DroneShield Ltd (ASX: DRO) has been one of the most talked-about defence technology shares on the ASX in the 2020s.

That attention is understandable. The company sits in a market shaped by drones, electronic warfare, national security, and the growing need to protect military and civilian assets from aerial threats.

And after a major share price decline, investors face a difficult question. Are DroneShield shares a buy, hold, or sell?

DroneShield shares have fallen hard

DroneShield shares are trading around $2.29 at the time of writing.

That leaves the stock down about 65% from its 52-week high.

A fall of that size can make investors nervous, especially in a growth share where expectations have been high. It also changes the valuation discussion.

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

Based on the current share price, that puts the stock on a price-to-earnings (P/E) ratio of around 88 times FY26 earnings, 53 times FY27 earnings, and 31 times FY28 earnings.

The near-term multiples are still high despite the share price decline.

But the FY28 valuation does not look excessive to me if DroneShield can keep scaling and become a larger, more profitable defence technology business.

Why I would buy

I think DroneShield shares are a buy for investors with a high tolerance for risk.

The reason is the market opportunity.

Drones have changed the way governments, defence forces, airports, prisons, critical infrastructure operators, and security agencies think about protection.

They can be used for surveillance, disruption, smuggling, attacks, and battlefield operations. That creates demand for systems that can detect, track, identify, and respond to drone threats quickly.

DroneShield is trying to become a trusted provider in that market.

I also like that the business is not only about hardware. Increasing software revenue could improve the quality of the revenue base over time, especially if customers keep paying for upgrades, subscriptions, support, data, and system improvements.

That could make the business more valuable than a simple equipment supplier.

What investors need to watch

DroneShield still has plenty to prove. The company needs to keep winning contracts, delivering products, expanding capacity, and turning demand into profits. Defence customers can take time to make decisions, and contract timing can create uneven revenue.

Competition is another risk. Counter-drone technology is attracting attention globally, and larger defence companies may push harder into the market.

There is also valuation risk to consider. Even after a 65% fall, DroneShield is still priced for significant growth. If earnings disappoint, the share price could fall further.

That is why position sizing is important. I would view DroneShield as a speculative growth share rather than a core blue-chip holding.

Foolish Takeaway

I would call DroneShield shares a buy, but only for investors who can handle volatility.

The share price fall has made the valuation more reasonable, particularly if the company can deliver the growth currently expected over the next few years.

The counter-drone market appears to have a long runway, and DroneShield has a strong position in a field that is becoming more important to defence and security customers.

There will be bumps along the way. Contract timing, execution, competition, and valuation all need watching. Still, for patient investors willing to accept the risks, I think DroneShield shares are worth buying after this heavy fall.

The post Down 65%: Are DroneShield shares a buy, hold, or sell? 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.

A $500,000 ASX share portfolio could provide a very attractive passive income stream.

But the amount investors receive each year can vary significantly depending on the dividend yield they target and the types of shares they own.

A portfolio built around lower-yielding growth shares may produce less income today, while a higher-yielding portfolio may come with extra risks if the payouts are stretched.

That is why I think investors need to look beyond the headline yield and think carefully about the balance between income, quality, and growth.

So, how much could a $500,000 ASX share portfolio realistically pay in dividends?

Understanding the yield

A dividend yield shows how much income a share or portfolio pays each year compared with its value.

For an ASX dividend portfolio, the yield investors target can make a big difference to the income they receive. It can also change the type of shares they end up owning.

A 4% yield may sound modest, but it could come from businesses with stronger balance sheets, steadier earnings, or better long-term growth prospects. A 6% yield can produce more income upfront, although it may push investors toward shares with slower growth, higher debt, or less reliable payouts.

That is why I think 5% can be a good middle ground. It is high enough to generate meaningful passive income, while still leaving room to focus on quality and diversification.

On a $500,000 portfolio, a 4% yield would generate around $20,000 a year in dividends before tax and franking credits. While at 5%, the annual income would rise to about $25,000, and at 6% it would be around $30,000.

For me, the 5% option feels like a sensible target for many income investors because it balances income today with the need to own ASX dividend shares that can keep performing over time.

What could sit in the portfolio?

I would want a mix of defensive dividend shares, property income, and businesses that can grow dividends over time.

Telstra Group Ltd (ASX: TLS) could play a useful role because connectivity is woven into daily life. Mobile data, payments, work, entertainment, and communication all rely on reliable networks.

Woolworths Group Ltd (ASX: WOW) is another defensive name to consider. Grocery demand is more stable than many discretionary categories, which can help support dividends through different economic conditions.

For property income, HomeCo Daily Needs REIT (ASX: HDN) could be attractive because its portfolio is focused on everyday-needs retail, including assets linked to supermarkets, pharmacies, and essential services.

