continued momentum in renewable developments and asset renewals. Notably, the Kaiwaikawe Wind Farm remains on schedule, starting first generation from six installed turbines in July.

The company also launched Flex Rates, a new time-of-use electricity plan, giving retail customers more control over their energy bills. Mercury’s May Geothermal Investor Day showcased its geothermal platform, with more than 1 TWh entering feasibility and $75 million committed to appraisal drilling.

What’s next for Mercury NZ?

Looking ahead, Mercury expects all turbines at Kaiwera Downs Stage 2 Wind Farm to be handed over by the end of August, with the Kaiwaikawe Wind Farm fully operational in the first half of FY27. The company’s wind platform is designed to deliver projects at scale, on time and within budget.

Mercury also plans to continue investing in renewable generation projects and asset renewals, strengthening its position as a leader in 100% renewable energy production across hydro, geothermal, and wind.

Mercury NZ share price snapshot

Over the past 12 months, Mercury NZ shares have declined 2%, trailing the S&P/ASX 200 Index (ASX: XJO), which has risen 1% over the same period.

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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 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.

DroneShield Ltd (ASX: DRO) shares have given investors a wild ride over the past year.

After reaching $6.71 in October, the counter-drone technology share is now trading around $2.17.

I think that reset has created a more appealing opportunity. Here are three reasons I would buy.

The valuation has become easier to justify

DroneShield remains a growth share, so investors should expect to pay more than they would for a mature industrial or defensive business.

According to CommSec consensus estimates, the company is expected to generate earnings per share of 2.6 cents in FY26, 4.3 cents in FY27, and 7.4 cents in FY28.

That puts the shares on price-to-earnings ratios of approximately 83 times FY26 earnings, 50 times FY27 earnings, and 29 times FY28 earnings.

The early multiples are high, but they fall quickly if DroneShield delivers the expected earnings growth. An FY28 multiple of around 29 times does not look excessive to me for a company whose earnings could almost triple between FY26 and FY28.

The share price could still fall if contract wins or earnings arrive more slowly than expected. Even so, investors are being asked to pay far less for the long-term opportunity than they were near the 52-week high.

Counter-drone demand could keep growing

DroneShield develops technology that helps military, government, law enforcement, and critical infrastructure customers detect, track, and respond to unwanted drones.

I think the need for those systems is becoming easier to understand.

Drones are now cheaper, more capable, and more widely available. They can be used for surveillance, smuggling, disruption, and attacks, creating security challenges across battlefields, airports, prisons, energy facilities, borders, and major public events.

DroneShield has spent years focusing on this market and offers portable, vehicle-mounted, and fixed-site systems. That specialist position could help it capture a growing share of customer spending as counter-drone protection becomes a more established part of defence and security budgets.

The company still competes with much larger defence groups, while government procurement can move slowly and produce uneven revenue. I would accept those uncertainties because I think the market itself has substantial room to expand.

Software could strengthen the business

Hardware currently generates most of DroneShield’s revenue, and I expect equipment sales to remain central to its growth.

However, the company also has a major opportunity to earn more from software.

Counter-drone equipment needs to keep recognising new drone models, frequencies, and tactics. Customers may therefore require software updates, threat libraries, support, and ongoing improvements after the original system has been delivered.

That can extend the relationship beyond a single hardware purchase.

As the installed base grows, DroneShield could have more opportunities to sell software and services to existing customers. A larger recurring revenue contribution could make earnings more dependable and increase the value of each customer relationship.

I think this part of the story deserves more attention because it gives the company another way to grow alongside rising hardware demand.

Foolish takeaway

DroneShield still carries more uncertainty than an established ASX blue chip share, and I would keep the position measured.

The company needs to convert market demand into contracts, deliver equipment on time, expand its operations carefully, and meet ambitious earnings expectations.

At around $2.17, I think the potential reward has become more attractive. The counter-drone market is expanding, DroneShield has built a strong specialist position, and growing software revenue could improve the business over time.

Those three factors make DroneShield shares a buy for me today.

The post 3 reasons to buy DroneShield shares now appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. 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.

Investors looking for ASX blue-chip shares are probably aiming for businesses that can provide stability, reliable earnings and a good dividend yield.

Share prices can go down and payouts are not guaranteed, but I believe some businesses are capable of being more resilient and consistent.

I think the two names below are leaders in their industry at what they do, offering pleasing passive income.

Scentre Group (ASX: SCG)

This business is the owner of large shopping centres – it owns 42 Westfield locations across Australia and New Zealand, which includes more than 12,000 outlets.

One of the main reasons why I think it’s such a stable investment is that rental income is contracted and reliable – it had a portfolio occupancy of 99.8% at 31 March 2026, showing it’s maximising its rental potential.

It has evolved from just a retail centre to being a core destination for other experiences uses such as entertainment, dining and so on. I don’t think it’s as vulnerable to e-commerce adoption as other retail real estate investment trusts (REITs).

The business continues to report growth across a number of rental metrics.

In the three months to 31 March 2026, total business partner (tenant) sales across the portfolio were $7 billion (up 5%), with specialty sales growth of 5.3%.

It also noted that average specialty rent escalations were 5.3% in the three months to 31 March 2026. This is good organic rental growth.

The ASX blue-chip share completed 636 leasing deals, achieving average specialty releasing spreads of 3.3%. In other words, the new rental contracts are (on average) 3.3% higher than the old ones. That’s also pleasing organic growth for the business.

Another way that Scentre can increase its rental potential is by investing in (re)developments at its locations. It’s currently progressing a $240 million redevelopment at Westfield Bondi as a “world-leading lifestyle, entertainment and dining destination”.

According to the forecast on Commsec, the business is projected to grow its annual payout to 19.1 cents per security in FY27. That translates into a forward distribution yield of 4.9%.

Telstra Group Ltd (ASX: TLS)

Another ASX blue-chip share I want to highlight is Telstra, the country’s largest telco business.

Its scale means it’s able to generate high profit margins and invest the most in its network, compared to other industries. Hopefully it continues investing in its resilience and reliability.

The company’s market position and network coverage mean it’s able to attract a lot of customers. Australia’s ongoing digitalisation is a tailwind for demand for Telstra’s services, with an increasing number of devices needing a connection.

Telstra’s revenue and underlying earnings have been steadily growing in the last few years, giving the company the financial room to pay a rising dividend. In its latest result, it grew its interim dividend per share by 10.5% to 10.5 cents.

The projection on Commsec suggests the ASX blue-chip share could pay an annual dividend per share of 21.5 cents in FY27. That could translate into a grossed-up dividend yield of 6.1%, including franking credits.

The post 2 ASX blue-chip shares offering big dividend yields 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.