Category: Stock Market

The Pro Medicus Ltd (ASX: PME) share price has suffered a 60% decline in the past six months, at the time of writing. For many years, I’ve considered Pro Medicus to be one of the best businesses in Australia.

However, it’s understandable why the market has sent it lower. The company was priced on expectations that its revenue and net profit were going to soar significantly in the coming years.

On a price/earnings (P/E) ratio basis, the Pro Medicus share price may have raced ahead of itself when it soared above $300.

However, at a much lower valuation, I think the business could be an appealing buy. After falling 60%, it could even be called a contrarian buy, though it does still trade on a high earnings multiple.

Quality growth continues

The ASX share market is normally forward-looking. By sending the Pro Medicus share price down so much, the market is suggesting the future is not as bright for the company.

But, investors are just speculating that the business will suffer from AI-produced competition. They are also assuming the business has no economic moat to fend off competition, despite its wonderful software offering, excellent sales team and powerful financials.

The business delivered a number of impressive numbers in the FY26 half-year result.

Revenue climbed 28.4% to $124.8 billion, the operating profit (EBIT) margin increased to 73% (up from 72%) and the underlying profit before tax climbed 29.7% to $90.7 million.

What other ASX share that’s the size of Pro Medicus (or larger) can point to that level of success?

It continues to win new contracts, sell additional modules to existing clients and it disclosed its pipeline remains “very strong”.

Based on the numbers and commentary, it seems the business is still well-positioned to deliver excellent profit growth. AI doesn’t seem to be affecting the company’s progress and it’s still winning contracts that can help push profit even higher.

The company’s quality is not in doubt, in my view.

The Pro Medicus share price valuation is now much better

Commsec’s projection suggests the business could generate earnings per share (EPS) of $1.42 in FY26 and $1.85 in FY27.

That means the company is now valued at 82x FY26’s estimated earnings and 63x FY27’s estimated earnings.

That’s not the lowest P/E ratio around, but it’s now dramatically lower. For any investor who has wanted to buy Pro Medicus shares, this is now a great chance to jump in.

Pro Medicus can continue to improve its software, possibly by using AI itself, and stay ahead of any potential challengers. I think the company’s future may now be underestimated by the market and therefore undervalued.

The post Is the Pro Medicus share price an opportunity too good to pass up? appeared first on The Motley Fool Australia.

More reading

• 3 excellent Australian tech stocks to buy before they rebound
• Beaten down: Are Cochlear, Pro Medicus or CSL shares a better buy right now?
• Here are the top 10 ASX 200 shares today
• $5,000 to invest? Here’s how I’d split it across the ASX
• The five worst performing ASX 200 stocks bought and held in February unmasked

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

Lottery Corporation Ltd (ASX: TLC) shares are pushing higher on Thursday morning.

At the time of writing, the ASX 200 stock is up 1% to $5.46.

Why is this ASX 200 stock rising?

Investors have been buying the lottery company’s shares today after it announced a new operating model and changes to its executive leadership team.

The ASX 200 stock notes that these changes are designed to accelerate growth.

According to the release, Lottery Corporation has revealed a new organisational structure aimed at supporting the next stage of its strategy and helping it evolve further as a digital entertainment company.

Under the new model, Lottery Corporation will create three customer-facing business units. These are Lotteries, Digital, and Keno.

It notes that each will have a distinct strategic mandate and will report to a chief operating officer structure.

Management believes this will improve focus, accountability, and decision-making across the business.

The ASX 200 stock’s CEO, Wayne Pickup, said the company is well positioned but believes the new structure will help unlock further value. He commented:

We have a strong foundation and our strategy has served the Company well, but we can unlock more value. This new structure gives us the clarity and accountability to accelerate our evolution as a digital entertainment company, concentrate on local market growth and make faster, better decisions.

Leadership changes

Several leadership changes will accompany the new operating structure.

The release highlights that Callum Mulvihill will become chief operating officer of Lotteries, responsible for growing the company’s core lotteries portfolio across its retail network and digital wholesale partnerships.

