Author: openjargon

The Santos Ltd (ASX: STO) share price has had an excellent 2026 to date, rising more than 26%. The S&P/ASX 200 Index (ASX: XJO) is virtually flat. The business has clearly been indirectly positively affected by events in the Middle East.

As the chart above shows, the business is close to a 52-week high. The question is whether the ASX energy share is a buy given elevated profit generation, or whether this is a good time to sell given the boosted valuation.

I’m not an expert on ASX energy shares, so I’m going to look at the opinion of fund manager L1 Group Ltd (ASX: L1G), which likes to hunt for opportunities across a variety of sectors. Let’s look at some of those views on the Santos share price.

Is the Santos share price a buy?

L1 noted that oil and gas shares rose strongly in March in response to the Iran war, with oil prices jumping by more than 50% and European gas names up between 50% to 70% in the year to date.

The fund manager said that it expects near-term tightness of fuel supply to continue. However, the medium-term fundamentals are “less supportive”.

Based on the above, L1 decided to reduce its exposure to energy names during March, including Santos shares, due to the expectation that oil and gas prices (and related shares) would normalise as the current conflict resolves. At the time of writing, there is still no permanent agreement between the US and Iran to allow fuel and other cargo ships through the Strait of Hormuz again.

But, on the positive side of things, L1 noted that Santos continues to “make significant progress on its key growth initiatives, with its Barossa project loading the first LNG cargo at the end of January 2026, and the Pikka project expecting to achieve its first oil in the coming weeks.”

The fund manager said that the completion of these significant growth projects will mark the end of a multi-year period of elevated investment and represent an “inflection point” for earnings and dividends going forward.

Other analysts’ views on the ASX energy share

Other analysts are also fairly positive on the business right now. According to CMC Invest, there are currently six buy ratings, two hold ratings and a sell rating on the business. However, the average price target of $7.90 only suggests a possible rise of 1% from where it is, at the time of writing.

I can see why L1 may have decided to sell if there’s little upside to maintaining the position size it held in Santos shares. Other opportunities could be more attractive. In L1’s view, it’s good to look at businesses with low price/earnings (P/E) ratios and growing earnings.

The post Is the Santos share price a buy or a sell amid the Middle East events? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• ASX 200 energy shares lift as pessimism over Iran war deepens
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why Deep Yellow, Develop Global, Resolute Mining, and Santos shares are pushing higher today

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 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.

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a small decline. The benchmark index fell slightly to 8,786.5 points.

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

ASX 200 expected to fall

The Australian share market looks set for a subdued start to the week despite a relatively good finish on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 3 points lower. In the United States, the Dow Jones was down 1.5%, the S&P 500 rose 0.8%, and the Nasdaq jumped 1.6%.

Oil prices mixed

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) will be on watch on Monday after a mixed night for oil prices on Friday night. According to Bloomberg, the WTI crude oil price was down 1.5% to US$94.40 a barrel and the Brent crude oil price was up 0.25% to US$105.33 a barrel. However, with the US cancelling peace talks with Iran over the weekend, oil prices could be on the move again when Asian markets open.

PLS shares named as a hold

PLS Group Ltd (ASX: PLS) shares are fairly valued according to analysts at Bell Potter. In response to the lithium miner’s quarterly update, the broker has retained its hold rating on the lithium miner’s shares with an improved price target of $5.50. It said: “We maintain our Hold recommendation. At current lithium market prices, PLS will generate substantial earnings and cash flow ahead of the restart of the 200ktpa Ngungaju processing plant. P2000 and Colina development studies are being progressed, providing substantial organic growth optionality in markets with strong underlying EV and BESS-led long term demand fundamentals.”

Gold price rises

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a good start to the week after the gold price pushed higher on Friday night. According to CNBC, the gold futures price was up 0.35% to US$4,740.9 an ounce. This couldn’t stop the precious metal from recording a weekly decline on inflation and rate hike concerns.

BHP and Rio Tinto shares on watch

Mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) will be on watch on Monday after a poor finish to the week for their London listed shares. Both miners saw their shares fall around 1% on the LSE. This may have been driven by a pullback in copper prices on Friday.