I would also leave room for dividend growth. Universal Store Holdings Ltd (ASX: UNI) and Lovisa Holdings Ltd (ASX: LOV) are more growth-focused retail shares, so they can be more volatile. But if their earnings continue to grow, their dividends could become more valuable over time.

Why growth still counts

Ideally, a dividend portfolio should grow as the years pass.

If a $500,000 portfolio grew by 5% per annum over 10 years, while dividends were banked separately, it could increase to around $815,000.

That larger portfolio could then produce much higher income. A 4% yield on $815,000 would generate around $32,600 a year, while a 5% yield would generate around $40,750 a year.

I think that shows why capital growth can be so meaningful for passive income investors.

Foolish takeaway

A $500,000 ASX share portfolio could produce a compelling income stream if it is built carefully.

I think a 5% yield is a sensible target because it could generate about $25,000 a year today while still leaving room to focus on quality, diversification, and dividend growth.

The best dividend portfolios can pay income now and become more valuable over time. That combination is what can turn a strong ASX portfolio into a much larger passive income stream in the years ahead.

The post How much could a $500,000 ASX share portfolio pay in dividends? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended HomeCo Daily Needs REIT, Lovisa, and Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The turnaround in CSL Ltd (ASX: CSL) shares has been sharp.

From the nine-year low struck on 3 June 2026, CSL has surged approximately 35% to $122.89.

The question is not whether the bounce has happened. It clearly has.

The question is what is driving it, whether those drivers are durable, and what the August FY26 result will need to show to confirm this is more than a sentiment swing.

What has driven the 35% rebound in CSL shares

The honest answer is that the recovery has been driven primarily by sector rotation and valuation recognition rather than new positive company-specific news.

Healthcare was the worst-performing sector of all eleven ASX 200 market sectors in FY26. The S&P/ASX 200 Health Care Index (ASX: XHJ) fell 39% over twelve months to hit a nine-year low on 3 June.

When a sector falls that far that fast, it tends to attract bargain-hunting institutional investors at the start of a new financial year. This is even more true when those same investors have just locked in large profits in resources and energy shares.

The underlying business has not changed materially in the six weeks since 3 June.

Management’s FY26 guidance of approximately US$15.2 billion in revenue and US$3.1 billion in NPATA on a constant currency basis remains unchanged.

The operational challenges, including US immunoglobulin supply constraints and China albumin pricing pressure, remain the same.

The case that the recovery is here to stay

At the 3 June low of approximately $91, CSL was trading at approximately 11 times forecast FY26 earnings. This was a valuation not seen in more than fifteen years for a business of this quality.

At $122.89, CSL trades at approximately 15.2 times forecast FY26 earnings, still a fraction of the 30 to 50 times multiple it commanded at its peak.

Morgans retains a buy rating with a price target of $147.59, implying upside of approximately 20% from the current price.

To support this thesis, management has also pointed to stronger Behring division revenue growth in the second half of FY26. Additionally, management expects moderately stronger-than-expected Seqirus vaccine performance.

These are all early signs that the operating recovery is beginning.

The case that it is just a temporary bounce

The more cautious reading is equally legitimate.

Eight of eighteen analysts covering CSL have a buy rating, while ten have a hold.

That split reflects the uncertainty around today’s share price.

Indeed, CSL has delivered a series of earnings disappointments over the past eighteen months. Each has been framed by management as temporary before proving more persistent than expected.

The FY26 result, due on 19 August, will be the most important test of whether the recovery has earnings support or is simply a valuation-driven sentiment swing.

If August delivers another round of guidance cuts, the 35% bounce could reverse quickly.

What the August result needs to show for CSL shares

Three things would confirm the recovery is real.

First, Behring division revenue growth in the second half of FY26 that confirms rather than falls short of management’s guidance.

Second, evidence that the immunoglobulin supply and pricing situation is moving in the right direction.

Third, confidence from the new CEO, expected to be named before the result, that the operational challenges have a visible resolution path.

If those three conditions are met on 19 August, CSL’s recovery from $91 to $122.89 will look like the early innings of something more sustained.

If they are not, investors who bought the bounce may face a difficult reassessment.

Foolish takeaway

CSL shares are up 35% since early June to $122.89, but remain down 49% over twelve months.

The recovery may be here to stay, reflecting an oversold valuation at the June lows.

It may also partly be a rotation bounce, driven by institutional new-year rebalancing rather than company-specific positive news.

The August FY26 result will separate those two explanations cleanly.

Until then, the honest answer to whether the recovery is real is: we do not yet know.

The post CSL shares are up 35% since early June. Is the recovery here to stay? appeared first on The Motley Fool Australia.

More reading

• Where could CSL shares go next? Here’s what brokers are predicting
• How to go from zero to $50,000 with ASX shares
• 3 ASX blue-chip shares that could be strong long-term value plays
• Up 36%: Can CSL shares keep rebounding?
• Which ASX 200 sectors paid the highest dividend yields in FY26?

Motley Fool contributor Mark Verhoeven 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 CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.