Author: openjargon

The S&P/ASX 200 Index (ASX: XJO) is a wonderful place to find passive income opportunities. There’s a great ASX 200 dividend stock I want to highlight for incredibly reliable and consistent dividends. That name is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), an investment house.

The business is one of the oldest on the ASX, it has been listed for more than 120 years.

It has a great history – the business started as a pharmacy business, but this has expanded into numerous sectors and asset classes through numerous investments.

Incredibly reliable ASX 200 dividend stock

The business pays for its dividend from the net cash flow from its investments (NCFI), after paying for its own operating expenses.

Therefore, growth of the net cash flow is the key metric to look at when judging how well this company can fund its growing dividend.

Dividend growth has been wonderfully consistent. The business has hiked its annual regular dividend every year since FY98 – 28 years of payout growth!

In terms of the consecutive years of dividend growth, that’s the best record on the ASX!

The FY26 half-year result saw the business report 15.4% growth of NCFI to $334 million. On a per-share basis, NCFI rose to 89 cents.

In the HY26 period, it hiked its interim dividend by 9.1% to 48 cents per share.

Pleasingly, the dividend has grown at a compound annual growth rate (CAGR) of 11.9% over the last five years.

The payout is growing at a great pace, it’s not just a slow-moving dividend.

On top of all of the above, the ASX 200 dividend stock has paid a dividend for 123 consecutive years. That’s a great reliability record too.

But, its dividend yield isn’t that high because it has a relatively low (and sustainable) dividend payout ratio. However, that helps future dividend growth. Its last two dividends equate to a grossed-up dividend yield of 3.6%, including franking credits.

But, if it were to grow its next two dividends by another 9%, for example, then its upcoming grossed-up dividend yield would be around 4%, including franking credits, at the time of writing.

If someone were to invest $1,000 into Soul Patts shares today, they could buy 23 shares with a little bit of change left over.

Great portfolio

Of course, we shouldn’t invest in an ASX 200 dividend stock just for the passive income or without knowing what it does.

Soul Patts is invested in a number of sectors such as resources, energy, telecommunications, building products, industrial properties, financial services, retirement living, swimming schools, agriculture, credit and plenty more.

I love that the business generates its returns from a variety of sources. That means its cash flow is diversified, and it can hunt across a wide spectrum of industries for ideas.

I’ve made this company my largest holding because of everything it has to offer investors wanting a mixture of passive income and capital growth.

The post $1,000 buys 23 shares in an incredibly reliable ASX 200 dividend stock appeared first on The Motley Fool Australia.

More reading

• Champion Iron announces production gains and new growth projects
• South32 Hermosa project boosts reserves and mine life in FY26 update
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Why is this ASX gold stock slipping despite new gold discoveries?

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If I were building a portfolio in retirement, my focus would shift slightly.

It would be less about chasing growth and more about reliability. I would want income that I can reasonably count on, backed by businesses that have proven they can hold up across different conditions.

These three ASX dividend stocks stand out to me from that perspective.

Transurban Group (ASX: TCL)

Transurban is one of those businesses where the appeal becomes clearer the longer you look at it.

It owns and operates toll roads across major cities, which might not sound exciting, but I think that is part of the point. These are long-life infrastructure assets that people use every day.

Traffic can move around in the short term, but over time, population growth and urban expansion tend to push volumes higher. That creates a steady and predictable revenue base.

Another factor I think is important is how its pricing works. Many of its toll roads have agreements that allow for regular price increases, sometimes linked to inflation. That can help support income even when costs are rising.

For a retiree, I think that combination of essential infrastructure and relatively visible cash flows is hard to ignore.

APA Group (ASX: APA)

APA Group operates energy infrastructure, including gas pipelines and related assets.

What I like here is the contractual nature of the business. A large portion of APA’s revenue is backed by long-term agreements, often with built-in escalators. That provides a level of income visibility that I think is valuable when you are relying on dividends.

It is also a business that sits in the background of the economy. Energy still needs to move from where it is produced to where it is used. That does not change quickly, even as the energy mix evolves over time.

