Author: openjargon

Investing in ASX small-cap stocks should always come with a side of caution. 

Many small-cap companies experience significant volatility because of limited liquidity, narrower customer bases, and greater sensitivity to market sentiment and economic changes.

However when one receives broker estimates of more than 300% upside potential, it’s worth taking note. 

That’s exactly the case for ASX small-cap stock Saluda Medical Inc (ASX: SLD). 

Company overview

Saluda Medical is a commercial-stage medical device company commercialising spinal cord stimulation (SCS) therapy. Saluda is currently a single product company, centred around its differentiated SCS product called the ‘Evoke System’. 

The company has been commercialising the Evoke System for roughly three years in the US, and approximately five years in Europe and Australia, for the treatment of patients with chronic pain of the trunk and/or limbs.

ASX small-cap healthcare stocks such as Saluda Medical can have high upside because successful clinical results, regulatory approvals, or commercial partnerships can rapidly increase their valuation from a low base. 

They are also more volatile because they often rely on future growth expectations, limited funding, and investor sentiment rather than stable earnings.

While the optimism around this small-cap is exciting, its 66% year to date share price decline illustrates this volatility.

Bell Potter optimistic on market share

In the latest report from Bell Potter, the broker said the US spinal cord stimulator market is worth about US$2.3 billion and is growing steadily. 

A major industry shift is toward “closed-loop” technology, which automatically adjusts stimulation levels, and Bell Potter believes this is becoming the new standard.

Although competitors already have a closed-loop product, Bell Potter believes Saluda’s technology is stronger and helping it grow quickly in the US market. 

Saluda’s recent growth rates have significantly outpaced the broader industry, leading Bell Potter to view the company as an emerging disruptor and a possible takeover target for larger competitors seeking faster growth.

A natural conclusion is competitors without closed-loop technology risk being left behind, and with the best available offering and little evidence of others developing their own, SLD is emerging as a formidable disruptor.

More than 300% potential upside

Based on this guidance, Bell Potter has retained its speculative buy recommendation and $2.00 price target on this ASX small-cap. 

From last week’s closing price of 48 cents, this indicates an upside potential of 316%. 

SLD is gaining considerable commercial traction, and with >150 US sales reps now on board, there’s little reason to expect any slowdown in the quarters ahead.

The post Meet the ASX small-cap healthcare company which could triple this year appeared first on The Motley Fool Australia.

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• With potential upside of more than 300%, is this ASX biotech the best buy on the ASX right now?
• What is Bell Potter’s view on this ASX small-cap following a clinical trial update?
• Is this ASX gold stock a buy, hold or sell after its quarterly results?
• Two ASX healthcare shares that could triple in the next year
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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 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.

TechnologyOne Ltd (ASX: TNE) shares closed last week with an impressive 3% gain. 

TechnologyOne is one of the largest publicly listed software companies in Australia, with offices across six countries. It develops user-friendly enterprise software products that are deeply integrated into customers’ information technology, or IT, infrastructure.

Like many software and technology companies, it experienced a heavy sell-off during the start of 2026 due to AI replacement fears. 

It has since steadied over the last month, and brokers are now viewing TechnologyOne shares as a buy-low candidate. 

Last week, the team at Bell Potter issued updated guidance on the company. 

Here’s the latest from the broker. 

All eyes on first half results 

TechnologyOne will report its first-half FY26 results on Tuesday, 19 May. 

Bell Potter expects profit before tax (PBT) growth to match the company’s earlier guidance of “high single-digit” growth.

They forecast PBT to rise 9% to $89.4 million, slightly above market consensus of 8% growth to $88.4 million.

The key area that could outperform expectations is annual recurring revenue (ARR). There is no official first-half ARR guidance, but Bell Potter and the broader market both expect ARR to grow 17% year-on-year to around $600 million.

Bell Potter assumes TechnologyOne will add about $100 million in ARR during FY26, which would match the top end of management’s 16–18% growth guidance. They expect this increase to be weighted toward the second half, with roughly $45 million added in H1 and $55 million in H2.

We believe, however, there is some chance of ARR growth exceeding $45m in H1 due to in part to the release of Plus – Technology One’s agentic AI product – and the impact this is having on product uptake by customers (e.g. James Cook University) which is driving up both NRR and ARR. 

If ARR growth does exceed $45m in H1 then this would suggest growth for the full year above $100m – given the typical H2 skew – and so could potentially lead to an upgrade of the full year guidance of 16-18% growth.