Loren Somerville will take on the role of chief operating officer of Digital, with responsibility for driving digital lottery sales, improving app and web experiences, and exploring new opportunities in adjacent lottery entertainment categories.

Antony Moore will become chief operating officer of Keno, overseeing both venue-based and online Keno operations as the company looks to expand the product’s reach.

Alongside these customer-facing units, the company will also establish three enterprise service divisions covering Financial & Corporate Services, Strategy, and People & Brand.

The company’s chief financial officer Adam Newman will remain in his role, with expanded responsibilities including legal, risk, cyber and technology services.

When will the changes take effect?

The new operating model and leadership structure are expected to take effect from 1 July 2026, subject to regulatory approvals.

And based on its share price performance this morning, investors appear to be welcoming the announcement.

The post Guess which ASX 200 stock is pushing higher on big news 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 positions in and has recommended The Lottery Corporation. The Motley Fool Australia has recommended The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Three ASX healthcare giants have endured a very rough 12 months. 

At the time of writing: 

• CSL Ltd (ASX: CSL) are down almost 46% 
• Pro Medicus Ltd (ASX: PME) have fallen 55.72%
• Cochlear Ltd (ASX: COH).

These results have all contributed significantly to the softness of the broader ASX healthcare sector. 

The S&P/ASX 200 Health Care Index (ASX: XHJ) is down approximately 33% in the last 12 months. 

For context, the S&P/ASX 200 Index (ASX: XJO) is up 9.3% in that same span. 

What are brokers saying about these healthcare stocks?

These three companies are amongst the largest healthcare stocks by market cap.

This means it could be an opportunity to buy low, with long-term upside. 

Let’s see if there is any upside according to experts. 

CSL

In February, CSL reported total revenue of US$8.3 billion, down 4% while net profit fell 7% to $1.9 billion.

Messaging from management indicated this was a disappointing result, and investors seemed to agree. 

Sentiment around this healthcare giant seems to be mixed. 

The team at Fairmont Equities recently put a sell recommendation on CSL shares. 

Ord Minnett has a hold rating and $198.00 price tag. 

Meanwhile, UBS has a price target of $235 on CSL shares. 

CSL shares closed at $142.86 yesterday. 

Pro Medicus

Pro Medicus was amongst the worst performing ASX 200 stocks during February. 

It’s worth noting on the positive side however, is that three of the company’s directors have increased their existing stake by purchasing additional Pro Medicus shares. 

This can be a sign of confidence from management, which can positively influence investor sentiment. 

It now sits almost 48% lower than the start of 2026. 

The company appears to be another victim of AI disruption fears.

Pro Medicus closed trading yesterday at $116.19. 

However, 13 analysts ratings via TradingView place have an average 12 month target of $220.75. 

That’s almost 90% upside from current levels. 

Cochlear

Cochlear shares have also endured a rough year, particularly post earnings. 

It was dumped on results day on 17 February after missing expectations. 

The response from Morgans was a hold recommendation and 12-month share price target on Cochlear of $214.93.

The broker said the 1H26 result was softer than expected, with revenue, margins and profit negatively impacted mainly on longer than anticipated contracting for the newly launched Nucleus Nexa system (Nexa).

This target is approximately 15.66% higher than yesterday’s closing price of $185.83. 

The 15 analyst offering one year forecasts via TradingView have an average price target of $255.59 on Cochlear shares.

That would be approximately 37% upside.

The post Beaten down: Are Cochlear, Pro Medicus or CSL shares a better buy right now? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• $5,000 to invest? Here’s how I’d split it across the ASX
• How high does UBS think CSL shares will go?
• I’d listen to Warren Buffett and buy quality ASX shares at fair prices today
• The five worst performing ASX 200 stocks bought and held in February unmasked

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 CSL and Cochlear. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended CSL, Cochlear, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Paladin Energy Ltd (ASX: PDN) boosted its revenue significantly in the first half of the year, which was good news for the company, but according to the analyst team at Shaw and Partners, the real story is the company’s growth plans across both Namibia and Canada.

