Category: Stock Market

The big four ASX bank stocks will always be relevant in the Australian stock market because of their dominant market share. 

Collectively, they make up over 20% of Australia’s benchmark index, the S&P/ASX 200 Index (ASX: XJO). 

That means the performance of the big four banks largely influences many investors’ the portfolios.

Let’s see how they are performing so far in 2026. 

2026 at a glance

As we approach the halfway mark of the calendar year, all four banks are in the red since January. 

• Commonwealth Bank Of Australia (ASX: CBA) shares are down just 0.2%
• ANZ Group Holdings Ltd (ASX: ANZ) shares have fallen nearly 4%
• Westpac Banking Corporation (ASX: WBC) shares have dropped 8%
• National Australia Bank Ltd (ASX: NAB) shares are 14% lower than the start of the year. 

Investors have been rotating out of ASX bank stocks for a few reasons, with valuations being hit hard. 

This was clear last week when CBA shares dropped 9% in a single day.

Among many headwinds, ASX bank shares are down in 2026 because investors expect slower profits after Australian housing tax changes, reduced confidence in mortgage and property-market growth. 

Banks are also increasing provisions for bad debts as households face higher financial stress and loan arrears rise. The selloff has been amplified because bank valuations were already considered expensive, making investors quick to react to weaker outlooks.

What are brokers saying?

With recent share price weakness, investors may be thinking these blue-chips are now trading at a relative discount. 

However recent analysis from experts indicates there could be more pain in the short term. 

For Australia’s largest bank, brokers have price targets set between $90 per share and $130 per share on CBA. 

This indicates a further drop of between 18% and 44%. 

It’s a similar outlook for Westpac shares. 

After the company released half-year results, the team at Ord Minnett placed an updated price target of $31.00 on the ASX bank stock. 

This implies a downside potential of 13%. 

Turning attention to NAB shares, there is mixed sentiment amongst brokers. 

Fair price estimates range from $26 to $48 per share. 

With the current share price sitting at around $36, this indicates a wide range of outcomes over the next 12 months. 

Finally, ANZ appears to be the ASX bank stock receiving the most broker optimism.

Citi recently renewed its buy rating on ANZ shares on Tuesday along with a 12-month price target of $40.

This indicates an upside potential of 14% from current levels. 

The post Which big four ASX bank stock is the best buy right now? appeared first on The Motley Fool Australia.

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• Buying Westpac shares? Here’s the yield you’ll get today
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• Down 17%: Are Westpac shares cheap?
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Motley Fool contributor Aaron Bell has positions in National Australia Bank. 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.

What a disastrous start to the trading week for ASX investors it was yesterday. After leaving the S&P/ASX 200 Index (ASX: XJO) last week on a dispondent note (down 0.11% to 8,630.8 points), investors seem to have come back from the weekend in an even fouler mood.

The ASX 200 opened at just 8,577.9 points yesterday morning and just kept on falling as the day unfolded. By the time the markets had closed, the index was sitting at 8,505.3 points, down a nasty 1.45%, after getting as low as 8,500.2 points during intra-day trading.

This latest drop means that the ASX 200 has now lost about 5% of its value over the past month alone. The index is also sitting on a year-to-date loss of 2.55%, and is down by roughly 7.6% since early March.

We haven’t seen the index at 8,500 points since the end of March, meaning the Australian share market is now at a seven-week low.

So what’s going on here?

Why is the ASX 200 at a seven-week low today?

Well, with 200 stocks making up the overall ASX 200 Index, it can be hard to pinpoint exact catalysts for its performance. However, we can note a few relevant factors here.

Generally speaking, there is no doubt that the ongoing Iran War is weighing on investors’ confidence. Despite endless back and forths, the Strait of Hormuz remains closed to most maritime traffic. That in turn means that oil is still facing a severe supply shock.

The markets arguably spent most of April assuming that the Strait wouldn’t be shut for long. Perhaps the realities of a potentially prolonged supply squeeze are settling in. Closer to home, the recent federal budget also seemed to have a depressing effect on the share market. Since last Tuesday night, the ASX 200 has fallen every session, bar one, and has lost 1.9% of its value. That could be a coincidence, of course. But numbers don’t lie.

The other factor that is probably pushing the ASX 200 to its seven-week lows this week is the performance of some individual ASX shares. The ASX 200 forest is made up of 200 ASX stock ‘trees’, if you’ll pardon the metaphor. We’ve seen some fairly consequential moves from a few of the trees over the past week.