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

More reading

• Market alert: 2 major ASX bank shares could fall double digits
• 3 reasons to buy BHP shares now and hold for the next decade
• Experts are bullish about the potential of this ASX 200 share!
• Australian couples vs singles: who needs more superannuation to retire?
• Nervous investors turn to ASX 200 defensives as global energy shock drags on

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

The two biggest ASX bank shares have been standout performers over the past five years, comfortably beating the broader market. While the S&P/ASX 200 Index (ASX: XJO) has gained around 24% in that time, Commonwealth Bank of Australia (ASX: CBA) has surged roughly 96% and Westpac Banking Corporation (ASX: WBC) has climbed about 56%.

But the tide may be turning. Despite their strong run, signs are emerging that the sector could be running out of steam. And some experts believe the slowdown could have further to go.

CBA: Premium pricing under pressure

CBA shares have continued to push higher in 2026, rising around 8% year to date. That’s despite long-running concerns that the $292 billion ASX bank share is trading well above fair value.

Analysts widely agree that the bank’s valuation looks stretched compared to its peers, with its current price not fully supported by underlying fundamentals. At the time of writing, CBA trades on a price-to-earnings (P/E) ratio of 28. That’s significantly higher than other major Australian bank stocks.

With shares sitting at $174.49, CBA is also up about 6% over the past 12 months. Yet broker sentiment remains overwhelmingly negative. According to TradingView data, 14 out of 16 brokers rate the stock as a sell or strong sell, with just two suggesting a hold.

The average price target sits at $129.88, implying around 28% downside from current levels. Some bearish forecasts go even further, suggesting the shares could fall as low as $90 within the next year. That’s a potential drop of nearly 50%.

Westpac: Cracks appearing in outlook

This $133 billion ASX Bank share is another big four bank facing growing scepticism. While its share price has performed well — up 1% year to date and 22% over the past 12 months to $39.01 — concerns are building about the road ahead.

In a recent trading update, the bank flagged risks stemming from disruptions in energy markets, warning that supply shocks could drive higher inflation and interest rates. That combination is likely to weigh on economic activity and place additional strain on borrowers.

Westpac also acknowledged that a softer economic backdrop could prove challenging for some of its customers. Following the update, several brokers downgraded their outlook on the stock, shifting to more cautious or outright bearish positions.

Consensus estimates now point to a strong sell rating, with an average price target of $34.75. That suggests a potential downside of around 11% from current levels.

Foolish Takeaway

After years of outperformance, Australia’s major banks may be entering a more difficult phase. Elevated valuations, slowing economic conditions, and cautious broker sentiment all point to increased downside risk, particularly for CBA and Westpac.

While ASX bank shares have long been seen as reliable income generators, investors may need to reassess whether current prices adequately reflect the challenges ahead.

The post Market alert: 2 major ASX bank shares could fall double digits appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 3 reasons to buy BHP shares now and hold for the next decade
• Experts are bullish about the potential of this ASX 200 share!
• Australian couples vs singles: who needs more superannuation to retire?
• Nervous investors turn to ASX 200 defensives as global energy shock drags on

Motley Fool contributor Marc Van Dinther 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.

There is no shortage of ways to invest in the ASX share market.

You can chase growth, focus on income, or try to time the next big move. But if I had to start fresh today, I would keep things much simpler.

I would build an ASX share portfolio that covers the key building blocks of long-term investing.

Start with broad market exposure

The first piece would be diversification.

Instead of trying to pick every winner, I would want exposure to a large group of ASX shares from the outset. That is where an exchange-traded fund (ETF) can play a role.

For example, the Vanguard Australian Shares Index ETF (ASX: VAS) provides exposure to a broad range of companies across the ASX. It includes large, mid, and small-cap stocks in one investment.

That gives you a foundation.

You are not relying on a single company to perform. You are participating in the broader market over time.

Add a quality growth layer

Once that base is in place, I would look to add a smaller number of individual ASX shares with clear growth potential.

One example I would consider is TechnologyOne Ltd (ASX: TNE).

It is a software business that continues to grow its customer base and expand its recurring revenue. What I like is the visibility. Subscription models tend to create more predictable earnings over time.

This part of the portfolio is about adding growth on top of the broader market exposure.

Include a steady income contributor

The final piece would be income.

Even if I am focused on long-term growth, I still like the idea of having some cash flow coming in along the way.

A company like Transurban Group (ASX: TCL) fits that role. It owns toll road assets that generate steady, inflation-linked revenue. Similarly, Woolworths Group Ltd (ASX: WOW) could also do a job.

They could support consistent distributions and add a more defensive element to the portfolio.

Keep it manageable

One thing I would avoid is overcomplicating things.

You do not need 20 or 30 holdings to get started. A small number of well-chosen investments can be enough.