Paladin reported revenue of US$138.3 million for the first six months of the year, up 79%, but posted a net loss of US$6.6 million driven by spending on ramping up production at its Langer Heinrich mine in Namibia.

The company had previously reported that fourth quarter production at Langer Heinrich jumped by 16% over the previous quarter to 1.23 million pounds.

Growth plans developing

Managing director Paul Hemburrow said when releasing the quarterly report that Langer Heinrich was performing well.

As global interest in nuclear energy continues to strengthen, I am delighted by our progress in ramping-up operations at Langer Heinrich Mine. The new level of production achieved during the quarter provides insight into the robust performance that can be achieved from this strategic uranium asset. Our site team’s goal is to continue delivering a consistent operational performance for the remainder of this financial year. The capability of our Canadian team is growing under the leadership of Dale Huffman as President Paladin Canada, with exploration and permitting workstreams advancing at PLS.  

PLS refers to the Patterson Lake South Project in the Athabasca region of Canada, which Paladin acquired in 2024.

The company’s website sates that it is a high-grade, near-surface uranium deposit at an advanced stage of development.

Top tier projects in focus

It’s the combination of the two projects – Langer Heinrich, and PLS – which has the Shaw team interested.

As they said in a research note to clients this week:

The combination of Langer Heinrich with Patterson Lake South has the potential to transform Paladin Energy into a 15 million pound per year uranium producer generating over US$2b of EBITDA per annum. At a 10x EBITDA multiple – that would make our $17.50 price target very conservative.  

Shaw said the PLS project currently has a mineral reserve of 93 million pounds, “and Paladin is aiming to bring it into production in 2031 at a rate of 9Mlb/yr over a 10 year mine-life”.

They added:

Paladin’s focus will shift to Patterson Lake South, its tier 1 growth project in the Athabasca Basin, post completion of a successful ramp-up of Langer Heinrich to full capacity in mid-2026. The Paladin share price has re-rated as the market recognised that the temporary commissioning issues at Langer Heinrich, were temporary. The next phase of Paladin outperformance will be driven by a strengthening uranium market, and by the market recognising the valuation upside in PLS. Paladin is one of our preferred exposures to the coming uranium market super-cycle.

The Shaw price target of $17.50 compares with the current price for Paladin Energy shares of $12.58, representing potential upside of 39.1%.

Paladin was valued at $5.65 billion at the close of trade on Wednesday.

The post How much upside is there in Paladin Energy shares? appeared first on The Motley Fool Australia.

More reading

• Why the Paladin share price is sinking 9% today
• Which ASX uranium stock is the smarter buy: Nexgen Energy or Paladin Energy?
• Here are the top 10 ASX 200 shares today
• Paladin share price jumps after major Canadian project approval
• Paladin share price on ice pending major announcement

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Finding S&P/ASX 200 Index (ASX: XJO) shares you can confidently tuck away for a decade isn’t about chasing hype. It’s about backing quality businesses with durable competitive advantages, global growth runways, and management teams that execute.

Two ASX 200 shares that tick those boxes are ResMed Inc (ASX: RMD) and Life360 Inc (ASX: 360). Both operate in structurally growing markets. Both ASX 200 shares have delivered strong long-term share price gains despite bouts of volatility. And both continue to attract positive analyst attention.

ResMed: global healthcare powerhouse

This ASX 200 share develops cloud-connected medical devices and software for the treatment of sleep apnoea, chronic obstructive pulmonary disease, and other respiratory conditions. ResMed’s devices and digital health ecosystem generate recurring revenue from masks, consumables, and monitoring software.

ResMed has long been a market darling. While the healthcare share price has seen swings over the past years, in the past 10 years the company has gained 365% in value to $52 billion. After reaching an all-time high in August of $45.25, ResMed has tumbled almost 20% to $36.34 at the time of writing.

However, the company’s strengths are clear. The ASX 200 share holds a dominant position in sleep therapy, benefits from an ageing global population, and leverages data-driven technology to enhance patient outcomes. Its software platforms also deepen relationships with healthcare providers, creating high switching costs.