Buy rating retained for TechnologyOne shares

Based on this guidance, Bell Potter has retained its buy recommendation on TechnologyOne shares. 

The broker has also increased its target price to $32.25 (previously $31.75). 

From last week’s closing price of $28.36, this indicates an upside potential of almost 14%. 

We see the result next week as a potential catalyst given the possible positive surprise in ARR.

The post What is Bell Potter’s updated view on TechnologyOne shares? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
• ASX tech shares vs. ATEC ETF: How they fared during sector downturn
• Why Eagers Automotive and Technology One shares just got a big buy call
• Is the TechnologyOne share price an opportunity too good to pass up?
• Why these ASX 200 tech shares could beat the market over the next decade

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 positions in and has recommended Technology One. 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.

The ASX 200 has plenty going on right now.

Inflation is back in focus, interest rates could rise further, oil prices have been volatile, and investors are trying to work out whether the artificial intelligence (AI) trade has gone too far.

In that kind of market, some good businesses can be overlooked.

One ASX 200 share I think deserves more attention is in this article.

REA Group Ltd (ASX: REA)

I think REA Group is one of the highest-quality digital businesses on the ASX.

The company owns realestate.com.au, which is the dominant property listings platform in Australia. That gives it a very strong position in one of the country’s most important markets.

Australians care deeply about property. Buyers browse even when they are not ready to buy. Sellers want maximum exposure. Real estate agents need leads, visibility, and data. Advertisers want access to a large, engaged audience.

REA sits at the centre of that activity.

That is why I think the business has such a powerful model. It does not need to own houses, take development risk, or lend money to buyers. It provides the marketplace and the digital tools around it.

Why I like the long-term opportunity

The property market can be cyclical.

Higher interest rates, weak consumer confidence, and uncertainty around housing policy can all affect listings and transaction volumes.

But I think REA’s long-term position remains very strong.

If someone is selling a home, they usually want it listed where the buyers are. If buyers are searching, they usually go where the listings are. That loop is hard for competitors to break.

Over time, REA can also do more than just show listings.

It can help agents market properties more effectively, give consumers better insights, provide data tools, and capture more value from the enormous amount of attention that flows through its platform.

This is the kind of business where scale can keep reinforcing itself.

A premium worth considering

This ASX 200 share is rarely cheap.

That is the main challenge. Investors usually have to pay a premium for the company’s market position, margins, and growth record.

REA shares currently trade at 29 times estimated FY27 earnings based on consensus estimates.

But I do not think a premium valuation automatically makes a stock unattractive.

Some businesses deserve to trade above the market because they have stronger competitive advantages and better long-term economics.

REA fits that category for me.

It is not immune to downturns, and the share price can fall if property conditions weaken or investors become less willing to pay for growth. But if I were thinking in terms of five to 10 years, I would be more focused on the strength of the platform than short-term listing volumes.

Foolish takeaway

Some ASX 200 shares need a perfect economic backdrop to look attractive.

REA does not fall into that category for me.

The property market will have good years and bad years, and the share price will move with sentiment. But the company’s position at the centre of Australia’s property search market is extremely valuable.

If the market becomes more focused on inflation, interest rates, and short-term housing uncertainty, I think long-term investors may get opportunities to buy REA at better prices.

That is when I would want to be paying attention.

The post 1 ASX 200 share I’d buy while the market is distracted appeared first on The Motley Fool Australia.

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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.

In Australia, the S&P/ASX 200 Index (ASX: XJO) is the benchmark index. 

It includes the 200 largest companies in Australia weighted by market capitalisation. 

Many investors have a portion of their portfolio dedicated to an ASX ETF that tracks the performance of this index. 

However, many investors might not be aware of concentration risk. 

Concentration: the case against traditional funds 

Some investors may be unaware that the ASX 200 index is weighted towards just a couple of holdings and sectors because it is market capitalisation based.

A small number of very large companies – especially banks like Commonwealth Bank Of Australia (ASX: CBA) and miners like BHP Group (ASX: BHP) – make up a disproportionately large share of the index due to market-cap weighting. 

This means the performance of the “Australian market” is often driven more by a handful of companies than by the broader Australian economy.

A recent report from VanEck highlights this issue.

Investors buying a diversified Australian equity strategy would think it is unlikely that two stocks would be 22% of the portfolio, nor would they think two sectors represent over 50% of the portfolio. This is a risk: Concentration risk.

Nothing highlighted this more than the post-budget fall of CBA. Australia’s 2nd largest company fell by over 10% on Wednesday.

