Author: openjargon

I’m always on the lookout for investments on the ASX that could provide passive income. One of the areas we can find opportunities is the ASX-listed exchange-traded fund (ETF) space.

I think it’s important to have a diversified portfolio – don’t just rely on one underlying business for dividends. An ASX ETF can provide exposure to dozens, hundreds or even thousands of companies.

But, many ASX ETFs focused on international shares have a fairly low dividend yield because the underlying companies have low yields, which makes it harder to invest in them for passive income seekers, even if they do own great companies. Below are two of my favourite ideas for passive income from ASX ETFs.

WCM Quality Global Growth Fund (ASX: WCMQ)

This ASX ETF aims to deliver investors an annualised distribution yield of at least 5%, which I think is a very good yield. It’s not too high, but it’s still very rewarding compared to the dividend yields of most ASX ETFs.

The fund looks across the global share market for opportunities. Currently, 56% of the portfolio comes from the Americas, which is substantially less than what the actual global share market’s allocation is, so I think it provides better diversification geographically.

WCM’s investment process is based on the belief that corporate culture is the biggest influence on a company’s ability to grow its competitive advantage (economic moat). I think a growing economic moat improves the company’s ability to generate stronger profit margins.

Between the ASX ETF’s inception in August 2018 and March 2026, it has delivered an average return of 14% per year. That’s high enough for the fund to both pay the 5% distribution yield and deliver capital growth with the retained returns as the net asset value (NAV) rises. Of course, past performance is not a guarantee of future performance.

Montaka Global Fund (ASX: MOGL)

This is a fund operated by the fund manager Montaka Global Investments, which is now ultimately owned by MFF Capital Investments Ltd (ASX: MFF).

The fund aims to invest in high-quality global companies that are well-positioned to benefit from major long-term industry trends and are priced below what Montaka thinks it’s worth.

In terms of the passive income, it targets a 4.5% distribution yield per annum, paid half-yearly.

Its performance in the last few months has been impacted by the sell-off of the share market following the Middle East conflict and the tech pain caused by AI worries. Even so, in the three years to March 2026 it produced an average return of 14%.

Some of its current largest holdings include Amazon, Microsoft, Meta Platforms, Alphabet, KKR, TSMC, Tencent and BAE Systems.

These picks are trying to take advantage of a few different key themes including cloud computing, ‘discovery engines’, enterprise software, digital marketplaces and private assets.

I believe this investment style can deliver good total returns over the long-term while still delivering pleasing passive income along the way.

The post 2 high-quality ASX ETFs I’d buy for impressive passive income appeared first on The Motley Fool Australia.

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• I’m planning to buy loads of these ASX ETFs for my retirement
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Motley Fool contributor Tristan Harrison has positions in Mff Capital Investments and Wcm Quality Global Growth 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 recommended Mff Capital Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Telix Pharmaceuticals Ltd (ASX: TLX) shares are all over the place. The ASX biotech stock is down 5% over the past five trading days, yet up 16% over the past month and 27% year to date.

Zoom out further and the picture flips again. Telix shares are still down 43% over the past 12 months, having fallen sharply from around $29.64 this time last year to as low as $8.26 in February. It’s trading at $14.32 per share at the time of writing.

So, what’s behind the volatility?

Multiple growth levers

Let’s start with the fundamentals. Telix operates in the fast-growing field of radiopharmaceuticals, developing imaging and therapeutic products for cancer care. Its lead product, Illuccix, is already generating revenue, particularly in the US market, and provides a strong commercial foundation.

That’s a key strength for Telix shares. Unlike many biotech companies, Telix is not purely speculative. It has an established product, growing sales, and a pipeline of additional candidates targeting areas such as kidney and brain cancer.

Recent updates have also been encouraging. The company continues to expand its commercial footprint while advancing its pipeline, giving investors multiple potential growth drivers over time.

Regulatory and valuation risks

But biotech rarely trades in a straight line. The flipside of that growth potential is risk. Earnings can be uneven, regulatory approvals are never guaranteed, and sentiment can shift quickly based on news flow. Clinical results, product launches, and even broader healthcare sector trends can all trigger sharp moves in the share price.