I think APA’s role in that system gives it a degree of stability, even if growth is not particularly fast.

For income-focused investors, that trade-off can make sense.

Coles Group Ltd (ASX: COL)

Coles brings a different type of defensiveness.

It operates in supermarkets, which I think is one of the most consistent areas of demand. People still need to buy food and everyday essentials regardless of what is happening in the economy.

That does not mean earnings never come under pressure. Margins can move, and competition can be intense at times.

But over longer periods, the underlying demand tends to hold up.

What I find interesting about Coles is how it combines that demand with ongoing investment in efficiency, supply chain, and digital capabilities. These can help support steady earnings over time.

For a retiree, I think that steady base can be valuable, particularly when combined with a consistent dividend stream.

Foolish takeaway

If I were investing for income in retirement, I would be looking for businesses that can keep paying, and ideally growing, their dividends over time.

Transurban, APA Group, and Coles each offer a different type of stability. Infrastructure, energy networks, and essential retail all play a role in the economy, and I think that gives these businesses a solid foundation for long-term income.

The post 3 ASX dividend stocks I’d buy if I were a retiree appeared first on The Motley Fool Australia.

More reading

• $250,000 to invest for passive income? Here’s how I would build a portfolio
• Are APA shares a buy after reaching a three-year high?
• Is it time for investors to turn back to defensive ASX shares?
• I think this simple ASX investing habit can build wealth over time
• 3 reasons why the Coles share price is a buy

Motley Fool contributor Grace Alvino has positions in Transurban Group. 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 Apa Group and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NextDC Ltd (ASX: NXT) is not an unfamiliar name, and it is one I have written about before.

But I think the setup looks a little different today.

With the ASX 200 growth stock still down around 20% from its 52-week high despite a recent rebound, I think it could be worth revisiting.

A business positioned at the centre of a structural shift

NextDC operates data centres, which are effectively the physical backbone of the digital economy.

As more businesses rely on cloud computing, artificial intelligence (AI), and data-heavy applications, the need for secure, high-performance infrastructure continues to grow.

I think what is important here is not just that demand is increasing, but how quickly it appears to be accelerating.

Recent updates point to a meaningful step-up in activity, with a sharp increase in contracted capacity and a growing pipeline of future demand.

To me, that suggests this is not a slow, steady trend. It is something that could build momentum over time.

The gap between demand and earnings

One of the challenges with NextDC is that the financials do not always reflect the underlying demand straight away.

The company signs contracts and builds capacity well ahead of when that capacity starts generating revenue. That creates a lag between investment and earnings.

For example, the business now has a large forward order book of contracted capacity that is expected to convert into revenue over the coming years.

If that contracted demand converts as expected, it could drive a step-change in revenue and earnings over time. But in the near term, the heavy investment required to build that capacity can weigh on reported results.

That mismatch can create periods where the market loses patience.

Record demand is changing the outlook

What jumps out to me from the latest update is just how strong demand appears to be right now.

Contracted utilisation has increased significantly in a short period, with a large increase driven by new customer wins.

That kind of move is not something you see every day. It points to a structural shift in how customers are using data infrastructure, particularly with the rise of AI and large-scale cloud deployments.

I think this is important because it changes the conversation. Instead of asking whether demand will show up, the question becomes whether NextDC can build fast enough to meet it.

Investment today, potential payoff later

There is no getting around the fact that this is a capital-intensive business.

NextDC is investing heavily in new capacity, and that can put pressure on cash flow and earnings in the short term. The ASX 200 growth stock has even increased its capital expenditure plans to keep up with demand.

That is the trade-off. Higher investment now in exchange for potential growth later.

I think investors need to be comfortable with that dynamic. This is not a story that plays out over a few quarters.

But if the demand trends continue, those investments could underpin a much larger business in the years ahead.

That said, this is not without risk. Execution matters. And there is always the possibility that demand does not materialise as expected or that returns take longer to come through.

Foolish takeaway

NextDC is not an ASX 200 growth stock I would buy expecting quick results.

But looking at where the business sits, and the demand trends it is exposed to, I think it has the potential to grow into something much larger over time.