CSL and CBA weigh down the index

For one, there was the 10% drop in the Commonwealth Bank of Australia (ASX: CBA) share price last week. Just before that, CSL Ltd (ASX: CSL) had almost 16% of its value wiped out in one session.

These two companies are top ten ASX 200 stocks (or at least were in CSL’s case). As such, moves of this nature are more than enough to have an impact on the broader index. Although a smaller stock, yesterday’s 62.8% crash for Tuas Ltd (ASX: TUA) shares wouldn’t have helped matters either.

Let’s see how this Tuesday, and the rest of this week, treat the Australian markets.

The post Why is the ASX 200 starting at a 7-week low today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Which big four ASX bank stock is the best buy right now?
• Here are the top 10 ASX 200 shares today
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• Why A2 Milk, Brambles, Elders, and Tuas shares are sinking today

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

Flight Centre Travel Group Ltd (ASX: FLT) gave investors a reason to cheer last week, with the ASX travel giant releasing a positive trading update at the annual Macquarie Conference.

Management reaffirmed its full-year profit guidance, but warned of near-term uncertainty from travel disruptions in the Middle East.

This sent shares up in a market that fell on the same day.

Here is what the update revealed and what it means for shareholders heading into the final stretch of FY2026.

The nine-month numbers

Flight Centre reported a 7.6% year-on-year increase in total transaction value to $19.5 billion for the nine months to 31 March 2026.

The third quarter showed particularly strong momentum, with Q3 Total Travel Value (TTV) rising 6.8% to $7 billion, representing 9.4% growth in constant currency terms.

Underlying profit before tax reached $226.4 million over the nine months, up 9.7% year-on-year, a result that signals the business continues to recover strongly from its pandemic-era lows.

Guidance reaffirmed

Management reaffirmed its full-year FY2026 underlying profit before tax guidance of $315 million to $350 million, a range that implies a materially stronger second half than the first.

Macquarie retained its outperform rating on the stock with a price target of $17.95.

Macquarie described the update as reflecting a strong corporate performance that offsets disruption in the leisure segment.

The broker also pointed to ongoing cost discipline and productivity gains as drivers of medium-term earnings growth.

The Middle East wildcard

Flight Centre did not shy away from flagging near-term risks.

Management noted that disruptions in the Middle East are creating uncertainty and temporarily disrupting international travel patterns.

The leisure business took an estimated $10 million profit hit in April as a result, though the global corporate division has not yet been significantly impacted.

Management acknowledged the impact of ongoing unrest on the key May to June trading period remains unclear, a caveat investors should watch closely.

Where the stock sits today

Flight Centre shares remain down ~24% over the past twelve months, even after the positive reaction to this week’s update.

That underperformance relative to the broader market may reflect the ongoing sensitivity of the leisure travel segment to geopolitical events and consumer confidence.

But with corporate travel continuing to perform strongly and full-year guidance intact, the investment case for patient investors may remain largely unchanged.

Foolish takeaway

Flight Centre is not without its risks, and the Middle East situation deserves close monitoring heading into the key June quarter.

But a 9.7% rise in underlying profit and a reaffirmed guidance range suggest the underlying recovery is progressing well.

For long-term Fools, this is a business worth keeping on the watchlist.

The post Here’s what Flight Centre’s latest trading update tells investors about FY2026 appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven 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 Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Artificial intelligence needs enormous amounts of physical and digital infrastructure to run.

Behind every large language model sits a vast and rapidly expanding layer of physical data centres, network connectivity, and logistics software.

The three ASX-listed companies are quietly positioning themselves as essential infrastructure providers for the AI age.

Goodman Group (ASX: GMG)

Goodman Group approaches artificial intelligence from the ground up.

The company owns, develops, and manages industrial property and data centre assets across 16 major cities globally.

Data centres now make up 73% of Goodman’s $14.4 billion development pipeline, up from just 40% eighteen months ago.

The company has assembled a power bank of 6.0 gigawatts across its global network.

This is becoming increasingly difficult for competitors to replicate as power access emerges as one of the key constraints on AI infrastructure expansion.

Amazon has committed $20 billion to Australian data centres by 2029, the largest technology investment in the country’s history, and Microsoft has pledged a further $5 billion.

Goodman is well positioned to benefit from this buildout, with the land, power, and expertise to deliver.

Megaport Ltd (ASX: MP1)

Megaport connects the AI infrastructure stack at the network layer, enabling businesses to instantly connect to cloud providers, data centres, and digital infrastructure on demand.

