With 2027 approaching, I think now is a good time for income investors to start looking at which ASX dividend shares could deliver attractive income next year.

There are plenty of companies offering generous dividend yields, but finding the best opportunities takes a little more work.

Here is how I would approach the search.

Start with the business

The first thing I would look for is a business that can generate dependable earnings and cash flow.

After all, dividends need to be funded by something.

Companies with established market positions, consistent demand, and manageable debt are generally a good place to start.

For example, Commonwealth Bank of Australia (ASX: CBA) has a substantial customer base across mortgages and deposits, helping it generate the profits needed to support regular dividends.

Telstra Group Ltd (ASX: TLS) is another example, with its telecommunications services providing an established source of customer demand.

I think businesses like these are worth considering because their underlying operations provide a reasonable foundation for future payouts.

Of course, even strong companies can experience difficult periods, so I would still want to examine their financial position carefully.

Look at where dividends are heading

For 2027, I would pay particular attention to what analysts expect companies to earn and distribute over the next few years.

A share offering a 6% yield today might look attractive, but that income becomes less impressive if profits are expected to fall and the dividend needs to be reduced.

I would be more interested in businesses where earnings are forecast to grow and dividends could follow.

I would also look at how much of those earnings are being paid to shareholders.

A company distributing almost all its profits may have limited room to increase dividends, particularly if it needs to invest heavily in its operations.

Ideally, I would want a business that can reward shareholders while retaining enough cash to support future growth.

Consider the economic outlook

The broader economy will also influence my choices. Interest rates, household spending, and commodity prices can all have a significant impact on company earnings and dividends.

For example, higher interest rates can affect bank profitability in several ways, including lending margins, credit demand, and borrower stress.

Meanwhile, mining companies such as BHP Group Ltd (ASX: BHP) can generate substantial dividends when commodity markets are strong, but those payouts can fluctuate considerably.

I would therefore consider how each ASX dividend share might perform under the economic conditions we could face in 2027.

Having income from businesses across several industries could also help reduce reliance on any single part of the economy.

Find the right price

Finally, I would consider the share price. A great dividend-paying company can still be a disappointing investment if investors pay too much for it.

I would compare the forecast dividend with the current share price to understand the potential yield, while also considering whether the business offers reasonable value.

Franking credits would be another factor for Australian income investors, depending on their individual circumstances.

For me, the strongest candidates would combine an attractive starting yield with a realistic opportunity for that income to grow.

Foolish takeaway

I think the best ASX dividend shares for 2027 will be those with the financial strength to keep rewarding shareholders.

A generous yield is certainly welcome, but I would be particularly interested in companies that can maintain their dividends through difficult conditions and potentially increase them over time.

That is where I would begin my search.

The post How I’ll find the best ASX dividend shares for 2027 appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. 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 Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

MotorCycle Holdings Ltd (ASX: MTO) shares have underperformed over the past year, but after a recent investor day, the analyst team at Morgans believes a rerating might be on the cards.

The broker has just released a new research report into the company, with a buy recommendation and a bullish share price target, to add to the healthy 7.1% dividend yield the company pays.

I’ll get to the specifics of the share price target shortly. First, let’s look at how the company has been travelling.

Record year for MotorCycle Holdings

As the name suggests, MotorCycle Holdings sells motorcycles and other recreational vehicles, such as personal watercraft and all-terrain vehicles, as well as parts and accessories.

Last financial year, the company reported record revenue of $788.7 million, up 21.3% on the previous year, and booked a net profit of $24.1 million, up 33.8%.

The company also moved from a net debt position of $9 million to having net cash of $13 million at the end of June this year.

Chief Executive Officer Matthew Wiesner said while releasing the annual results that it had been “an exceptional year of growth and strategic advancement for MotorCycle Holdings”.

He added:

Our market leadership position strengthened considerably during FY2026 through the continued growth in our wholesale vehicle distribution businesses across ANZ and the acquisition of select business assets of the Peter Stevens Group which was completed on 31 July. It enhances the Group’s national footprint, provides stronger relationships with OEMs, introduces new products and categories and increases our market share.

Mr Wiesner added that the company’s wholesale division was going from strength to strength, with record sales of 20,127 units, up 15% year on year.

MotorCycle Holdings shares looking cheap

Morgans said in their research note that the investor day “reinforced a business transformed in scale and mix, with wholesale driving earnings in a challenging market, retail and data offering the next leg of improvement, and FY31 targets giving clarity on the growth trajectory ahead”.