So how do investors combat this? 

There are several ASX ETFs that use unique strategies to provide a more balanced profile of the ASX 200. 

Here are three options to consider. 

VanEck Australian Equal Weight ETF (ASX: MVW)

This ASX ETF includes only the largest and most liquid companies on ASX.

It currently includes 76 equally weighted stocks, that are rebalanced on a quarterly basis.

Due to the MVW Index’s equal weight construction methodology, at the last rebalance, no company was more than 1.3%. Therefore, MVW, which tracks this index has less stock concentration risk than the ASX 200.

BetaShares Ftse Rafi Australia 200 ETF (ASX: QOZ)

QOZ ETF is another option to target the ASX 200.

It tracks the performance an index that comprises the top 200 companies listed on the ASX. However they are measured by fundamental size.

QOZ is weighted in a way that is reflective of the economic importance rather than the market capitalisation of its constituents.

Constituent weighting is based on accounting values and is known as “Fundamental indexing”.

BetaShares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20)

Many portfolios having a heavy bias towards the big banks and miners. However, EX20 helps diversify exposure away from those stocks and sectors.

It aims to track the performance of an index comprising the 180 largest stocks listed on the ASX, after excluding the 20 largest, based on their market capitalisation.

The post Three unique ASX ETFs to target the ASX 200  appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has positions in BetaShares Ftse Rafi Australia 200 ETF. 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.

For the most part, travel shares have been an ASX loser in 2026. 

Investors have grown increasingly concerned that persistent inflation, elevated interest rates and the ongoing conflict involving Iran will weigh on global travel demand. 

Rising oil prices linked to tensions in the Middle East have also pushed up airline fuel costs and increased airfares, while higher borrowing costs and cost-of-living pressures have made consumers more cautious about discretionary spending such as holidays and business travel. 

The conflict has also created broader uncertainty around global economic growth and disrupted some flight routes and travel patterns, prompting investors to reassess earnings expectations across the tourism and aviation sectors. 

As a result, travel-related stocks have faced sustained selling pressure amid fears that demand could weaken further. 

While the bear case is clear, these headwinds are likely to prove temporary if inflation moderates, interest rates begin to ease and geopolitical tensions stabilise over the medium term.

This has created a value opportunity for ASX travel shares. 

While these headwinds are likely to persist in the short term, here are three options to consider for a long-term recovery. 

Qantas Airways (ASX: QAN)

Qantas shares currently sit close to a 52-week low. 

They are now down more than 18% year to date. 

While rising fuel costs are a threat to the bottom line this year, the airline’s dominant market share that has made it a blue-chip stock remains unchanged. 

As the Motley Fool’s Samantha Menzies laid out last week, Qantas’ market share, expanding offshore routes and AI adoption all are green flags for the company. 

Brokers have placed an average price of $11.04 on Qantas shares. 

From current levels, this indicates an upside of almost 30%. 

Helloworld Travel (ASX: HLO)

Helloworld Travel is another example of heavily sold off travel shares. 

Year to date, its share price is down roughly 25%. 

The company consists of a wide array of travel brands across three key pillars of its business: retail, wholesale, and inbound.

Recent analysis from brokers indicates it also could be a long-term value play. 

Recently, Shaw and Partners placed a buy rating on this ASX All Ords travel share with a 12-month target of $2.80.

This implies 95% upside. 

Web Travel Group Ltd (ASX: WEB)

Web Travel Group could be another long-term focus amongst ASX travel shares. 

Its share price has crashed almost 50% year to date. 

However, it did report some solid 1H26 results recently:

• TTV up 22% on the prior corresponding period (PCP)
• Above guidance TTV margin
• WebBeds EBITDA up 21% on PCP
• Solid cash position with $481 million cash, $699 million available liquidity and a $200 million undrawn revolving credit facility. 

12 analysts offering a one year forecast on these ASX travel shares have an average target of $5.21. This indicate more than 100% upside from the current share price of $2.44.

The post Is now the time to buy ASX travel shares with brokers tipping up to 100% upside? appeared first on The Motley Fool Australia.

More reading

• Buying Qantas shares? Here’s how the airline aims to capitalise on Air New Zealand’s woes
• At just $8.59, it looks like Qantas shares are a bargain buy: Here’s why
• 4 ASX All Ords shares expected to rise 65% to 95% in a year
• Why Graincorp, Air New Zealand and Megaport shares are turning heads on Thursday
• Air NZ warns of ‘fuel shock’, what this means for Qantas shares

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 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.

