Periods like this don’t come around very often.

Across the ASX, a group of well-known income stocks are trading well below their highs, not because their business models are broken, but because short-term conditions have turned against them. 

In many cases, their dividends are under pressure today. But that is exactly why I think the long-term opportunity looks so compelling.

When income stocks fall out of favour, investors often focus on what dividends look like right now. I prefer to think about what they could look like two or three years from now if conditions normalise.

Here are several ASX income stocks where I think patience could be rewarded with both dividend growth and capital upside.

Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL)

Accent Group and Super Retail Group have both been hit hard by the same forces.

Soft consumer spending and aggressive discounting have weighed on earnings and margins. Unsurprisingly, that has flowed through to share prices and dividend expectations. Both stocks are trading well below their prior highs.

In my view, these pressures look cyclical rather than structural. Neither business has lost relevance. They have strong brand portfolios, national store networks, and proven operating models.

If consumer conditions improve over the next couple of years, I think there is scope for a meaningful recovery in profitability. That would likely support higher dividends in FY27 and FY28, alongside a rebound in share prices. Buying during periods of pessimism has historically been how the best income returns are generated.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Domino’s Pizza Enterprises is a different case, but the setup feels similar.

This ASX income stock has struggled with execution across several international markets, and that has weighed heavily on investor confidence. Store closures, cost pressures, and weaker sales growth have all played a role in pushing the share price lower.

Management believes its turnaround plan will reset the business. This includes cutting costs, simplifying operations, and exiting underperforming locations.

I don’t think a recovery is guaranteed. But if the plan works even moderately well, Domino’s could emerge leaner, more focused, and more profitable. From an income perspective, that creates optionality. Dividends today are not the attraction. The attraction is what they could look like if their earnings recover.

Treasury Wine Estates Ltd (ASX: TWE)

Treasury Wine Estates has been weighed down by soft demand for premium wine, particularly as cost-of-living pressures have altered consumer behaviour.

I think this is another example of a high-quality business caught in an unfavourable cycle. Demand for premium wine has not disappeared, but consumers have become more cautious with their spending.

If spending patterns normalise, this ASX income stock could see improving volumes and margins. That would support both earnings recovery and improved dividend capacity over time. Buying when sentiment is weak is uncomfortable, but it is often when long-term value is created.

Macquarie Group Ltd (ASX: MQG) and NIB Holdings Limited (ASX: NHF)

Not all income opportunities require a full turnaround.

Macquarie Group is down around 15% from its 52-week high. NIB Holdings is down roughly 19%. In both cases, these are established businesses with long operating histories and proven earnings power.

While near-term growth may be more muted, I think both companies remain capable of delivering attractive income and capital returns over a full cycle.

Why this could be a rare opportunity

Income investing works best when you buy before dividends recover, not after.

Just look at Qantas Airways Ltd (ASX: QAN). You could have bought its shares for $4.77 in October 2023. According to CommSec, the airline is forecast to pay a dividend of 42.9 cents per share in FY26. This means that investors who bought shares two and a bit years ago could receive a yield on cost of 9% in 2026.

Today’s environment has created a gap between what dividends look like now and what they could look like if conditions improve. For patient investors willing to look beyond the next twelve months, that gap could represent a rare opportunity.

It won’t work for every stock. Some turnarounds fail. But when income stocks recover, they often reward investors twice. Once through higher dividends, and again through rising share prices. That combination is how long-term wealth is built.

The post ASX income stocks: A once-in-a-decade chance to get rich appeared first on The Motley Fool Australia.

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• 2 ASX shares highly recommended to buy: Experts
• $10,000 invested in Qantas shares two years ago is now worth…
• Can this ASX 200 stock recover after losing 51%?
• How I’d go about finding undervalued ASX shares to buy and hold forever in 2026
• NIB share price up 22% in 12 months, but could face short-term weakness. Here’s what investors should know

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 positions in and has recommended Domino’s Pizza Enterprises, Macquarie Group, Super Retail Group, and Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Macquarie Group, NIB Holdings, Super Retail Group, and Treasury Wine Estates. The Motley Fool Australia has recommended Accent Group and Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s a great joy to own ASX dividend shares that deliver passive income for our bank accounts. I think it’s even more appealing to own businesses that have a habit of growing the payout each year.