The company’s acquisition of Latitude.sh in November 2025 pushed the company deeper into the AI infrastructure stack, adding GPU, CPU, and storage capabilities that complement its core network offering.

Last week, Megaport announced $254 million in new contracts through Latitude.sh with two US-based AI technology companies, generating $90.6 million in annualised recurring revenue.

CEO Michael Reid described the announcement as evidence that:

Megaport is becoming an essential platform for powering the applications of tomorrow with globally distributed, automated infrastructure.

WiseTech Global Ltd (ASX: WTC)

WiseTech Global plays a less obvious but equally important role in the AI infrastructure story.

Its CargoWise platform provides software that manages the enormously complex global supply chains required to source, manufacture, and ship the hardware that powers AI, including NVIDIA GPUs, memory chips, and the specialised cooling equipment that data centres demand.

WiseTech has shifted almost all CargoWise customers to a transaction-based commercial model and is now embedding artificial intelligence directly into the platform to automate workflows, improve compliance, and reduce costs for customers.

The company maintains FY2026 revenue guidance of US$1.39 billion to US$1.44 billion and an EBITDA margin of 40% to 41%.

WiseTech shares have fallen from their highs, which has compressed the valuation significantly and may have created a more attractive entry point for potential investors.

Foolish takeaway

Together, these stocks represent three distinct but complementary ways to gain exposure to the AI infrastructure boom.

They are great examples of ASX-listed companies already generating real revenue from a theme that has dominated the last few years.

The post 3 ASX stocks that could win big from the AI infrastructure boom appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven 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 Goodman Group, Megaport, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was a tough start to the week for the S&P/ASX 200 Index (ASX: XJO). Australia’s benchmark index dipped 1.5% yesterday to hit a new seven week low. 

However it wasn’t all doom and gloom. 

Several ASX materials stocks shot higher, including: 

• Lynas Rare Earths Ltd (ASX: LYC) up 5%
• Elevra Lithium (ASX: ELV) jumped 5%
• Brazilian Rare Earths (ASX: BRE) climbed almost 10%. 

These companies have now all doubled in the last 12 months. 

Let’s see what was behind the strong start to the week for these ASX materials stocks, and if there is more upside. 

Brazilian Rare Earths rockets on expansion news 

Brazilian Rare Earths operates as a mineral exploration company. It focuses on the discovery and development of mineral resources in Brazil. 

Following yesterday’s impressive 10% rise, it is now up more than 200% in the last two years. 

Investors were gobbling up this ASX materials stock yesterday after it announced the spin-off of its aluminium business. 

Brazilian Rare Earths plans to demerge its Amargosa bauxite and gallium project into a new company through an initial public offering worth up to $50 million.

The company said the move separates two large-scale, strategically important mineral platforms with different development pathways.

At the time of writing, this ASX materials stock is trading for approximately $5.87. 

However in good news for prospective investors, experts are tipping more upside, including an $8 price target from Canaccord. 

This target is still 36% higher than current levels. 

Lynas still has upside 

Lynas is primarily involved in the exploration, development, and processing of rare earth minerals in Australia and Malaysia. 

It sits at the centre of a critical supply chain: rare earth magnets. 

These are used in electric vehicles, wind turbines, and advanced electronics.

It is one of the few major rare earths producers outside China, which has helped it benefit from geopolitical concerns around supply security and diversification.

After yesterday’s 5% rise, it is now up 150% in the last 12 months and closed yesterday at $18.93. 

However 15 analyst forecasts via TradingView have an average price target of $22.45 on this ASX materials stock – indicating a further 18% upside. 

Elevra Lithium can keep rising

Elevra is an emerging lithium producer focused on sourcing and developing the raw materials needed to construct lithium-ion batteries, primarily lithium and graphite.

Like many lithium shares, it has benefited from surging oil costs, which has reignited the appeal for alternative energy sources.

After yesterday’s rise, it is now up 380% in the last year. 

According to analyst forecasts via TradingView, it has another 30% upside to reach fair value. 

The post Can these soaring ASX materials stocks keep rising? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
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• Which ASX rare earths company is spinning out a new aluminium company?
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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 recommended Lynas Rare Earths Ltd. 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 toll road giant has quietly become one of the most reliable income stocks on the ASX.

Here is what shareholders can expect to receive this year.

For income investors looking for reliability, Transurban Group (ASX: TCL) ticks a lot of boxes.