ASX 200 energy shares outperformed last week, rising 2.66%, as the oil shock continued to plague the global economy.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) fell 1.3% to finish the week at 8,630.8 points.

The market turned pessimistic after changes to investment taxes were announced in the Federal Budget on Tuesday.

The changes contributed to the largest one-day fall in history for Commonwealth Bank of Australia (ASX: CBA) shares on Wednesday.

Five of the 11 market sectors finished the week in the red.

Let’s review.

What happened with ASX 200 energy shares last week?

The Brent Crude oil price shot 5.5% higher to US$107 per barrel last week as negotiations to end the Iran war stalled.

The Strait of Hormuz, through which about 20% of the world’s gas and oil supply is shipped, remained effectively shut down.

On Friday, Trading Economics analysts said:

The key shipping route remains under a dual blockade that has emerged as a central obstacle in negotiations, with President Donald Trump saying the current ceasefire was on “massive life support” after dismissing Tehran’s latest response to his peace proposal.

Meanwhile, the IEA reported that crude and fuel flows through the Strait of Hormuz dropped by around 4 million barrels per day in March and April, warning that the global oil market could stay materially undersupplied through October even if the conflict is resolved next month.

Meanwhile on the market, the Woodside Energy Group Ltd (ASX: WDS) share price rose 3.99% to close at $31.25 on Friday.

The Santos Ltd (ASX: STO) share price lifted 4.79% to $7.88.

The Ampol Ltd (ASX: ALD) share price rose 2.49% to $35.05.

The Viva Energy Group Ltd (ASX: VEA) share price lifted 2.7% to $2.28.

Karoon Energy Ltd (ASX: KAR) shares ascended 6.63% to close the week at $2.09.

Beach Energy Ltd (ASX: BPT) shares swung 2.31% higher to $1.11 apiece.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Energy (ASX: XEJ)	2.66%
Materials (ASX: XMJ)	1.75%
A-REIT (ASX: XPJ)	1.49%
Utilities (ASX: XUJ)	1.35%
Consumer Discretionary (ASX: XDJ)	0.75%
Industrials (ASX: XNJ)	0.07%
Communication (ASX: XTJ)	(0.18%)
Information Technology (ASX: XIJ)	(2.3%)
Consumer Staples (ASX: XSJ)	(2.54%)
Financials (ASX: XFJ)	(4.32%)
Healthcare (ASX: XHJ)	(8.06%)

The post ASX 200 energy shares rise as global oil shock drags on appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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.

It makes a lot of sense to invest for passive income in superannuation because of the lower tax rate compared to normal individual tax rates for full-time workers.

There are a number of attractive ASX dividend shares that are driving their underlying values higher and delivering bigger payments to shareholders.

The two businesses below are trading at good prices and offer great dividend yields. I’d be very happy to invest $15,000 across these two names today.

Centuria Industrial REIT (ASX: CIP)

This business is a real estate investment trust (REIT) that owns a portfolio of commercial properties – there’s no negative gearing involved in this real estate.

Its industrial properties are spread across Australia’s cities, in areas where there is limited supply, significant demand and a very low vacancy rate. This combination is helping drive the underlying rental value of the properties, boosting their earnings power and the value of the real estate.

In the FY26 third-quarter update, the business reported that its FY26 year-to-date re-leasing spreads were 36% – that’s a big jump of rental income on the new leases.

The business is expecting to grow its FY26 annual distribution per year by 3% to 16.8 cents per unit, which translates into a distribution yield of 5.75%. I think it’s a solid starting yield for passive income in superannuation.

Grant Nichols, the fund manager of the REIT, said:

Looking ahead, we foresee the domestic infill industrial market’s supply-demand imbalance to persist with limited construction of new warehouses coupled with consistently high occupier demand as tenants look to strengthen their delivery times and reduce transport costs. Current macroeconomic uncertainty, resultant of the Middle East conflicts and global oil constraints, is impacting inflation and construction price pressures. These factors are expected to curtail future industrial market supply. The value of high-quality, existing infill industrial assets is expected to increase as the disconnect to replacement cost continues to escalate.

This bodes well for long-term returns, in my view.

Future Generation Global Ltd (ASX: FGG)

The other ASX share I want to highlight is Future Generation Global, a listed investment company (LIC) that invests in global shares.

But, unlike many other LICs, this one doesn’t charge any management fees or performance fees. Instead, it donates 1% of its net assets to youth mental health charities.