Valuation is another factor. After a strong run earlier in its lifecycle, Telix shares were priced for high expectations. When sentiment toward growth stocks weakened, the pullback was severe. Even now, the stock remains sensitive to any changes in outlook.

That helps explain the wide trading range over the past year. Short-term movements are often driven more by sentiment than fundamentals. Positive announcements can spark sharp rallies, while periods of limited news or broader market caution can lead to equally sharp pullbacks.

What next for Telix shares?

Despite the wild swings, analysts remain firmly in the bullish camp.

According to TradingView data, all 16 brokers covering Telix shares rate them as a buy or strong buy. The average price target sits at $24.44, implying around 71% upside from current levels.

Some are even more optimistic. The most bullish target stands at $31.01, suggesting potential upside of 116% if the company delivers on expectations.

So where does that leave investors?

Telix is a classic high-growth healthcare stock. It offers significant upside potential, backed by a commercial product and expanding pipeline, but it also comes with volatility.

The bottom line is simple. The swings in Telix shares reflect a mix of strong fundamentals, high expectations, and shifting market sentiment.

For investors, that means opportunity, but also a need for patience and a tolerance for bumps along the way.

The post What’s driving the wild swings in Telix shares? appeared first on The Motley Fool Australia.

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• 3 exciting ASX shares you won’t want to miss out on
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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 positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The defence industry has been a great place to invest over the past 12 months.

But if you thought you’d missed the boat, think again.

That’s because Bell Potter believes one ASX defence stock with a “high ROIC business model” could deliver market-beating returns.

Which ASX defence stock?

The stock that Bell Potter is urging investors to buy is Elsight Ltd (ASX: ELS).

It is a growing supplier of communication modules to drone manufacturers. Bell Potter notes that Elsight offers advanced communication components for unmanned systems through its flagship product, the Halo platform.

Bell Potter notes that the ASX defence stock has released its quarterly update this week. While the result had no surprises, Bell Potter highlights that Elsight’s US opportunity is building. It commented:

ELS reported revenue of US$11.4m in 1Q26, a 12x increase YoY and a fifth consecutive quarter of QoQ revenue growth. The result compares to our $25.3m estimate for 1H26, suggesting ELS needs another quarter of revenue growth to hit our number, achievable given ELS likely delivered a large part of the units from the $21m order in April 2026. Active dialogue continues with the customer on follow-on orders.

ELS is observing growing demand and traction in the US, with engagement cadence across both end-user government programs and OEM customers increasing materially during the quarter, reflecting the impact of the expanded US sales team. Management expects these elevated engagement levels to support revenue conversion in coming quarters. DIU Phase 3 conclusion was delayed slightly due to the Iran conflict with the program expected to conclude in H1 2026 and lead to orders. ELS has secured access to SOCOM’s Other Transaction Authority (OTA) contracting vehicle, positioning ELS for fast procurement in the US.

Time to buy?

According to the note, the broker has retained its buy rating on the ASX defence stock with an improved price target of $8.10 (from $8.00).

Based on its current share price of $6.92, this implies potential upside of 17% for investors over the next 12 months.

Commenting on the company and its high ROIC business model, Bell Potter said:

We retain Buy. We believe ELS has developed a market leading product that is leveraged to the proliferation of unmanned systems in both a defence and commercial context. We believe ELS shares offer relative value versus listed peers at 43x CY26e EV/EBIT given its recurring revenue, high ROIC business model and defensible niche. We expect the key driver for ELS shares will be revenue upgrades from OEM 1(>80% of CY25 revenue) production capacity expansion and BlueUAS list entry.

The post Buy this ASX defence stock with a ‘high ROIC business model’ appeared first on The Motley Fool Australia.

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Bendigo and Adelaide Bank Ltd (ASX: BEN) shares took a beating on Wednesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed down 4.16% yesterday, trading for $10.61 apiece.

For some context, the ASX 200 ended the day down 1.18%.

Taking a step back, Bendigo Bank shares are now trading at just about the same levels they were one year ago, underperforming the 13.14% 12-month gains posted by the benchmark index.

Although that’s not including the 63 cents a share in fully-franked dividends the bank paid eligible stockholders over this time. Bendigo Bank stock trades on a fully franked trailing dividend yield of 6%.