The broker said MotorCycle Holdings had set a revenue target of $1.2 billion for FY31, pointing to 8% sales growth per year over a five-year period.

They said they were encouraged by the clear strategy and added:

We think the market overlooks MTO’s wholesale business, which has meaningful growth levers across product, categories and partnerships. We see scope for Retail upside from Harley-Davidson scale, ongoing brand rationalisation and data and systems integration. Double-digit earnings growth and a net cash balance sheet look compelling.

Morgans has a price target of $4.30 for MotorCycle Holdings shares compared to $2.71 currently.

If achieved, this would be a 58.6% return.

The post This high-dividend ASX small cap could rise more than 50%: Broker appeared first on The Motley Fool Australia.

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• Nextdc vs WiseTech: Which ASX tech stock is better for a 25 year old investor?
• How I’ll find the best ASX dividend shares for 2027
• CSL shares: Buy, hold, or sell?
• Down more than 50%, are Zip shares too cheap to ignore?
• Tuas vs Temple & Webster: Which beaten-down ASX share offers better value?

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 recommended Harley-Davidson. The Motley Fool Australia has recommended MotorCycle. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

CSL Ltd (ASX: CSL) shares have staged a remarkable recovery over the past few months.

After a difficult period for the healthcare giant, the share price has rebounded strongly as investors have become more optimistic about its future.

But with much of that recovery already behind us, is CSL still worth buying?

Here’s how I see it.

Why I still like CSL

One of the biggest reasons I remain positive on CSL is the strength of its underlying business.

The company is a global leader in plasma-derived medicines, including immunoglobulin therapies used to treat patients with immune deficiencies and other serious medical conditions.

Demand for these treatments has been growing, and I think there is considerable scope for that to continue as diagnosis rates improve and more patients gain access to treatment.

CSL is also particularly well positioned to meet this demand.

Building a global plasma collection network and the manufacturing facilities required to produce these medicines takes enormous investment, specialist knowledge, and regulatory approval.

That gives CSL a competitive position that would be difficult for another company to replicate.

What I would like to see over the next few years is the company making better use of those advantages.

Plasma collection and processing costs have weighed on profitability, and improving efficiency across the network should help CSL generate stronger returns from growing demand.

Encouragingly, management is continuing to address this.

Last week, CSL announced an expanded relationship with Haemonetics, with plans to roll out its latest plasma collection technology across the company’s US collection centres by the end of 2027.

This is one of several initiatives aimed at improving collection efficiency, and I think these incremental improvements could add up over time.

Alongside the development and commercialisation of newer medicines, they give CSL several ways to strengthen earnings through to 2030.

What does the earnings outlook suggest?

I think the next few years should see CSL steadily rebuild its earnings.

Consensus forecasts point to earnings per share (EPS) of $8.96 in FY27, increasing to $9.50 in FY28 and $10.03 in FY29.

That represents annual earnings growth of approximately 6% between FY27 and FY29.

It is a relatively modest pace, but I think it provides a reasonable foundation for a business of CSL’s size.

There is also potential for stronger growth if plasma collection efficiency improves faster than expected, margins recover, or newer products deliver better results.

Of course, none of that is guaranteed. CSL still needs to execute its recovery plans, manage costs, and navigate the challenges that come with developing and commercialising medicines.

But I think the direction of the business looks positive.

Are CSL shares still good value?

This is where I think investors need to adjust their expectations.

CSL shares are trading around $184.65 on Monday, more than double their 52-week low of $90.

That is a substantial recovery, although the shares remain below their 52-week high of $222.47.

At today’s price, CSL trades on a P/E ratio of approximately 21 times forecast FY27 earnings, falling to around 18 times FY29 earnings.

I would no longer describe that as a bargain valuation.

The market is already pricing in some improvement, and I think investors should expect a more gradual recovery in the share price from here.

Nevertheless, I am comfortable paying that sort of multiple for a global healthcare leader with established competitive advantages and a reasonable outlook for earnings growth.

If CSL continues to improve profitability and grow earnings into 2030, I think shareholders could still enjoy good returns over the next few years.

Foolish takeaway

CSL is a buy for me, although the opportunity looks quite different from when the shares were trading closer to $90.

I think the business has plenty of room to improve, particularly as its plasma operations become more efficient and demand for its medicines continues growing.

At around $185, I would be happy to buy CSL shares and give the company time to deliver on that potential through to 2030.

The post CSL shares: Buy, hold, or sell? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in CSL. 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.