This also makes it easier to stay on top of what you own and remain confident during periods of market volatility.

Build over time

This structure is only the beginning.

From there, I would look to add regularly. Whether it is monthly or whenever cash becomes available, consistency is what builds the portfolio.

Over time, those contributions can have a bigger impact than trying to pick the perfect entry point.

Foolish takeaway

If I had to build a simple ASX share portfolio today, I would focus on three things.

Broad market exposure, a layer of growth, and a source of income.

It is not complicated, but I think that is the point. A simple approach, applied consistently over time, can go a long way in building wealth.

The post If I had to build a simple ASX portfolio today, this is what I’d do appeared first on The Motley Fool Australia.

More reading

• How much is needed in an SMSF to target a $6,166 monthly passive income?
• Nervous investors turn to ASX 200 defensives as global energy shock drags on
• All-weather ASX ETFs to buy if the market crashes 20%
• The Warren Buffett rule I keep coming back to with ASX shares
• 3 ASX dividend shares I’d hold through anything

Motley Fool contributor Grace Alvino has positions in Transurban Group and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One and Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group and Woolworths Group. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares have never been a straight-line story.

The mining giant’s share price has gained nearly 200% over the past decade, but that journey has included plenty of ups and downs. That’s the nature of a business tied to commodity cycles. Even so, the past 12 months alone have seen BHP shares climb roughly 47%.

To put it in perspective, the S&P/ASX 200 Index (ASX: XJO) has risen 68% over ten years and 11% over the past 12 months.

So why consider buying now and holding through to 2036?

Strong operations across key commodities

Despite volatile commodity prices, BHP’s core operations continue to deliver.

The company has reported record production from its Western Australian iron ore operations and solid output from its copper division. Iron ore remains on track to meet full-year guidance, while copper production is expected to land in the upper half of its range.

That consistency matters. When multiple divisions are performing well at the same time, it supports earnings stability and strong cash generation.

There’s also a bigger picture at play. Global demand for key resources – especially copper – is expected to grow as the world transitions toward cleaner energy. Copper is essential for electric vehicles, renewable energy systems, and power infrastructure.

If that trend plays out, BHP shares are well positioned to benefit.

Reliable income with strong dividend history

BHP shares aren’t just about growth, it’s also a major income stock.

The company has a long track record of paying dividends, with distributions stretching back nearly two decades. It typically targets a payout ratio of at least 50% of earnings, which means shareholders benefit directly when commodity prices are strong.

Yields often sit in the 4% to 6% range and are usually fully franked, making them particularly attractive for Australian investors.

Of course, dividends can fluctuate with earnings. But over time, BHP has proven it can deliver meaningful income across cycles.

Financial strength and long-term growth

Another key reason to watch BHP shares is the company’s balance sheet and future pipeline.

The company has strengthened its financial position through asset sales and strategic deals, including a major silver streaming transaction. These moves have generated significant cash and reinforced an already robust balance sheet.

That financial flexibility is critical. It allows BHP to invest in new projects while still returning capital to shareholders.

One standout project is the Jansen potash development in Canada, with first production expected around mid-2027. This adds exposure to a completely different commodity – fertilisers – providing diversification beyond iron ore and copper.

At the same time, BHP continues to focus on low-cost operations and disciplined capital allocation. That approach helps protect margins, even when industry costs rise.

Foolish Takeaway

BHP shares will always be influenced by commodity cycles – that’s unavoidable. But with strong operations, reliable dividends, and exposure to long-term demand trends, the company offers a compelling case for patient investors.

For those willing to ride out the ups and downs, BHP could remain a powerful long-term holding well into the next decade.

The post 3 reasons to buy BHP shares now and hold for the next decade appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Market alert: 2 major ASX bank shares could fall double digits
• Experts are bullish about the potential of this ASX 200 share!
• Australian couples vs singles: who needs more superannuation to retire?
• Nervous investors turn to ASX 200 defensives as global energy shock drags on

Motley Fool contributor Marc Van Dinther has positions in BHP 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Qantas Airways Ltd (ASX: QAN) shares are now trading well below where they were just a few months ago.

The recent 33% pullback from its high has largely been driven by external factors, particularly the conflict in the Middle East and the sharp rise in oil prices. Jet fuel costs have surged, creating uncertainty and weighing on sentiment.

When I look at it now, I see an opportunity to buy into the airline business at a cheaper price. Here are three reasons I would consider buying Qantas shares.