But that passive income isn’t enough to keep Bell Potter Securities’ Christopher Watt from issuing a sell recommendation on the ASX 200 bank stock (courtesy of The Bull).

Should you sell Bendigo Bank shares today?

“The market responded positively to the company’s third quarter trading update for fiscal year 2026,” Watt said.

Indeed, Bendigo Bank shares closed up 8.4% on 9 April following the release of the bank’s Q3 FY 2026 update.

“Unaudited cash earnings were up 7.6% on the first half quarterly average. The net interest margin of 1.98% was up 6 basis points on the second quarter of 2026,” Watt noted.

As for the sell recommendation, Watt concluded:

In our view, catalysts to drive improvement from here are limited. The risk-reward profile lags other peers, so we would be inclined to cash in gains in this volatile environment.

What’s been happening with the ASX 200 bank stock?

Despite the 7.6% third-quarter cash earnings boost Watt mentioned above, Bendigo Bank reported a 0.4% year-on-year decline in statutory net profit after tax (NPAT) to $109.4 million.

Profits were impacted in part by the 3.2% year-on-year increase in operating expenses to $305.1 million.

The March quarter also saw the company launch the next phase of its Productivity Program.

The program, which is intended to support Bendigo Bank shares longer term, includes recently announced partnerships with Infosys and Genpact.

Commenting on the new partnerships on the day, Bendigo Bank CEO Richard Fennell said:

These partnerships will support the Bank’s ability to meet the rapidly evolving needs of our customers and other stakeholders as we build on the foundational technology platforms already delivered.

By focusing on our core strengths, including customer connection and our strong deposit franchise, Bendigo Bank will be better positioned to respond to changing market dynamics and drive sustainable growth.

The post Sell alert! Why this expert is calling time on Bendigo Bank shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 stock Generation Development Group Ltd (ASX: GDG) will be watched with a keen eye today after it crashed 22% on Wednesday. 

The ASX financials company provides investment bonds and investment-linked lifetime annuities which offer innovative and tax-efficient solutions for wealth accumulation, estate planning and generating regular income in retirement.

Following yesterday’s horror run, the ASX 200 stock is now down almost 40% year to date. 

For comparison, the S&P/ASX 200 Financials Index (ASX: XFJ) is up just over 3% in the same period. 

Why did the share price crash?

It appears investors were exiting their positions in this ASX 200 stock following the release of its March 2026 quarterly update.

It closed yesterday at $3.56 per share. 

Generation Development Group is the parent company of Evidentia Group and Generation Life  – two of its core operating businesses. 

Key highlights from Evidentia Group for the March quarter included: 

• Funds Under Management increased to $34.8 billion, up 30% vs the PCP
• Net Inflows of $1.4 billion for the quarter, including the transition of a mandate worth c. $0.3 billion. 

Management noted that underlying demand remains solid, with momentum improving through February and into March.

Meanwhile, Generation Life reported FUM of $5.3 billion at 31 March 2026, up 35% on the prior year ended 31 March 2025.

Generation Life also delivered quarterly sales of $375 million, up 57% on the previous corresponding period.

What did Bell Potter have to say?

Following the result and subsequent 22% crash, the team at Bell Potter provided updated guidance for this ASX 200 stock. 

The broker said overall, it was a mixed set of results. 

High level, the core business is seeing ongoing improvement while acquisitions show signs of softness. Market guidance now looks ambitious, but client momentum remained strong, and flagged mandates have started to contribute after being laid out. However, conversion delays have persisted.

Barring any sharp adverse market moves, we expect these delays to resolve. Outside of mandates Evidentia net inflows are performing in-line. Timing variability has had further pushback as a result of counterparties.

Price target reduction

Based on this guidance, the team at Bell Potter reduced its price target on this ASX 200 stock to $6.20 (previously $7.40). 

The broker has retained its buy recommendation. 

Despite lowering its price target, this still indicates an upside potential of 74% from yesterday’s closing price of $3.56. 

Bell Potter isn’t the only broker that sees upside for this ASX 200 stock.

Last month, the team at Morgans placed a $6.66 price target on the company, and eight analyst forecasts via TradingView place an average 12-month price target of $7.17 on the company. 