The company operates some of Australia’s most critical toll road infrastructure across Melbourne, Sydney, and Brisbane, as well as assets in North America.

On top of this, Transurban generates predictable cash flows that support a consistent distribution to securityholders year after year.

Here is the full picture of what Transurban is aiming to pay in 2026.

The 2026 distribution

Transurban paid an interim distribution of 34 cents per security in February 2026, unfranked.

The company has guided for a total FY2026 distribution of 69 cents per security, which implies a final distribution of approximately 35 cents per security in the second half.

The next ex-dividend date falls on 27 June 2026, with payment expected on 22 August 2026.

At the current share price of approximately $14.60, that forward distribution implies a yield of approximately 4.7%.

Why the yield looks attractive

Transurban distributions do not carry franking credits, which is a meaningful distinction for Australian investors accustomed to the full benefit of franked dividends from the big four banks or retailers.

However, the trade-off is a business model with almost unmatched resilience.

Traffic volumes across Transurban’s network have now recovered well above pre-pandemic levels, and the company’s toll pricing mechanisms link revenue directly to inflation.

This means distributions tend to grow in real terms over time.

Total distributions have grown from 65 cents per security in FY2024, demonstrating a steady upward trajectory even through a period of elevated interest rates.

What makes Transurban different

Transurban is actively developing and expanding infrastructure, including major projects in Melbourne and Sydney that will add new revenue-generating assets to the portfolio over the coming years.

The West Gate Tunnel Project in Melbourne, one of the largest road infrastructure projects in Australian history, is progressing toward completion.

This will add a major new toll road to Transurban’s network once open.

Foolish takeaway

Transurban may not deliver explosive growth.

But what the company offers instead is a durable, inflation-linked income stream backed by essential infrastructure that Australians rely on every day.

For income investors who value consistency over yield maximisation, it remains one of the most attractive options on the ASX.

The post Here is what Transurban shares are paying income investors in 2026 appeared first on The Motley Fool Australia.

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

Sigma Healthcare Ltd (ASX: SIG) shares closed on Monday trading for $2.82 apiece.

That sees shares in the S&P/ASX 200 Index (ASX: XJO) healthcare giant down 3.75% over 12 months, underperforming the 2.53% one-year gains posted by the benchmark index.   

More recently, the stock has been trending higher, up 8.46% since hitting a one-year closing low of $2.60 a share on 24 March.

Sigma Healthcare shares also trade on a fully franked 1.2% trailing dividend yield.

And looking ahead, Morgans Financial’s Mitch Belichovski believes the company is well-positioned to deliver further market-beating growth (courtesy of The Bull). 

Here’s why.

Should you buy Sigma Healthcare shares today?

“Sigma Healthcare is a wholesale distributer of pharmaceutical goods and medicines,” Belichovski said.

Citing the first reason he’s bullish on Sigma Healthcare shares, he noted:

Following the merger with Chemist Warehouse to create a leading healthcare franchisor, Sigma recently announced it had signed a memorandum of understanding with Greenlight Healthcare that will launch the Chemist Warehouse brand in the UK market. Sigma will acquire a 75% interest in a number of stores.

Commenting on the company’s UK expansion earlier this month, Sigma Healthcare CEO Vikesh Ramsunder said, “International expansion is one of our four key strategic growth pillars.”

Ramsunder added:

Having proven that the Chemist Warehouse model resonates with customers in other markets, including New Zealand and Ireland, the JV with GreenLight now provides a measured market access into the UK.

Moving on to the second reason Belichovski has a buy recommendation on the ASX 200 stock, he said:

Chemist Warehouse has averaged opening 33 new stores per annum over the past five years, but this international expansion could expedite growth. SIG is a first class operator that’s likely to continue its impressive growth track record into the future.

And I’ll throw in a third reason you may wish to buy Sigma Healthcare shares today myself.

Namely, for the company’s growing fully-franked dividends.

While the current 1.2% dividend yield isn’t huge, the company’s most recent interim payout on 20 March was the highest since 2019. And if Belichovski has it right on the company’s growth path, investors could enjoy further dividend boosts ahead. 

What’s the latest from the ASX 200 stock?

Sigma Healthcare presented at the annual Macquarie Group Ltd (ASX: MQG) Conference on 4 May.

The company reported that sales at its Australian Chemist Warehouse segement had increased by 16.7% year to date, while sales at its International Chemist Warehouse segment were up 24.7%,.

The company also said it had committed to opening a new 23,000 square metre distribution centre in New Zealand.