Strong demand is still there

One of the most important things to me is whether demand has held up.

Based on its market update this month, that appears to be the case.

Qantas continues to see strong demand for international travel, particularly to Europe, even as it adjusts routes and capacity in response to the current environment.

Domestic demand also remains solid, supported by both business and leisure travel.

That tells me the core business is still functioning well. The issue is not a lack of customers, it is the cost side of the equation.

The business has levers to respond

Airlines are not passive when conditions change.

Qantas has already taken steps to manage the impact of higher fuel costs. That includes adjusting capacity, redeploying aircraft, and increasing fares where needed.

This is important. It shows the company has some ability to respond rather than simply absorbing higher costs. While it may not fully offset the impact in the short term, it can help protect margins over time.

The company has also hedged a large portion of its fuel exposure, which provides some buffer against further volatility.

Long-term improvements are still underway

The third reason comes back to what the business is building.

Qantas is in the middle of a major fleet renewal, with new aircraft continuing to arrive and more expected over the next 18 months.

These aircraft are more efficient, support new routes, and improve the overall customer experience.

At the same time, the Loyalty division continues to grow and diversify earnings, with over 18 million members and expanding partnerships.

These are long-term drivers. They are not going to show up in a single quarter, but they can shape how the business performs over the next decade.

Foolish takeaway

Qantas shares have fallen heavily due to rising fuel costs and global uncertainty.

But demand remains strong, the company has levers to respond, and long-term investments are still progressing.

With the share price down 33%, I think this looks more like an opportunity to buy a quality business at a lower price rather than a sign that the long-term story has changed.

The post Down 33%: Here are 3 reasons I’d buy Qantas shares appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 blue-chip shares I’d buy with $5,000 in May
• Is the Qantas share price a buy? Here’s an expert’s view
• Why Black Cat, Mirvac, Qantas, and Temple & Webster shares are falling today
• 3 ASX 200 shares tipped to rise 20% or more
• 2 ASX shares highly recommended to buy: Experts

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.

A lot of investors like the idea of building a second income through ASX shares.

The appeal is simple. Instead of relying purely on capital gains, your portfolio can start generating cash along the way.

But how much income can you realistically expect from a $50,000 ASX share portfolio?

Dividend income

Before jumping into numbers, I think it helps to understand what actually drives dividend income.

It comes down to the dividend yield of your portfolio and the types of businesses you own.

Some companies pay very little, choosing to reinvest for growth. Others return a larger portion of their earnings to shareholders. Most sit somewhere in between.

On the ASX, I think aiming for a yield of around 4% to 6% is a reasonable range if you are building a diversified income portfolio. That might include a mix of REITs, retailers, infrastructure assets, and more defensive names.

But the key is not chasing the highest yield available. It is about building something that can keep paying over time.

Building a portfolio that can support income

This is where stock selection starts to matter. For example, higher-yield shares like HomeCo Daily Needs REIT (ASX: HDN) and Harvey Norman Holdings Ltd (ASX: HVN) can help lift the overall income of a portfolio.

HomeCo Daily Needs benefits from steady rental income tied to everyday retail, while Harvey Norman combines retail earnings with a large property portfolio that can support dividends.

Around those, I would still look to include other reliable dividend payers to spread risk and create a more balanced income stream.

That way, you are not relying too heavily on any single company or sector.

So what does that look like in dollar terms?

Using a 5% dividend yield as a guide, a $50,000 portfolio could generate $2,500 per year in dividends.

That works out to roughly $48 per week.

It is not going to replace your income, but it is a meaningful starting point. More importantly, it is something that can grow.

What happens if you keep going?

This is the part I think often gets overlooked.

The first $2,500 is just the base income.

If you reinvest those dividends and continue adding to your portfolio, the income can start to build much faster.

For example, starting with $50,000 and adding $5,000 each year, a portfolio growing at an average of 9% annually could reach around $200,000 over time.

At a 5% yield, that would produce $10,000 per year in passive income.

At that point, it starts to feel much more significant.

Let compounding do the work

The difference between $2,500 and $10,000 does not come from taking more risk.

It comes from time, consistency, and reinvestment.

Each dividend payment buys more ASX shares. Each contribution increases your base. Over time, that creates a compounding effect where the income begins to accelerate.

That is when the strategy really starts to show its value.

Foolish takeaway

A $50,000 ASX share portfolio could generate around $2,500 a year in dividends at a 5% yield.