So, with the share price down from its highs and demand showing signs of accelerating, this could be one of those situations where patience is rewarded.

The post This beaten-down ASX 200 growth stock could be one to watch appeared first on The Motley Fool Australia.

More reading

• NextDC shares dip as retail offer opens. Here’s what you need to know
• NEXTDC opens $0.5 billion retail entitlement offer
• Top brokers name 3 ASX shares to buy next week
• NextDC just raised $750 million, here’s why the shares are climbing
• NEXTDC launches $750m wholesale notes to boost growth funding

Motley Fool contributor Grace Alvino 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.

Charter Hall Long WALE REIT (ASX: CLW) is an ASX dividend stalwart that every passive income investor should consider, in my view.

I believe it offers virtually everything a dividend-focused investor could want: a good yield, stability, diversification, good value and the potential for a bit of growth.

Let’s run through each of those positives.

Diversification

As its name suggests, the business is a real estate investment trust (REIT). It’s perhaps the most diversified REIT that’s listed on the ASX.

The ASX dividend stalwart is invested across numerous sectors including government properties (including Geoscience Australia), pubs, grocery and distribution, data centres, telecommunication exchanges, Bunnings properties, service stations, food manufacturing, waste and recycling, and more.

I like this strategy because this reduces the risk of being too overexposed to one particular sector. Plus, it means the REIT can look across the entire property landscape for opportunities.

Stability

I think of the most important aspects of being an ASX dividend stalwart is that it can provide stability for investors during economic uncertainty.

Charter Hall Long WALE REIT offers stability in a few different ways.

Firstly, as the name suggests, it has a long WALE. That’s not a giant sea creature, but the weighted average lease expiry. In other words, how long are its rental contracts for (and including the fact that some rental contracts generate more rental income than others).

Currently, it has a WALE of around nine years, which is one of the largest in the industry.

The business also has a portfolio occupancy of near 100%, with 99% leased to tenants that are either government, or leading ASX-listed, multinational or national businesses.

Some of the ASX tenants include Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Endeavour Group Ltd (ASX: EDV).

A good yield

The ASX dividend stalwart pays out a distribution every three months, which is pleasingly regular for investors wanting passive income.

It’s expecting to pay an annual distribution per unit of 25.5 cents in the 2026 financial year, which represents a distribution yield of 7.3%. It hasn’t offered a distribution yield better than during most of the last six years.

Growth potential of the ASX dividend stalwart

I like saving cash in a bank account, but I’m not looking for a term deposit-style investment that offers fixed income and no growth.

Instead, I want to own things that can deliver earnings growth and distribution growth in the long-term, even if there’s a bit of disruption in the short-term.

Charter Hall Long WALE expects to grow its FY26 annual distribution by 2% to 25.5 cents amid the interest rate volatility.

I think longer-term growth looks likely thanks to rental growth – there are some properties with fixed annual increases and others with rental growth linked to inflation.

Overall, I think this business looks undervalued considering its latest stated net tangible assets (NTA) was $4.68 – much higher than the current unit price.

The post An ASX dividend stalwart every Australian should consider buying appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $2,500 monthly passive income?
• 2 ASX shares with dividend yields above 7%
• Why this ASX dividend share is a retiree’s dream
• 2 ASX blue-chip shares offering big dividend yields
• Looking for long-term passive income? Try one of these ASX shares

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 and Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Australian share market is a great place to build a passive income.

But which ASX dividend shares could be in the buy zone right now? Let’s look at three that analysts are tipping as buys:

Cedar Woods Properties Limited (ASX: CWP)

The first ASX dividend share that could be a buy is Cedar Woods.

It is one of Australia’s leading property developers with a portfolio that is diversified by geography, price point, and product type. This includes subdivisions in emerging residential communities, high-density apartments, and townhouses in inner-city neighbourhoods.

Bell Potter believes the company is well-placed to benefit from Australia’s chronic housing shortage.

It expects this to underpin fully franked dividends per share of 39 cents in FY 2026 and then 41 cents in FY 2027. Based on its current share price of $7.19, this would mean dividend yields of 5.4% and 5.7%, respectively.