Recent earnings results showed continued revenue growth and margin resilience, with strong demand across its core sleep and respiratory segments. Management has highlighted ongoing product innovation and expanding digital integration as key drivers.

Risks include regulatory changes, competitive pressure, and currency movements given its global footprint. Concerns about new obesity drugs reducing sleep apnoea incidence have also weighed on sentiment at times.

Still, many analysts remain constructive on the Aussie stock. TradingView data show that most market watchers see the ASX 200 share as a buy. They have set an average 12-month price target of $43.64, while the more optimistic target peaks at $52.48. This suggests to a 44% upside at current price levels.

Life360: scaling a digital ecosystem

Life360, by contrast, has been a higher-volatility growth story. The ASX 200 shares have surged dramatically over the past five years, rising more than 600% at one stage. But they have also experienced sharp pullbacks. In the past 6 months the tech stock has dropped 55% to $20.38 at the time of writing.

Life360 operates a global digital safety platform focused on families. It offers location sharing, crash detection, roadside assistance, and identity protection services, primarily through subscription plans. The company has steadily grown monthly active users toward the 100 million mark, providing a strong funnel for paid conversions.

Its key strength lies in monetisation. Life360 continues converting free users into paying subscribers while expanding into higher-margin advertising through acquisitions and integrations.

Latest results showed continued revenue growth and rising subscription numbers, alongside improving profitability metrics. Management remains focused on balancing user growth with monetisation and cost discipline.

Risks include reliance on continued subscriber growth, privacy scrutiny around data usage, and competition from larger tech players. The stock also pays no dividend, reflecting its growth-first strategy.

Analyst sentiment remains broadly positive. Recent broker updates reiterate buy ratings, with price targets implying meaningful upside. Bell Potter just retained their buy rating with a trimmed price target of $40.00. This points to an upside of nearly 100% at current levels.

The post 2 of the best Aussie ASX 200 shares to buy and hold for 10 years appeared first on The Motley Fool Australia.

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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 Life360 and ResMed. The Motley Fool Australia has positions in and has recommended Life360 and ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Lottery Corporation (ASX: TLC) share price is in focus today as the company unveils a fresh operating model and executive leadership team shake-up, aiming to accelerate its strategy and foster further growth.

What did Lottery Corporation report?

• Introduced a new operating structure with three core business units: Lotteries, Digital, and Keno
• Announced changes to the Executive Leadership Team, including new COO appointments for each business unit
• Expanded accountability for enterprise services, with Adam Newman’s role as CFO broadened to cover Legal, Risk, Cyber, and Technology
• Advised of the planned departures of two executives: Andrew Shepherd and Nicholas Allton

What else do investors need to know?

Lottery Corporation’s shake-up is designed to provide clearer mandates and strategic focus across its expanding digital and retail operations. The new operating structure groups offerings under distinct chief operating officers, with digital set to play a larger role as the company moves towards becoming a digital entertainment business.

Adam Newman, currently CFO, will temporarily serve as Company Secretary from 31 March 2026 while a permanent appointment is found. The company emphasised continuity and stability through these changes, thanking outgoing executives for their service.

What did Lottery Corporation management say?

Managing Director & Chief Executive Officer Wayne Pickup said:

We have a strong foundation and our strategy has served the Company well, but we can unlock more value. This new structure gives us the clarity and accountability to accelerate our evolution as a digital entertainment company, concentrate on local market growth and make faster, better decisions.

What’s next for Lottery Corporation?

Looking ahead, Lottery Corporation plans to sharpen its focus on digital growth and local market expansion. By streamlining the executive team and creating specialised business units, management aims to make faster decisions and adapt swiftly to changing market conditions.

The company’s priorities include maximising the performance of its lotteries products, enhancing digital experiences for customers, and growing its Keno offering both online and in venues.

Lottery Corporation share price snapshot

Over the past 12 months, the Lottery Corporation share price has risen 11%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 9% over the same period.

View Original Announcement

The post Lottery Corporation shakes up leadership with digital-first strategy 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 positions in and has recommended The Lottery Corporation. The Motley Fool Australia has recommended The Lottery Corporation. 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.