Sigma Healthcare shares closed up 0.7% on the day of the Macquarie presentation.

The post 3 reasons to buy Sigma Healthcare shares today 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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This ASX wine stock has been smashed over the past year.

Treasury Wine Estates Ltd (ASX: TWE) shares are now worth less than half of their 52-week high of $8.63. They are down roughly 20% in 2026 and around 50% over the past 12 months.

But after climbing around 6% over the past month, investors may be wondering if the worst is finally over.

A difficult backdrop

There is no denying the last year has been painful for Treasury Wine Estates shareholders.

Back in October, the company withdrew its FY26 earnings guidance and paused its share buyback. Problems in China and the US weighed heavily on the business. The ASX wine stock also reported a large first-half loss after impairments hammered its result.

Weak consumer demand, earnings pressure, and broader challenges across the wine industry all hurt sentiment.

The dividend outlook also deteriorated quickly. In fact, the market currently expects no dividend payout in FY26. That alone could scare away many income investors.

Looking beyond short-term pain

However, it is important to look beyond the short-term pain of the ASX wine stock.

And importantly, the company’s latest operating update gave investors some much-needed positives. In the March quarter, China depletions jumped 40% on a seasonally adjusted basis. ANZ depletions increased 11%. Asia excluding China climbed 14%, while US market depletions improved 9.1%.

Those numbers matter. They suggest demand is starting to recover in several key markets after an extremely difficult period.

The US business also appears to be stabilising. China demand remains strong. At the same time, Treasury Wine Estates is rolling out operational changes designed to improve execution and efficiency.

If that momentum continues, earnings could gradually rebuild from here.

Income recovery on the horizon

And that is where the longer-term income story becomes interesting. According to CommSec consensus estimates, the market expects partially franked dividends of 15 cents per share in FY27 and 24 cents per share in FY28.

At the current price of the ASX wine stock, that implies a potential forward dividend yield of around 3.3% in FY27. That figure climbs to more than 5.3% in FY28 before factoring in franking credits.

This is not an ASX stock you buy for immediate passive income. Instead, investors are backing a recovery story. The bet is that income returns as earnings improve over time.

Capital growth ahead?

There could also be meaningful capital growth if sentiment keeps recovering.

Treasury Wine Estates still owns a premium portfolio of wine brands. Penfolds remains a major earnings driver and one of Australia’s most recognised luxury wine labels.

The ASX wine stock is also restructuring operations, which could help margins improve in the years ahead. Its balance sheet looks more stable too. Recent refinancing activity has strengthened liquidity and given the business more flexibility while it navigates softer conditions.

What next for the ASX wine stock?

According to date on TradingView six out of 17 brokers see the ASX wine stock as a buy or a strong buy. The other 11 analysts rate it a hold and the average 12-month price target is set at $5.24, which points to a 25% upside. The most bullish forecast is $7,90, suggesting a 88% upside at the time of writing.

One broker who is becoming more optimistic on the outlook, is Morgans. It believes the company’s shares are now trading on low earnings multiples, potentially creating an attractive entry point for patient investors.

The team at Morgans recently upgraded Treasury Wine Estates shares to an add rating with a $5.30 price target.

The post Why investors may regret ignoring this ASX wine stock today 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 Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Who couldn’t use $20,000 in passive income a year?

For some investors, that could help smash down the mortgage faster. For others, it might fund Europe trips, long Friday lunches, or provide a means to escape the 9-to-5 grind earlier.

And while generating $20,000 a year in passive income sounds ambitious, it breaks down to roughly $485 a week.

The real question is: how do you actually build an investment portfolio capable of producing that kind of reliable income?

Here is one simple long-term approach.

Start with the target

If a portfolio delivers an average dividend yield of 5%, generating $20,000 annually would require approximately $400,000 invested.

That number can feel intimidating at first glance.

But the important thing is remembering that passive income portfolios are rarely built overnight. They are built steadily through years of investing, compounding, and reinvesting returns.

The first stage is not about income at all. It is about building capital.

Focus on growth first

One of the biggest mistakes investors make early on with building passive income is chasing high dividend yields too soon. In many cases, growth can be far more powerful than income during the wealth-building phase.

Companies capable of reinvesting profits at high rates of return can compound shareholder wealth much faster than mature income stocks. For example, businesses like Xero Ltd (ASX: XRO) and Pro Medicus Ltd (ASX: PME) may not offer massive dividend yields today, but both have delivered exceptional long-term capital growth.