The post After a 22% crash, this ASX 200 stock could be set to rise 74% according to Bell Potter appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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 Generation Development Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

South32 Ltd (ASX: S32) shares are on the move again.

The ASX mining stock rose another 2% to $4.50 on Wednesday following a solid March 2026 quarterly update. That extends a strong run, with shares now up 16% over the past month. South32 shares have ascended 72% over the past 12 months, comfortably outperforming the S&P/ASX 200 Index (ASX: XJO), which is up 15%.

So, can the momentum continue?

Multiple growth pathways

Start with the fundamentals. South32 is a diversified global miner with exposure to commodities like aluminium, copper, zinc, and manganese. That diversification helps smooth earnings and gives it multiple pathways for growth.

The latest quarterly numbers reinforce that strength.

Net cash increased by US$121 million during the period, leaving the balance sheet in a stronger position. That financial flexibility is a key advantage, particularly in a cyclical sector.

Joint-venture success

Operational performance also impressed. Brazil Alumina delivered record year-to-date production, rising 5% to 1,060kt. Across the broader portfolio, the company largely held production guidance steady, signalling resilience despite a challenging operating environment.

One standout was Sierra Gorda, which delivered a record quarterly distribution of US$135 million, highlighting the value of South32’s joint venture assets.

Not everything went perfectly. Australia Manganese saw its guidance cut due to water issues following heavy rainfall and cyclone activity. However, this appears to be a localised disruption rather than a broader operational concern.

Higher freight costs

The company is also navigating external pressures. Like many miners, South32 is dealing with higher freight costs linked to geopolitical tensions. It continues to monitor supply chains closely but has not reported any diesel shortages.

Beyond the quarter, the bigger picture remains compelling. South32 shares are positioning itself for long-term demand in key commodities tied to global electrification and infrastructure trends. At the same time, its strong balance sheet supports both growth investment and shareholder returns.

Still, risks remain. Commodity prices are inherently volatile, and any downturn could weigh on earnings and sentiment. Operational disruptions – such as weather events – can also impact output, while global cost pressures may continue to squeeze margins.

What next for South32 shares?

Valuation is another factor. After such a strong run, some analysts are becoming more cautious in the near term. Morgans recently lowered its rating on South32 shares to accumulate, citing the current valuation, though it maintained a $5.00 price target.

That said, broader sentiment remains positive. According to TradingView data, 12 out of 16 brokers rate South32 shares as a buy or strong buy. The average price target sits at $4.97, implying around 11% upside from current levels. The most optimistic forecasts point to $5.81, which is around 29% higher.

Foolish Takeaway

South32 is executing well, backed by strong production, rising cash, and exposure to long-term commodity demand.

The rally may not be over for South32 shares, but after a 72% surge, investors should expect a bumpier ride from here.

The post South32 shares are booming, but is the best still to come? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has positions in South32. 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.

The Genesis Energy Ltd (ASX: GNE) share price is in focus today after the company reported a strong third quarter for FY26, with normalised EBITDAF guidance upgraded to $515–$545 million amid robust hydro generation and disciplined cost management.

What did Genesis Energy report?

• Hydro generation rose to 745 GWh, up 264 GWh on the prior corresponding period (pcp), driven by strong hydrology and storage levels.
• Thermal generation decreased to 236 GWh, down 716 GWh on pcp, as Unit 5 was mainly offline and gas was sent to higher-value customers.
• Total customer numbers fell to 491,532, down 6.6% on pcp, as the company prioritised margin quality over volume.
• Electricity netback increased to $173/MWh, up 11.2% on pcp due to better pricing and a focus on portfolio quality.
• Total electricity sales were 1,380 GWh, down 94 GWh on pcp, reflecting the shift to higher-value segments.
• FY26 normalised EBITDAF guidance was upgraded to $515–$545 million (from $490–$520 million).

What else do investors need to know?

Genesis continued to push ahead with its Gen35 strategy, which includes significant investment in renewable projects and digital transformation. Construction has started at the Tihori (Edgecumbe) solar farm, with more progress at Leeston and Rangiriri sites as part of a target to expand solar capacity.