A growing number of investors are turning to exchange traded funds (ETFs) to build long-term portfolios on the ASX.

Instead of trying to pick individual winners, ETFs allow investors to gain exposure to hundreds or even thousands of companies with a single investment.

For those looking to keep things simple while still building a diversified portfolio, the following funds could be worth considering.

Vanguard Australian Shares Index ETF (ASX: VAS)

The first ASX ETF that could be a strong foundation for a long-term portfolio is the Vanguard Australian Shares Index ETF.

This fund tracks the performance of the S&P/ASX 300 Index and provides exposure to many of the largest and most established companies in Australia. That includes household names such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and CSL Ltd (ASX: CSL).

Because of its broad exposure, this fund gives investors a simple way to participate in the overall growth of the Australian share market. It also tends to deliver attractive dividend income thanks to the high-yielding nature of many ASX companies.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

Another ASX ETF to consider building a portfolio around is the VanEck Morningstar Wide Moat ETF.

This fund focuses on companies with sustainable competitive advantages, often referred to as economic moats. These advantages can help businesses defend their market position and generate strong returns over long periods.

Current holdings include companies such as United Parcel Service (NYSE: UPS), Fortinet (NASDAQ: FTNT), and Bristol-Myers Squibb (NYSE: BMY).

By targeting high-quality businesses trading at attractive valuations, the VanEck Morningstar Wide Moat ETF follows a philosophy that closely resembles an investment approach popularised by Warren Buffett.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

The Vanguard MSCI Index International Shares ETF could be another key piece of a long-term portfolio.

This ASX ETF provides exposure to more than 1,000 stocks across developed markets outside Australia. It includes global leaders such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Nvidia (NASDAQ: NVDA).

Owning this fund allows investors to diversify beyond the relatively small Australian market and gain exposure to industries and companies that are not heavily represented on the ASX.

Over the long term, this kind of global diversification can help smooth returns and broaden growth opportunities.

iShares S&P 500 ETF (ASX: IVV)

The iShares S&P 500 ETF is another popular option for investors wanting exposure to the world’s largest economy.

It tracks the performance of the S&P 500 Index, which contains 500 of the biggest stocks on Wall Street. Major holdings include Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META).

The US market has historically been a powerful driver of global investment returns, thanks to its concentration of innovative companies and world-leading technology businesses. With a single trade, this fund allows Australian investors to participate in that growth.

iShares Global Consumer Staples ETF (ASX: IXI)

A final ASX ETF to consider is the iShares Global Consumer Staples ETF.

This fund focuses on companies that produce everyday products people continue to buy regardless of economic conditions. Its portfolio includes businesses such as Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and PepsiCo (NASDAQ: PEP).

Consumer staples companies often generate steady earnings and strong cash flows, which can help add stability to a long-term portfolio.

By combining defensive businesses with global diversification, the iShares Global Consumer Staples ETF can provide balance alongside more growth-focused holdings.

The post 5 simple ASX ETFs to build a long-term portfolio around appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL and VanEck Morningstar Wide Moat ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Bristol Myers Squibb, CSL, Fortinet, Meta Platforms, Microsoft, Nvidia, United Parcel Service, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, BHP Group, CSL, Meta Platforms, Microsoft, Nvidia, VanEck Morningstar Wide Moat ETF, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The average dividend yield on the Australian share market is traditionally around 4%.

But income investors don’t need to settle for that. Not when there are high-yield options out there.

For example, three shares that brokers are bullish on and expect to provide above-average yields in the near term are listed below. Here’s what they are recommending:

Charter Hall Retail REIT (ASX: CQR)

The first ASX dividend share that could be a buy in March is the Charter Hall Retail REIT.

It owns a diversified portfolio of convenience-based retail centres anchored by supermarkets, service stations, and essential services. These tend to be highly defensive, as shoppers continue to spend on groceries and everyday necessities regardless of economic conditions.

Together with long lease terms and high-quality tenants, Charter Hall Retail has good visibility over rental income. This is supportive of consistent distributions to unitholders.

The team at Citi is positive on the company and is expecting some big dividend yields in the near term.