The broker has a buy rating and $10.20 price target on its shares.

Premier Investments Ltd (ASX: PMV)

Another ASX dividend share that is being tipped as a buy is Premier Investments.

It owns brands such as Smiggle and Peter Alexander and holds a significant investment portfolio. Like many retailers, it has faced a tough consumer environment, which has dampened near-term earnings expectations.

But analysts at Macquarie remain positive, largely due to the strength of the Peter Alexander brand.

They are expecting the company to pay fully franked dividends of 95.2 cents per share in FY 2026 and then 97.4 cents per share in FY 2027. Based on its current share price of $12.53, this would mean generous dividend yields of 7.6% and 7.8%, respectively.

Macquarie has an outperform rating and $16.90 price target on its shares.

Sonic Healthcare Ltd (ASX: SHL)

A third ASX dividend share that is rated as a buy by analysts is Sonic Healthcare.

It is one of the world’s leading healthcare providers with operations spanning laboratory medicine, pathology, radiology, and primary care medical services.

It has been going through a tough period, but analysts at Bell Potter believe the company is now positioned for sustainable growth.

This is expected to support partially franked dividends of $1.09 per share in FY 2026 and $1.11 per share in FY 2027. Based on its current share price of $19.93, this equates to dividend yields of 5.45% and 5.55%, respectively.

Bell Potter has a buy rating and $28.75 price target on its shares.

The post 3 ASX dividend shares to build a passive income appeared first on The Motley Fool Australia.

More reading

• 1 ASX dividend stock down 30% I’d buy right now
• 3 excellent ASX dividend shares with 5% to 7% yields to buy
• 3 cheap ASX dividend shares offering 5% to 6% yields (and major upside)
• 1 ASX dividend stock down 43% I’d buy right now
• 6 ASX shares hitting 52-week lows amid today’s market rally

Motley Fool contributor James Mickleboro 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 recommended Premier Investments and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had another subdued session and dropped into the red. The benchmark index fell 0.25% to 8,687 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set for a tough session on Thursday following a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 63 points or 0.7% lower this morning. In the United States, the Dow Jones was down 0.6%, the S&P 500 edged 0.05% lower, and the Nasdaq rose slightly.

Hold Codan shares

Codan Ltd (ASX: CDA) shares are fairly valued after jumping 15% on Wednesday. This morning, the team at Bell Potter has put a hold rating and improved price target of $41.30 (from $37.70) on the technology company’s shares. It said: “With relatively high levels of R&D spend strengthening CDA’s competitive advantages across its businesses, CDA is well positioned to benefit from increased demand for mission-critical connectivity solutions in both defence and public safety markets. We believe CDA shares trade at fair value on 33x FY26 EV / EBIT amidst improving operating momentum and improving outlook in both segments.”

Oil prices jump

ASX 200 energy shares Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) could have a strong session on Thursday after oil prices surged overnight. According to Bloomberg, the WTI crude oil price is up 8.2% to US$108.12 a barrel and the Brent crude oil price is up 7.8% to US$119.93 a barrel. This was driven by news that Donald Trump plans to blockade Iran until it agrees to a nuclear deal.

Fortescue shares rated as a sell

Fortescue Ltd (ASX: FMG) shares are overvalued according to analysts at Bell Potter. This morning, the broker has downgraded the iron ore giant’s shares to a sell rating with a reduced price target of $18.15. It said: “FMG’s core iron ore operations continue to perform very well and benefit from an elevated iron ore price. However, we anticipate higher costs to emerge in 2HCY26 as low-cost inventories are exhausted, putting pressure on earnings. We are wary of the “portfolio optimisation” review encompassing Iron Bridge. We drop our rating to Sell.”

Gold price drops

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a poor session on Thursday after the gold price dropped overnight. According to CNBC, the gold futures price is down 1.1% to US$4,557.6 an ounce. Traders appear to believe that soaring oil prices could lead to higher inflation and interest rate hikes.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• 3 key takeaways from Woodside’s first-quarter result
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• Why 29Metals, Aurelia Metals, Codan, and oOhMedia shares are racing higher today
• Why Ramelius, Liontown and Woodside shares are making waves on Wednesday

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group Ltd. 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.