It’s especially pleasing to see the payment increase each year. This enables us to become wealthier, offset/exceed inflation, as well as signalling that the business isn’t hitting shareholders with a cut.

If we’re relying on dividend income to pay for our life, it could be a disaster if an ASX dividend share were to enact a cut. That’s why I’ve put a lot of my own money towards the two names below, and I still think they’re buys today.

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

The leading ASX business for dividend increases is Soul Patts, in my view.

While the investment house hasn’t delivered the biggest dividend increases over the past decade or two, it has certainly been the most consistent.

It has increased its annual dividend every year since 1998, which is a longer streak than any other ASX share.

It’s invested in a number of sectors including telecommunications, resources, agriculture, industrial properties, building products, swimming schools, credit and more.

By having a diversified portfolio, it’s able to lower the risks and find the best opportunities in a wide array of industries.

The ASX dividend share is able to regularly grow the passive dividend income because it generates investment cash flow from its portfolio, it pays for its expenses and then sends a majority of that net cash flow to shareholders. It retains some of the money to invest in more opportunities each year.

The company has a grossed-up dividend yield of 3.9%, including franking credits. But, with its record of rising payouts, I’m expecting the FY26 grossed-up dividend yield to be at least 4.1%, at the current valuation.

L1 Long Short Fund Ltd (ASX: LSF)

I like the listed investment company (LIC) structure for receiving stable and growing income because of how LICs can use investment gains in the latest and previous financial years, enabling a smooth and steadily rising payout due to the profit reserve.

The L1 Long Short Fund provides investors with access to a fund that aims to produce positive returns regardless of what share markets are doing. It achieves this by investing in businesses it thinks are undervalued, as well as shorting businesses it thinks will fall. The company’s investment objective is to deliver strong, positive, risk-adjusted returns over the long term whilst seeking to preserve shareholder capital.

The ASX dividend share has steadily increased its passive income each year since it started paying dividends in 2021. It recently announced a shift to a quarterly dividend of 3.5 cents per share. Annualised, that represents an increase of at least 9.8% year-over-year, assuming no increases to the quarterly payout.

If it does pay 14 cents per share in FY26, that’d be a grossed-up dividend yield of 4.7%, including franking credits.

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

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• These ASX shares won big last year and are still excellent buys for 2026
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• $20,000 in savings? Here’s how that could become $10,000 a year in passive income
• Don’t want to rely on your wage? Build a second income with these ASX shares
• 10 ASX shares I’d buy with $10,000 in 2026 to beat the market

Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Reaching 50 with little or no savings can feel overwhelming. But it certainly doesn’t mean all hope is lost.

In fact, by borrowing a few pages from Warren Buffett’s investment playbook, I believe it is still possible to build meaningful wealth over time and potentially enjoy a comfortable retirement.

Buffett didn’t get rich by chasing trends or trying to outsmart the market in the short term. Instead, he relied on patience, discipline, and a relentless focus on quality. Those principles can be just as powerful for everyday investors, even when starting later in life.

Think long term even at 50

One of the cornerstones of Buffett’s success is his long-term mindset. He buys shares with the intention of owning them for many years. This allows time and compounding to do the heavy lifting.

While a 50-year-old investor may not have decades of investing ahead of them, they still likely have 15–20 years before retirement. That’s more than enough time for compounding to work, especially if ASX share investments are made consistently.

The key is to stop thinking in terms of quick wins and instead focus on steady progress. Even modest returns, when reinvested over time, can add up to something meaningful.

Focus on quality businesses

Buffett is famous for favouring high-quality businesses with strong competitive advantages. These are companies with lasting brands, loyal customers, pricing power, and the ability to generate reliable cash flow.

Importantly, he doesn’t insist on buying them at any price.

Instead, he looks to invest when the market is overly pessimistic, often during periods of economic uncertainty or when an industry falls out of favour. These temporary setbacks can push down share prices, creating opportunities for patient investors.

In 2026, there’s no shortage of ASX shares facing short-term challenges. For long-term investors, that can be a feature rather than a flaw, provided the underlying business remains strong.

Examples could be CSL Ltd (ASX: CSL), James Hardie Industries Plc (ASX: JHX), or WiseTech Global Ltd (ASX: WTC).