But I do not think that is the most important part. What matters is what you do next. By reinvesting dividends, adding new money, and staying consistent, that income stream can grow into something much larger over time.

The post How much could a $50,000 ASX share portfolio pay in dividends? appeared first on The Motley Fool Australia.

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• Down 40%: These high-yield ASX dividend shares are rated as buys
• 5 ASX dividend shares I’d buy for a second income
• Forget Westpac shares, I’d buy these ASX dividend stocks

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 Harvey Norman. The Motley Fool Australia has recommended HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When I’m looking for ASX income stocks to buy, the dividend growth that the stock can potentially offer is far more important than its upfront dividend yield.

Many ASX dividend stocks that offer large upfront yields aren’t in a financial position to be able to grow those yields substantially going forward. That puts a speed limit on future potential returns.

But income stocks that offer a potentially long runway of dividend growth can compound their future payouts for the benefit of shareholders. That’s the kind of investment I love to buy.

So with that in mind, let’s discuss two ASX income stocks that have been growing their payouts at the speed of a rocket.

Two ASX income stocks growing their dividends at a blistering pace

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

First up, we have the investing house, Washington H. Soul Pattinson, or Soul Patts for short. Soul Patts runs a massive portfolio of underlying investments on behalf of its shareholders. This portfolio includes large stakes in other ASX blue chips, strategic single stock investments, private credit, venture capital, and property.

In short, a diversified, yet high-performance asset base.

This company has been at this game for decades, and it has the runs on the board to show for it. For one, it is the only ASX income stock that has a 28-year (and counting) streak of annual dividend hikes.  These aren’t 1% per year hikes either. Soul Patts doled out an annual total of 50 cents per share back in 2015. By 2025, this had grown to $1.03 per share. All fully franked too.

Between 2021 and 2025, this ASX income stock delivered an average annual dividend growth rate of 11.9% per annum. That’s real wealth-building material right there.

MFF Capital Investments Ltd (ASX: MFF)

Next, let’s check out another ASX income stock in MFF Capital. MFF is a listed investment company (LIC), meaning that, much like Soul Patts, it runs an underlying portfolio on behalf of investors. In MFF’s case though, this portfolio consists mostly of US stocks.

MFF follows the Warren Buffett playbook of buying high-quality companies at compelling prices, and holding them for years on end. Some of its largest current positions, which include Amazon, Alphabet, Mastercard, American Express, and Visa, were accumulated years ago.

Let’s talk dividends, though. Like Soul Patts, MFF is a dividend growth machine. It doesn’t quite have Soul Patts’ payout longevity yet. But its growth has been equally impressive.

Back in 2017, MFF forked out 2 cents per share in annual, fully franked dividends to its shareholders. By 2021, the company had hit 7.5 cents per share. Last year, investors enjoyed a total of 17 cents per share. In 2026, the company has told investors to expect a total of 21 cents per share, up 23.5% from just 2025 levels if so. Since 2017, the company has averaged an annual increase of more than 25%. Enough said.

The post 2 ASX income stocks with rocketing dividends appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares I’d much rather buy than an investment property
• Has your ASX dividend stock increased its payout 28 years in a row?
• 2 quality ASX 200 shares I’d buy if the market fell another 10%
• Want to build a second income? I’d buy these ASX shares today
• Why Monash IVF, NAB, Viva Energy, and Worley shares are falling today

American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, American Express, Mastercard, Mff Capital Investments, Visa, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, Visa, and 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 Australia has recommended Alphabet, Amazon, Mastercard, Mff Capital Investments, and Visa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) share James Hardie Industries Plc (ASX: JHX) could be a seriously underrated opportunity amid ASX stock market volatility.

This opinion isn’t coming from me, it’s from one of Australia’s leading fund managers – L1 Group Ltd (ASX: L1G). L1 has a long-term track record of outperforming the ASX 200 with its main listed investment company (LIC), L1 Long Short Fund Ltd (ASX: LSF).

In the three years to March 2026, the LIC delivered an average net return per year of 15.9%, outperforming its benchmark by an average of more than 6% per year.

L1 noted that the Iran War triggered a widespread fall in equity markets, with a major spike in market volatility. It’s using this period of elevated volatility to identify “high quality companies that are now trading far below fair value, even assuming a less favourable macro outlook.”

The fund manager notes that James Hardie is a leading siding (fibre cement), composite decking and building solutions company.

Let’s take a look at why L1 recently increased its investment in James Hardie shares following a decline of more than 20% during March.