Woodside Energy Group Ltd (ASX: WDS) shares are rising on Wednesday following the release of a first-quarter update from the energy giant.

This was not necessarily a blowout quarter, but I think there were a few important takeaways that reinforce the longer-term investment case.

Here is how I see it.

Reliability remains a real strength

One of the standout aspects of the update was just how reliable Woodside’s assets continue to be.

Key operations like Sangomar, Pluto LNG, and the North West Shelf all delivered reliability at or above 99% .

That might not sound exciting, but I think it matters more than it gets credit for.

In a business like energy, consistency drives cash flow. High reliability means assets are producing when they should, which supports earnings and helps smooth out volatility over time.

Even with some disruption from cyclones late in the quarter, the company was able to maintain strong operational performance overall.

For me, that reinforces the idea that Woodside’s asset base is high quality.

Production dipped, but pricing improved

Production volumes came in at 45.2 million barrels of oil equivalent, down 8% from the previous quarter .

That was largely due to seasonal weather impacts, which I do not see as a structural issue.

At the same time, pricing moved in the opposite direction. Woodside achieved an average realised price of US$63 per barrel of oil equivalent, up 11% from the prior quarter .

I think this balance is important. Energy companies are always dealing with a mix of volume and price. In this case, lower production was partly offset by stronger pricing, which helps support overall revenue.

It also highlights how sensitive earnings can be to commodity prices. If pricing remains firm, that can do a lot of the heavy lifting.

Growth projects are progressing well

For me, this was probably the most important takeaway.

Woodside continues to make strong progress on its major growth projects, particularly Scarborough, which is now 96% complete and on track for first LNG in the fourth quarter of 2026 .

Other projects like Trion and Louisiana LNG are also advancing and remain on budget. I think this is important because it underpins future production and cash flow growth.

These are long-life assets that can generate returns for years once they come online. Seeing them progress on time and on budget reduces a lot of execution risk.

It also gives investors more confidence in the medium-term outlook.

Are Woodside shares a buy?

I think they are. This update does not change the core story for me.

Woodside continues to operate a portfolio of high-quality assets, benefits from strong commodity pricing, and is steadily bringing major growth projects closer to completion.

There will always be volatility in energy markets. Production can move around, and prices can change quickly.

But when I look at the bigger picture, I think the combination of reliable operations, improving pricing, and a clear pipeline of projects puts the company in a strong position over time.

For investors looking for income and exposure to global energy demand, I believe Woodside shares still look like a solid option.

The post 3 key takeaways from Woodside’s first-quarter result appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why Ramelius, Liontown and Woodside shares are making waves on Wednesday
• Up 40% in 2026: Why are Woodside shares charging higher today?
• Woodside Q1 2026 earnings: Revenue grows, Scarborough and Trion progress
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Grace Alvino 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.

When I think about what drives long-term outperformance, I come back to a fairly simple idea. 

The businesses that tend to win over a decade are usually the ones with consistent demand, pricing power, and the ability to quietly grow earnings year after year.

That is why I think Woolworths Group Ltd (ASX: WOW) shares have a real chance to beat the market over the next 10 years.

A business built on everyday demand

Woolworths sits in one of the most resilient parts of the economy. People still need to buy groceries regardless of what interest rates are doing or how the broader market is performing.

That does not make it immune to short-term pressures. Margins can move around, and competition can pick up. But over long periods, this kind of demand tends to be stable and predictable.

That stability matters more than it might seem. It gives Woolworths a consistent base of revenue that can compound over time, even if growth is not explosive in any single year.

Scale that supports earnings growth

One of the key advantages Woolworths has is scale. It operates one of the largest supermarket networks in Australia, which gives it significant buying power and operational efficiency.

Over a 10-year period, even modest improvements in margins, combined with steady sales growth, can lead to meaningful earnings expansion.

A steady compounding profile

Woolworths is not the type of ASX share that typically delivers sudden, dramatic gains. But that is not really the point here.