The company made headway with battery storage at Huntly Power Station—Stage 1 is nearing commissioning and Stage 2 has reached Final Investment Decision. Genesis also finalised the integration of Frank into its main brand and focused on margin improvement, which has helped enhance unit economics.

What’s next for Genesis Energy?

Genesis is maintaining its focus on renewable energy, battery storage, and digital upgrades. The FY26 earnings guidance upgrade reflects expected benefits from effective cost management, favourable hydro conditions, and improved wholesale pricing. However, management notes that performance may be influenced by hydrology, gas supply, plant reliability, and broader market conditions.

Looking ahead, Genesis will keep developing large-scale solar, battery, and customer electrification projects to support the country’s lower-carbon energy transition. The company also aims to grow its flexibility products in response to evolving customer demand and decarbonisation trends.

Genesis Energy share price snapshot

Over the past 12 months, Genesis Energy shares have declined 3%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 12% over the same period.

View Original Announcement

The post Genesis Energy upgrades FY26 guidance on strong Q3 earnings appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

If you are looking for an ASX uranium stock to buy, then it could be worth considering Paladin Energy Ltd (ASX: PDN) shares.

That’s the view of analysts at Bell Potter, who are feeling positive about this uranium producer following the release of its quarterly update.

What is the broker saying?

Bell Potter was pleased with Paladin Energy’s performance during the third quarter.

It highlights that its production was ahead of expectations, which has underpinned an upgrade to its guidance for FY 2026. The broker commented:

PDN reported quarterly uranium production of 1.3Mlb (2Q FY26 1.2Mlb; BPe 1.2Mlb), sales of 1.0Mlb (down 16% QoQ) and closing uranium inventory of 2.2Mlb, up 0.55Mlb QoQ due to timing of shipments. Commissioning of the remaining mining fleet and strong plant performance drove increased mining and production rates. PDN realised an average price of US$68/lb (down 13% QoQ) reflecting higher volumes sold into base escalated contracts. Production costs were US$40/lb.

Last week, PDN upgraded FY26 guidance to production of 4.5-4.8Mlb (previously 4.0- 4.4Mlb; YTD 3.6Mlb) and capital expenditure (excluding capitalised stripping costs) of US$15-17m (previously US$26-32m; YTD US$7m). […] Implied guidance points to a lift in production costs as mined volumes feed a higher portion of processed tonnes (vs processing stockpiled ore) and diesel cost inflation, which accounts for around 10-15% of PDN’s cost of production.

ASX uranium stock tipped as a buy

According to the note, the broker has retained its buy rating on Paladin Energy’s shares with an unchanged price target of $15.30.

Based on its current share price of $12.87, this implies potential upside of 19% over the next 12 months.

Commenting on its investment thesis, Bell Potter said:

We retain our Buy recommendation and $15.30/sh TP. PDN is positively exposed to rising uranium markets, with ~53% exposure to spot prices out to 2030. Production at LHM continues to improve, with transition to processing primarily fresh ore, milled grades should lift from 501ppm in 1H as should plant performance and reliability. The only risk we see is water disruptions as we enter a seasonally tricky period known for algal blooms which can impact availability from the desalination plant.

Overall, this could make the ASX uranium stock worth considering if you are looking for exposure to this side of the market for your portfolio.

The post This ASX uranium stock is a top buy according to one broker appeared first on The Motley Fool Australia.

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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 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 has been a lot of uncertainty on the ASX share market over the last couple of months with share prices moving around significantly. I think this is a great opportunity to buy ASX dividend shares.

When a share price goes lower, it boosts the dividend yield on offer. Therefore, when the opportunity is there, I think it’s worth jumping on. For example, if a business with a 7% dividend yield sees a 10% share price fall, the yield on offer becomes 7.7%.

The two businesses below have some of the most appealing dividend yields, partly because I expect ongoing payout growth.

Universal Store Holdings Ltd (ASX: UNI)

I think Universal Store is one of the most underrated businesses on the ASX for dividends because of both its yield and its impressive growth.

In my view, it’s important that a good ASX dividend share regularly increases its payout to help offset (or outpace) inflation and ensure our bank account grows in real terms.

Universal Store is best-known for two businesses within its stable – Universal Store and Perfect Stranger. The company aims to sell premium apparel to fashion-focused younger shoppers in Australia.