The positives of the investing in the ASX 200 share

James Hardie is one of the building product businesses facing an uncertain situation related to inflation and costs. L1 said that the James Hardie share price (and peers) pulled back amid worries about higher interest rates and expectations of softening demand.

The fund manager said this contributed to a sector de-rating toward a bottom-of-the-cycle valuations. L1 believes there’s a good prospect for returns from a “future normalisation of interest rates and/or improving consumer confidence”.

It was suggested by the investment team that the business has no director impacts from the Iran war, with around 80% of sales generated in North America.

L1 suggested that James Hardie offers strong earnings growth potential with an earnings multiple in the mid-teens.

The fund manager said that the James Hardie share price is valued on a forward price/earnings (P/E) ratio of around 15x. That compares to a 10-year average of the forward P/E ratio being around 21x.

The 2022 period of high inflation saw the business trade at an even lower valuation, but the business has largely traded above that 15x P/E ratio since early 2023.

L1 isn’t the only expert that likes James Hardie shares – the ASX 200 share is currently rated as a buy by 15 analysts, according to Commsec. It’s one of the most liked businesses inside the ASX 200 right now.

The post Experts are bullish about the potential of this ASX 200 share! appeared first on The Motley Fool Australia.

More reading

• Australian couples vs singles: who needs more superannuation to retire?
• Nervous investors turn to ASX 200 defensives as global energy shock drags on
• The superannuation balance you actually need at 65 to retire without the Age Pension
• 5 years ago, $10,000 bought 111 CBA shares. But how many would it buy now?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. 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.

I often say that ASX shares are the best place to look for passive income due to their attractive dividend yields as well as franking credits. I’d use ASX shares to build up a second income.

Some investors may be drawn to names like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP), but I think there are options that can provide better reliability and better long-term payout growth.

By choosing growing ASX shares, we can receive pleasing payouts in the shorter-term and see very noticeable growth over the long-term. That’s why I’ve got my eyes on the following ASX shares for passive income.

L1 Long Short Fund Ltd (ASX: LSF)

This is a listed investment company (LIC), which means its job is to invest in other assets on behalf of shareholders.

One of the most appealing features of this LIC is that it invests in both ASX shares and global shares, which is a pleasing level of diversification and gives the company a very wide investment universe to hunt for opportunities.

Additionally, the ASX share is able to utilise a short-selling strategy which means it can make money when share prices go down.

It has made money from a variety of sectors including resources, industrials and communication services. It has not needed technology shares to achieve its 16% average net return per year over the five years to 31 March 2026. Past performance is not always a reliable indicator of future performance, of course.

With that powerful portfolio business, L1 Long Short Fund has been utilising a portion of it to deliver a growing dividend. The ASX share’s quarterly dividends in the first-half of FY26 were up 13.6% year-over-year compared to the HY25 dividend.

I’m expecting it to continue hiking its quarterly dividend for the foreseeable future. At the time of writing, I think its next 12 months of quarterly dividends will translate into a grossed-up dividend yield of 5.2%, including franking credits.

I think this ASX share is a great option for building a second income.

APA Group (ASX: APA)

APA is another ASX share with excellent passive income credentials. It’s an energy infrastructure giant that generates significant cash flow which funds its distributions.

Its key asset is the huge gas pipeline network which connects sources of supply to demand. As a sign of how important this business is to Australia, take in this fact: APA transports half of Australia’s gas usage. Not many Australian businesses can claim that sort of reliance in Australia.

But, that’s not the only asset in the APA portfolio. It also owns gas power stations, gas storage, gas processing, electricity transmission, solar power and wind farms.

Pleasingly, most of APA’s revenue is linked to inflation, giving the business a good sense of protection during periods of higher inflation, like now.

Its expanding portfolio of assets generates the cash flow which pays for the growing passive income.

APA has increased its annual distribution each year over the past 20 years thanks to its rising cash flow. It’s expecting to increase its FY26 annual payout to 58 cents per security. At the time of writing, that translates into a forward distribution yield of 5.8%.

The post Want to build up a second income? These 2 top ASX shares are a buy appeared first on The Motley Fool Australia.

More reading

• 3 ASX dividend shares I’d hold through anything
• 5 powerhouse ASX dividend shares to buy and hold until 2050
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• Forget BHP shares! Buy these ASX dividend shares instead for passive income
• 3 ASX dividend shares to buy for 5.8%, 7%, and 10% yields

Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. 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 Apa 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.