What matters is consistency. If a business can grow earnings at a steady pace, reinvest into its network, and maintain strong market share, the compounding effect can become quite powerful over time.

It is also worth noting that Woolworths continues to be viewed as a high-quality defensive within portfolios, sitting alongside other stable names that can deliver dependable growth.

That kind of positioning tends to attract long-term capital, which can support valuation over time.

Why time is the key factor

Over shorter periods, Woolworths shares might lag the market. That can happen if growth stocks are leading or if defensive names fall out of favour.

But over a decade, the equation shifts. The combination of steady earnings, strong market position, and essential demand can add up in a way that is easy to underestimate.

For example, over the last 10 years, Woolworths shares have delivered an average total return of 9% per year.

This is not about trying to pick the fastest grower. It is about owning a business that can keep moving forward, year after year, with fewer surprises along the way.

Foolish takeaway

Woolworths is unlikely to be the most exciting share on the ASX. But over 10 years, it does not need to be.

If it continues to grow steadily, defend its market position, and benefit from its scale, I think it has a solid chance of delivering returns that quietly edge past the broader market.

The post Why I think Woolworths shares could beat the market over 10 years appeared first on The Motley Fool Australia.

More reading

• $250,000 to invest for passive income? Here’s how I would build a portfolio
• Is it time for investors to turn back to defensive ASX shares?
• If I had to build a simple ASX portfolio today, this is what I’d do
• Nervous investors turn to ASX 200 defensives as global energy shock drags on
• 5 ASX dividend shares I’d buy for a second income

Motley Fool contributor Grace Alvino 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 Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to companies operating in the gaming and poker machine spaces Australia has a couple of the world majors, with Aristocrat Leisure Ltd (ASX: ALL) being one.

New broker report

RBC Capital Markets has just initiated coverage of the stock, and they have an outperform rating on it, as well as a bullish share price target which we’ll get to shortly.

Interestingly one of the characteristics of gaming spending over the past six weeks has been its resilience in the face of global uncertainty.

AS RBC’s Mark Wilson says in his report on Aristocrat:

Notwithstanding the Iran conflict and cost of living pressures, global gaming markets remain resilient as evidenced by recent gaming expenditure data. In 1Q26, US commercial gaming revenue was up 5% on the previous corresponding period with land-based casino gross gaming revenue (GGR) up 3% and iGaming GGR up 18%.

Mr Wilson said Aristocrat still has room to grow, despite already holding a commanding position in the market.

As he said:

Aristocrat’s recent game performance highlights that it is well-positioned to grow incremental market share, notwithstanding that it has a current 43% share of the North American Gaming Ops market and a 31% share of the Outright Sales market.

Mr Wilson said RBC believes there is upside risk to their earnings forecasts if the company’s Aristocrat Interactive division can achieve its revenue target of US$1 billion by FY29.

He went on to say:

The iGaming market is growing in excess of 20% pa and Aristocrat has just a 3.5% share of the iCasino market, ahead of the launch of Lightning Link.

More broadly Mr Wilson said the company’s balance sheet was in fine shape.

Given the strength of Aristocrat’s recurring revenue businesses, we expect Aristocrat will be able to generate free cashflow in excess of $1.7 billion per annum, which has been one of the key drivers of Aristocrat’s strong balance sheet. This provides the company the ability to seek acquisition opportunities as well as return surplus capital to shareholders via share buybacks. We expect these to be ongoing.

Capital management options

Mr Wilson’s report says the company has just $234 million remaining under its current $1.5 billion buyback program which is scheduled to run until March 2027, raising the prospect that a new buyback could be launched.

RBC Capital Markets has a share price target of $58 on Aristocrat shares, compared with the current price of $47, implying potential upside of 23%.

Aristocrat is valued at $27.86 billion, and pays a dividend yield of 2%.

The post This ASX gaming company could deliver 20%+ returns: RBC Capital Markets appeared first on The Motley Fool Australia.