Broad market ETFs can also play a major role here. Funds such as Vanguard Australian Shares Index ETF (ASX: VAS) and iShares S&P 500 ETF (ASX: IVV) provide diversification while still giving investors exposure to long-term market growth.

At this stage, the goal is simple: grow the portfolio as large as possible.

Let compounding do the heavy lifting

Time is one of the most powerful investing tools available.

If an investor contributed $1,200 per month and achieved an average annual return of 10% over the long term — not guaranteed, but historically achievable — the portfolio could grow surprisingly quickly.

After 10 years, the portfolio would be worth around $250,000. After 15 years, it could approach $500,000.

Importantly, total contributions over 15 years would only amount to about $216,000, with the remainder coming from investment growth and compounding returns.

That is where the real snowball effect begins.

Transition toward income

Once the portfolio approaches the target size, investors can gradually shift toward more income-focused assets.

That could include dividend shares such as APA Group (ASX: APA), Transurban Group (ASX: TCL), or Telstra Group Ltd (ASX: TLS). Income-focused ETFs such as Vanguard Australian Shares High Yield ETF (ASX: VHY) may also help diversify the income stream.

At an average portfolio yield of 5%, a $400,000 portfolio could generate approximately $20,000 annually in passive income.

And if dividends continue growing over time, that income stream could become even larger.

Foolish takeaway

Passive income is rarely created in one giant leap. It is usually built in stages: first by growing capital, then by converting that capital into reliable income-producing assets.

It takes patience, consistency, and time, but for long-term ASX investors, the rewards can be substantial.

The post How to generate $20,000 a year in passive income on the ASX appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
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• Pro Medicus shares jump as massive US contract win turns heads
• How much could the Pro Medicus share price rise in the next year?
• 3 Vanguard ETFs for Australian investors to build wealth by 2036

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 Transurban Group, Xero, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, Transurban Group, and Xero. The Motley Fool Australia has recommended Pro Medicus, Vanguard Australian Shares High Yield 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.

It has been a volatile year for the S&P/ASX 200 Index (ASX: XJO). Australia’s benchmark index has lagged behind global markets as inflation, interest rates and global conflict have weighed on sentiment. 

After another fall yesterday, the ASX 200 is down roughly 2.5% year to date. 

When the market here on home soil lags, it reinforces the importance of diversification to overseas equities. 

One option investors can target is emerging markets. 

What are emerging markets?

Emerging markets are economies that are in the process of rapid industrialisation, urbanisation, and economic development, but are not yet considered fully developed markets.

Common examples typically include countries such as India, Brazil, Indonesia, and Vietnam, which often offer higher long-term growth potential than developed economies like Australia or the United States. 

Emerging markets can provide diversification and strong returns driven by expanding middle classes and infrastructure investment. However they also carry higher risks, including political instability, currency fluctuations, weaker regulatory systems, and greater market volatility.

In 2026, several emerging markets ASX ETFs have raced ahead of the Australian market. 

iShares MSCI Emerging Markets ETF (ASX: IEM)

This ASX ETF aims to provide investors with the performance of the MSCI Emerging Markets Index, before fees and expenses. The index is designed to measure the equity market performance in global emerging markets.

It has a large weighting towards companies in the tech, financials and consumer discretionary sectors. 

By country, its largest exposure is to Taiwan (24%), China (23%) and South Korea (18%). 

In 2026, this ASX ETF has vastly outperformed the ASX 200, rising 9%. 

VanEck MSCI Multifactor Emerging Markets Equity ETF (ASX: EMKT)

This ASX ETF provides a diversified portfolio of large and mid-cap stocks from emerging markets countries.

At the time of writing, it includes roughly 220 underlying holdings. 

Its largest exposure is to companies based in South Korea (26%), China (25%) and Taiwan Region (23%). 

Approximately one third of the fund is made up of technology shares. 

It has risen an impressive 16% so far this year and 33% over the last 12 months. 

Betashares MSCI Emerging Markets Complex ETF (ASX: BEMG)

Another emerging markets fund that has performed strongly in 2026 is this relatively new fund from Betashares. 

It aims to track the performance of the MSCI Emerging Markets Net Total Return Index. 

It provides exposure to more than 1,000 stocks across more than 20 emerging countries in fast-growing regions including Asia, Latin America, Eastern Europe and Africa. 

The fund has risen almost 12% year to date. 

The post These emerging markets ASX ETFs are racing ahead of the ASX in 2026 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 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.