Additionally, it’s not one fund manager that controls the portfolio. Instead, there are 16 different funds in the portfolio – there are more than 3,700 underlying shares, enabling Future Generation Global to give investors significant diversification.

On the dividend side of things, the business has increased its annual dividend per share each year since FY19. So, it has already given investors several years of regular dividend increases and I’m expecting more to come.

At the end of April 2026, it had a profit reserve of 71.5 cents per share and (excluding the special dividend) a grossed-up dividend yield of 7%, including franking credits.

I think it’s a great option for passive income in superannuation with that large and growing dividend, plus the diversification.

The post How to invest $15,000 for passive income in superannuation? appeared first on The Motley Fool Australia.

More reading

• Create a river of dividends for passive income alongside work earnings with ASX stocks
• How much is needed in superannuation to target a $5,000 monthly passive income?
• What’s going on with this ASX 200 stock today?
• Centuria Industrial REIT books $188m in Q3 asset sales, reaffirms FY26 outlook
• Where I’d invest $10,000 into ASX 200 dividend shares right now

Motley Fool contributor Tristan Harrison has positions in Future Generation Global. 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.

Qantas Airways Ltd (ASX: QAN) shares are certainly not immune to the surge in global energy prices since the outbreak of the Middle East conflict.

Indeed, on 26 February – two days before the Iran war commenced – Qantas estimated that supplying its aircraft with jet fuel in the second half of the financial year (H2 FY 2026) would cost around $2.5 billion.

No small sum, that.

However, on 14 April, with global oil prices rocketing, Qantas bumped up its second-half-year jet fuel cost forecast to $3.1 billion to $3.3 billion. Adding a potential $600 million drag on full-year profits from the prior estimate.

But rather than pull into its shell, the ASX 200 airline stock is embracing the old adage, “When life hands you lemons, make lemonade.”

And Qantas shares may make that proverbial lemonade at the expense of rival Air New Zealand Ltd (ASX: AIZ).

On Thursday, Air New Zealand reported that it was increasing its second-half FY 2026 fuel cost forecast to approximately NZ$980 million. That’s up from prior expectations of NZ$740 million.

As such, Air New Zealand said it now expects to post an FY 2026 loss before tax of between NZ$340 million and NZ$390 million.

With Qantas having increased its first-half-year underlying profit before tax by $71 million to reach $1.46 billion, the company is taking aim at Air New Zealand’s routes.

Qantas shares expanding their New Zealand footprint

Speaking in Wellington this week, Qantas CEO Vanessa Hudson noted that Australia continues to be New Zealand’s largest international visitor market.

Commenting on the surging price of jet fuel, she said:

I want to be honest about the environment we’re operating in. Fuel costs are elevated. The situation in the Middle East continues to affect routing and costs for airlines globally. When you run an airline, uncertainty is never far away.

However, Hudson revealed how Qantas shares could find support during difficult times by increasing its presence in New Zealand.

According to Hudson:

What we’ve learned over more than a century of flying is that when conditions are difficult, you back the relationships that matter most. New Zealand is one of those relationships. And we are backing it.

What the Qantas Group is committing to New Zealand right now is the biggest investment we have ever made in this market. Across Qantas and Jetstar, more than 800,000 seats have been added between Australia and New Zealand over the last 12 months.

She noted that the airline’s investment in New Zealand goes beyond adding those seats.

“We recently opened our new Auckland lounge, a multi-million-dollar investment and part of the hundreds of millions we are committing to our lounge network globally,” she said.

Hudson added, “We’re investing in Auckland because we see its potential, and we want to be the airline that realises it.”

As of Friday’s close, Qantas shares were down 14.17% since the onset of the Iran war.

Air New Zealand shares have tumbled 29.79% over this same period.

The post Buying Qantas shares? Here’s how the airline aims to capitalise on Air New Zealand’s woes appeared first on The Motley Fool Australia.

More reading

• At just $8.59, it looks like Qantas shares are a bargain buy: Here’s why
• Why Graincorp, Air New Zealand and Megaport shares are turning heads on Thursday
• Air New Zealand shares sink as investors brace for a major loss
• Air New Zealand flags sharp FY26 loss as rising fuel costs bite
• Air NZ warns of ‘fuel shock’, what this means for Qantas shares

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 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 think it’s quite rare to find ASX dividend stocks that offer a mixture of both reliability and a good dividend yield. Future Generation Australia Ltd (ASX: FGX) is one of the best businesses for that combination of passive income factors, in my opinion.

If I were picking a business for dividends, I’d pick Future Generation Australia over names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) or Fortescue Ltd (ASX: FMG).