The broker has pencilled in dividends per share of 25.5 cents in FY 2026 and then 26 cents in FY 2027. Based on its current share price of $3.99, this would mean dividend yields of 6.4% and 6.5%, respectively.

Citi has a buy rating and $4.50 price target on its shares.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend share that could be a buy this month according to analysts is Dexus Convenience Retail REIT.

It owns a nationwide portfolio of service stations and convenience retail sites that are leased to high-quality tenants under long-term, inflation-linked agreements. These leases provide predictable cash flows, which is exactly what income-focused investors typically look for.

Bell Potter is bullish on the REIT. It has a buy rating and $3.25 price target on its shares.

As for income, it expects dividends of 20.9 cents per share in FY 2026 and 21.6 cents per share in FY 2027. Based on its current share price of $2.74, that equates to dividend yields of 7.6% and 7.9%, respectively.

Harvey Norman Holdings Ltd (ASX: HVN)

A third ASX dividend share to buy in March could be Harvey Norman.

In addition to its core electronics and furniture operations, this retail giant owns a substantial property portfolio. This adds another layer of income stability and has supported generous dividend payments over time.

Macquarie remains positive on the retailer. It believes the company is positioned to pay fully franked dividends per share of 27.8 cents in FY 2026 and 31.2 cents in FY 2027. Based on its current share price of $5.51, this represents dividend yields of 5% and 5.65%, respectively.

The broker has a buy rating and $6.60 price target on its shares.

The post These ASX dividend shares offer 5% to 7% yields appeared first on The Motley Fool Australia.

More reading

• These ASX 200 shares have sunk to 6-month lows. Time to buy?
• Can this $7 billion ASX retail stock stage a comeback?
• Why Bapcor, Brainchip, Coles, and Harvey Norman shares are dropping today
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• 3 ASX dividend shares I would buy with $3,000

Citigroup is an advertising partner of Motley Fool Money. 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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Charter Hall Retail REIT, Harvey Norman, and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’m always interested in considering share prices when I see a decline. Certain S&P/ASX 200 Index (ASX: XJO) income shares are offering investors a huge dividend yield.

High dividend yields can be a trap, particularly if they mean the dividend will be cut sooner rather than later.

However, some dividend yields may not be illusions but be coming from incredibly undervalued names.

Keep in mind, a dividend yield increases when a share price decreases. For example, if a business has a 7% dividend yield and then the share price drops 10%, the dividend yield reaches 7.7%.

Share prices do sometimes go through large declines when there is some sort of widespread issue, such as the GFC, COVID-19 or the strong inflation period. Dividend yield-focused investors can see higher yields at times like that. But, I wouldn’t call the current period as once-in-a-decade. Rather, the market seems to regularly go through sizeable declines.

I think income investors should always be on the lookout for ASX 200 income shares with large yields.

The business doesn’t necessarily need to have a dividend yield of 10% (or more) for it to be a good ASX dividend share. For example, I’ve highlighted names like Future Generation Australia Ltd (ASX: FGX) and Hearts and Minds Investments Ltd (ASX: HM1) as compelling ideas for dividend income (though they aren’t ASX 200 income shares).

I’ll briefly point out three names that are expected to have extremely high dividend yields in FY26. But, there’s no guarantee those yields will be that strong forever.

IPH Ltd (ASX: IPH)

IPH is a legal business that provides clients with intellectual property (IP) services such as patent filing, trademarks and enforcement. It has a position in a number of markets including Australia, New Zealand, Asia and North America. It claims to be the largest player in the Asia Pacific region.

The FY26 half-year result showed good financial progress by the business. It grew revenue by 6.5% to $363.9 million, increased operating profit (EBITDA) by 6.6% to $107.1 million and the statutory net profit (NPAT) rose by 10.5% to $41.2 million. The business decided to hike its interim dividend by 11.8% to 19 cents.

The forecast on Commsec suggests the ASX 200 income share’s annual dividend could rise to 37.6 cents per share in FY26. That translates into a dividend yield of 11% excluding any franking credits, at the time of writing.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is a funds management business that provides portfolios across Australian shares, international shares and infrastructure equities. It also holds stakes in a few other businesses including investment bank Barrenjoey and fund manager Vinva.