It is delivering excellent levels of growth – in the first half of FY26, group sales increased 14.2% to $209.6 million, with Universal Store sales rising 11.9% to $174.8 million and Perfect Stranger sales soaring 41.5% to $17.8 million.

The sales growth supported a 22% rise in underlying net profit after tax (NPAT) to $28.3 million. The business’ offering is clearly resonating with customers, particularly the Perfect Stranger brand. Its interim dividend was hiked by 18.1% per share.

The ASX dividend share is expecting to open more Universal Store and Perfect Stranger stores in the second half of FY26, as well as in the coming years. The increased scale could see ongoing sales strength and improving profit margins.

According to the forecast on Commsec, it’s trading with a projected FY27 grossed-up dividend yield of 8.9%, including franking credits, at the time of writing.

Future Generation Australia Ltd (ASX: FGX)

The other ASX dividend share I want to tell you about is a listed investment company (LIC) that doesn’t charge any management fees or performance fees. Instead, it donates 1% of its net assets each year to youth charities.

Its actual investments are a variety of funds from different fund managers who are all happy to work pro bono.

This investment style means investors have exposure to hundreds of underlying businesses, which are typically smaller (and have more growth potential) than what the S&P/ASX 200 Index (ASX: XJO) is weighted to.

As a LIC, Future Generation Australia is able to steadily grow its annual dividend per share from investment returns it has made in the current year or previous years.

In the most recent result, Future Generation Australia decided to increase its annual dividend per share by around 3% to 7.2 cents. That translates into a grossed-up dividend yield of approximately 7.5%, including franking credits.

I’m projecting a 7.75% grossed-up dividend yield (at the time of writing), including franking credits, for FY27.

The post Get paid huge amounts of cash to own these ASX dividend shares! appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation 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 recommended Universal Store. 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 has traditionally generated a return of around 10% per annum.

But investors don’t necessarily have to settle for that, especially with some ASX stocks tipped for outsized returns.

Which ASX stock?

The stock that Bell Potter believes is severely undervalued is AMA Group Ltd (ASX: AMA).

It is the largest accident repair company in Australia with approximately 140 vehicle panel repair shops.

Bell Potter highlights that AMA released its third quarter update this month and has delivered earnings ahead of expectations thanks to stronger than forecast margins. In addition, it was pleased to see management announce plans for a share buyback. It said:

Normalised pre-AASB 16 EBITDA of $17.9m in 3QFY26 was 2% above our forecast of $17.6m and the beat was driven by a higher margin than forecast (7.0% vs BPe 6.7%) while revenue was slightly below ($254.2m vs BPe $263.3m). At a business level, Capital Smart and Specialist Businesses were both ahead of our forecasts ($13.3m and $1.8m vs BPe $12.4m and $1.0m) while AMA Collision and Wales were below ($2.0m and $1.5m vs BPe $4.6m and $2.1m).

Operating cash flow pre-AASB 16 of $(0.4)m was below our forecast of $3.8m but was negatively impacted by a higher-than-expected $6.3m tax payment during the quarter. AMA announced its intention to put a share buyback program in place given “the Board has determined that recent market volatility presents a good capital management opportunity.”

Share tipped to almost double

According to the note, the broker has retained its buy rating on the ASX stock with an unchanged price target of $1.10.

Based on its current share price of 56 cents, this implies potential upside of 96% for investors over the next 12 months.

Commenting on its buy recommendation, Bell Potter said:

There are no changes in the key assumptions we apply in the valuations we use to determine our target price which are a 5.5x multiple in the EV/EBITDA and 10.5% WACC in the DCF. Yes, we adjusted these assumptions to reflect the risk of a downgrade to the guidance but we leave them unchanged as we still see risk of a downgrade at some stage or a slight miss at the result. The result is no net change in our target price of $1.10 and we retain the BUY recommendation.

The key potential positive catalyst is an end to the conflict in the Middle East and a reduction in fuel prices though we note that, even with fuel prices remaining elevated, anecdotal evidence suggests traffic volumes are relatively normal in at least city areas, particularly with school holidays now over.

The post Guess which ASX stock Bell Potter says could rise almost 100% appeared first on The Motley Fool Australia.

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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 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.