More reading

• Why I’d invest $4,000 into these ASX 200 shares
• 6 ASX 200 shares with strengthened buy ratings this week
• Down 30%! 3 ASX shares I’d buy now
• Down 50% in the past year, are these ASX 200 shares too cheap to ignore?
• Buy, hold, sell: Aristocrat, Lovisa, Bendigo Bank shares

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 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.

Building a passive income portfolio is not about chasing the highest dividend yield. For me, it is about finding a balance between reliable income today and the ability for that income to grow over time.

If I had $250,000 to invest for passive income, I would focus on a mix of high-quality ASX dividend shares and a couple of income-focused ASX ETFs to keep things diversified and simple.

Here is how I would approach it.

Start with a core of reliable income stocks

I would anchor the portfolio with a handful of large, established ASX shares that have a track record of paying dividends through different market conditions.

Commonwealth Bank of Australia (ASX: CBA) would be one of my starting points. The major banks are not cheap right now, but they remain some of the most consistent dividend payers on the ASX. CBA, in particular, has shown an ability to deliver relatively stable income, supported by its strong market position.

Telstra Group Ltd (ASX: TLS) would also be on my list. Telstra offers a relatively attractive dividend yield and benefits from recurring revenue through its core telecommunications business. It is not a fast grower, but for income, consistency matters.

Woolworths Group Ltd (ASX: WOW) adds a different layer. Its dividend yield is typically lower than banks or telcos, but the business is defensive. People still need groceries regardless of economic conditions, which can help support more stable earnings and dividends over time.

Add infrastructure for steady cash flows

Transurban Group (ASX: TCL) is another name I would include.

Infrastructure assets like toll roads tend to generate predictable, long-duration cash flows. Many of Transurban’s revenues are linked to traffic volumes and, in some cases, inflation, which can provide a degree of protection for income investors.

This type of exposure helps smooth out the portfolio, especially when more cyclical sectors become volatile.

Include resources for income and upside

BHP Group Ltd (ASX: BHP) would round out the core holdings.

Mining dividends can be more volatile because they depend on commodity prices. However, BHP has historically returned significant cash to shareholders during strong commodity cycles.

I would not rely on it for steady income every year, but it can provide a meaningful boost to portfolio income over time, along with exposure to global demand for resources.

Use ASX ETFs to diversify and simplify

To complement individual stocks, I would allocate part of the portfolio to income-focused exchange-traded funds (ETFs) like the Vanguard Australian Shares High Yield ETF (ASX: VHY) or the BetaShares S&P Australian Shares High Yield ETF (ASX: HYLD).

These ETFs provide exposure to a broader basket of dividend-paying companies, which can help reduce the risk of relying too heavily on any single stock.

They also make the portfolio easier to manage. Instead of needing to constantly adjust individual holdings, the ETF structure does some of that work in the background.

How I would split the $250,000

Rather than overcomplicating things, I would aim for a balanced allocation across these ideas.

Roughly speaking, I would divide the portfolio between core dividend stocks and ETFs. The individual holdings provide targeted exposure to high-quality businesses, while the ETFs add diversification and help smooth income.

The exact percentages would depend on personal preference, but the key idea is to avoid concentrating too much in any one sector, especially banks or resources.

Foolish takeaway

A $250,000 passive income portfolio does not need to be complicated to be effective.

By combining reliable dividend payers like Commonwealth Bank, Telstra, Woolworths, Transurban, and BHP with diversified ASX ETFs such as the VHY or HYLD ETFs, it is possible to build a portfolio that generates income today while still having room to grow over time.

The post $250,000 to invest for passive income? Here’s how I would build a portfolio appeared first on The Motley Fool Australia.

More reading

• $10,000 invested in the Vanguard Australian Shares High Yield (VHY) ETF a year ago is now worth?
• Should you buy CBA shares for their ‘consistent profitability’?
• Is it time for investors to turn back to defensive ASX shares?
• How to dollar-cost average your way to passive income with ETFs
• If I’d put $6K in this ASX mining stock 12 months ago I’d have over $20k now

Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia and Transurban Group. 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 Telstra Group, Transurban Group, and Woolworths Group. The Motley Fool Australia has recommended BHP Group and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.