The business recently announced it’s going to merge with Barrenjoey, giving Magellan much more earnings growth potential in the coming years, in my opinion.

According to the forecast on Commsec, it’s predicted to pay a grossed-up dividend yield of 11.1% in FY26, including franking credits at the time of writing.  

Centuria Office REIT (ASX: COF)

This is a real estate investment trust (REIT) that owns office properties across metropolitan Australian locations.

The ASX 200 income share’s weighted average lease expiry (WALE) is around four years, which provides some rental income and visibility, but there are recent developing headwinds of higher interest rates, rising inflation and questions of how AI developments could impact office demand.

Even so, the land that the offices sit on is valuable, and the REIT is working out leasing some floors to data centres, protecting its underlying value.

The business has guided that it’s going to pay a distribution per unit of 10.1 cents in FY26, translating into a distribution yield of 10.1%, at the time of writing.

The post A once-in-a-decade chance to get a 10%+ yield from ASX 200 income shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia and Hearts And Minds Investments. 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 IPH Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to ASX telco stocks, Telstra Corporation Ltd (ASX: TLS) is often the cautious investor’s pick. It’s large, familiar and pays a reliable dividend. But size and stability don’t always deliver the best value.

Aussie Broadband Ltd (ASX: ABB) is a smaller and more speculative investment, but I think what it lacks in size, it makes up for in potential.

So, which is the better investment?

Telstra: A reliable investment with limited room for growth 

Let me couch what I am about to say ­­– Telstra is, by almost all metrics, a high-quality business and a relatively safe bet. It dominates the Australian telecommunications market, owns critical infrastructure, generates strong cash flows, and offers an attractive, fully franked dividend. All of this stability makes it a highly dependable investment.

But where it lacks appeal for me is growth potential. Telstra’s core markets are mature. And while its management has shown a disciplined approach to cost control, revenue growth from ordinary activities remains on the modest side – 0.9% uplift in FY25 on the prior corresponding period. That’s not necessarily a deal breaker in and of itself, but it does limit the potential upside for investors.

At current prices, you’re paying for stability and income certainty rather than earnings growth. If you’re a defensive investor, it’s going to win hands down. For growth investors, I think there’s more value to be had elsewhere in the sector.

Aussie Broadband: Strong fundamentals and well positioned to grow  

Aussie Broadband plays in the same markets as Telstra. But unlike Telstra, which is defending an established base, Aussie Broadband is carving new pathways for itself, particularly in government and corporate contracts. These contracts tend to offer good margins and customer stickiness, positioning Aussie Broadband for accelerated growth. In FY25, it saw an 18.7% revenue uplift to $1.19 billion.

And as it scales its customer base, its operating leverage has room to grow. Fixed networks and systems will spread across a growing revenue base, allowing margins to expand. Telstra, on the other hand, may have already exhausted much of this margin expansion potential.

But it is important to note that risks can be heightened for a smaller player like Aussie Broadband. Across the telco sector, competition is fierce, and pricing pressure can be intense. Of course, these risks still apply to Telstra. However, as a well-established player with significant brand equity and scale, they are less likely to bother investors in any meaningful way.

That said, Aussie Broadband doesn’t carry the legacy cost base of its much bigger competitor. And its disciplined approach to growth, prioritising return on invested capital rather than expansion at all costs, adds to its appeal for me.

The bottom line

Both are solid telco stocks, so you probably can’t go wrong. If your strategy is defensive, then Telstra remains the safest bet. But if you are looking for exposure to earnings growth and are comfortable with some share price volatility, Aussie Broadband is my pick. At current prices, I think it’s an opportunity to get in on a quality business that has the hallmarks of further impressive growth to come.  

The post Aussie Broadband vs Telstra: Which telco stock deserves your dollar? appeared first on The Motley Fool Australia.

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• 3 reasons to buy Telstra shares right now

Motley Fool contributor Melissa Maddison 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 Aussie Broadband. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.