Part of the reason for that preference is the fact that Future Generation Australia is a listed investment company (LIC). That means it invests in other assets on behalf of shareholders and has the flexibility to decide on the size of its dividend payments.

This LIC is quite different to a typical LIC because there are no management fees involved. Instead, it’s invested in the funds of more than a dozen different fund managers who work for free so that Future Generation Australia can donate 1% of net assets each year to youth charities. It’s a great setup, in my opinion.

Let’s look at the reliability and dividend yield of this compelling ASX dividend stock.

Reliable passive income option

The LIC is invested in more than 450 underlying shares across different sectors, giving it a pleasing level of diversification. This is a powerful tool to reduce risk and volatility.

Future Generation Australia itself reports that it has outperformed the ASX share market (to March 2026) by an average of 0.8% per year since its inception (September 2014) and this has been achieved with lower volatility.

It has a much larger weighting to small and medium ASX shares than the overall ASX share market, which I view as an advantage.

In terms of the dividend, it has grown its annual dividend per share every year since 2015, representing a decade of continuous dividend growth.

Good dividend yield

Not only has it been very consistent with increasing its payout, the dividend yield is very good.

Its 2025 annual payment was 7.2 cents per share, which translates into a grossed-up dividend yield of 7.8%, including franking credits.

Dividends aren’t guaranteed, of course, but with a profit reserve of 45 cents per share, it can pay growing dividends for a number of years.

I think this seems like a great time to invest in the ASX dividend stock. At the time of writing, investing $1,000 would buy 757 Future Generation Australia shares. I’d love to do that.

The post $1,000 buys 757 shares in an incredibly reliable ASX dividend stock appeared first on The Motley Fool Australia.

More reading

• Create a river of dividends for passive income alongside work earnings with ASX stocks
• How much is needed in superannuation to target $10,000 of monthly passive income?
• How I’d aim for a 7% dividend yield in a SMSF
• Get paid huge amounts of cash to own these ASX dividend shares!

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

Xero Ltd (ASX: XRO) shares had a bit of a wild ride last week, with a sell-off following the release of the company’s full-year results, followed by a rally a day later, which recovered all of the losses.

Kneejerk sell-off

Investors seem to have overreacted to the headline profit figure, which fell 27% to NZ$167.4 million, due to costs associated with Xero’s acquisition of Melio.

Outside of that line in the company accounts, there was plenty to be happy about, however.

Xero reported revenue growth of 31% to NZ$2.8 billion and an 18% increase in EBITDA to NZ$757.4 million.

Chief Executive Officer Sukhinder Singh Cassidy said it was a strong result.

She added:

Our 3×3 strategy is hitting its stride, demonstrated by accelerating US growth with 110,000 new customers, including new Melio direct payments customers, and pro-forma revenue growth of 50%. We have powerful momentum across our markets, and delivered strong EBITDA growth while absorbing Melio. Globally we are providing a small business financial operating system for the AI era, driving value for customers while deepening our technology foundations, compliance capability and data advantages, and driving stronger unit economics.

Xero also announced a NZ$550 million share buyback.

Analysts like what they see

Morgans said in a note to clients last week that both the results and the company’s outlook to FY27 beat expectations.

They added:

Earnings momentum continues to improve relative to consensus expectations. Management were confident enough to announce a buy-back and hint at potential capital management in FY28. However, investors didn’t take comfort with commentary around AI disruption risk versus reward. Management has a plan to maximise the opportunity set ahead of a path to AI monetisation. It’s early days in AI and the path to AI driven value creation will become clearer, over time.

Morgans said the key question was whether Xero can replicate its success in Australia and New Zealand in offshore markets.

Morgans has a price target of $111 on Xero shares.

Morgan Stanley, however, is more bullish, with a $130 price target.

The broker said for Xero and for all tech companies with exposure to AI, “the debate on long term earnings and terminal values is still active”.

Morgan Stanley said it thought a share derating had been warranted but was too severe, with the market underappreciating the company’s competitive position locally.

And finally, among the brokers, Macquarie has a whopping $235.80 price target on Xero.

They said in their note to clients:

Management is walking the walk, making data-driven decisions leading to better capital allocation outcomes. We see the stock as fundamentally mispriced, and expect AI monetisation and US growth to be the key catalysts … to re-rate the stock.

The post Could Xero shares really go that high? 3 brokers weigh in appeared first on The Motley Fool Australia.

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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 positions in and has recommended Macquarie Group and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.