Consistency matters

Trying to pick the perfect moment to invest is rarely productive. Buffett himself has said that time in the market is far more important than timing the market.

For someone starting from scratch at 50, investing regularly, whether monthly or quarterly, can be a powerful habit. It removes emotion from the process and ensures that capital is being put to work regardless of market conditions.

Over time, this disciplined approach can smooth out volatility and build momentum.

For example, if you could afford to invest $1,000 into ASX shares each month, you might be surprised at how much that could grow over time.

If you were to do this and achieve an average 10% annual return (broadly in line with historical averages), your portfolio would grow to be worth over $720,000 in 20 years.

Foolish takeaway

It is never too late to start investing and by following in Warren Buffett’s footsteps, investors could build wealth and retire rich, even if starting from zero.

The post No savings at 50? Here’s how I’d use Warren Buffett’s playbook to build wealth and retire comfortably appeared first on The Motley Fool Australia.

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• How I’d go about finding undervalued ASX shares to buy and hold forever in 2026
• 4 ASX shares I’d buy with $10,000 today

Motley Fool contributor James Mickleboro has positions in CSL and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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.

The Australian share market has long been a popular destination for income investors, and for good reason.

A large number of ASX shares pay dividends, often twice a year, giving investors a steady stream of cash flow without having to sell their shares. For many, this makes them an attractive option for building passive income over time.

So, what could a $10,000 investment realistically deliver?

What $10,000 can earn in passive income right away

The simplest way to generate income is to focus on dividend-paying ASX shares or ETFs like the Vanguard Australian Shares High Yield ETF (ASX: VHY).

If an investor were able to build a portfolio with an average dividend yield of 6%, which is achievable by targeting high-quality, high yielding income shares, a $10,000 investment would generate around $600 a year in dividends.

That’s not going to replace a salary, but it’s a decent return for doing very little. And importantly, it is just the starting point.

Rather than spending that income straight away, I would be inclined to reinvest it. That’s where compounding really starts to work in your favour.

Why I’d play the long game first

Instead of prioritising income from day one, another approach is to focus on growing the portfolio first.

If a $10,000 investment were able to compound at an average rate of 10% per year, which is roughly in line with long-term share market returns, it would grow to around $42,000 after 15 years.

At that point, switching to an income-focused portfolio yielding 6% would produce roughly $2,500 a year in passive income.

Stretch the timeframe further and the numbers become even more compelling. After 25 years of compounding at 10%, the same $10,000 could grow to about $110,000, supporting annual passive income of around $6,600 at a 6% yield.

The key takeaway is that time can be just as powerful as capital.

Adding more changes everything

Where things really start to get interesting is when regular contributions are made.

Starting with $10,000 and investing an extra $500 per month into ASX shares could dramatically accelerate results.

Assuming a 10% average annual return, that strategy could produce a portfolio worth approximately $240,000 after 15 years.

At a 6% dividend yield, that would translate into about $14,500 a year in passive income.

Extend the same strategy over 25 years and the portfolio could grow to roughly $730,000, with income potential approaching $44,000 a year, all else being equal.

Foolish takeaway

Generating meaningful passive income doesn’t happen overnight. But the combination of dividends, compounding, and consistent investing can be incredibly powerful over time.

Even a relatively modest starting amount like $10,000 can grow into something substantial, especially when paired with patience and regular contributions.

The post How much passive income could I make from ASX shares with $10,000? appeared first on The Motley Fool Australia.

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• My simple 5-share ASX retirement portfolio
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The best ASX shares to own today could be the ones that deliver the most growth over the next decade. Therefore, the best buy-and-hold opportunities are the ones we should consider for our portfolios.

The world could change significantly in the next 10 years. Large amounts are being invested in the development of artificial intelligence (AI) and robots. I’m not going to make any specific predictions, but regardless of how things change, I believe some sectors can continue to thrive.

There are a couple of names I’ve made my largest bets on in ASX growth shares.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of Australia’s leading online retailers of homewares, furniture and home improvement. The business sells many thousands of products, which are largely shipped directly from suppliers, giving the business a capital-light model and allowing it to sell a much wider range.

The capital-light nature of the business means it generates pleasing cash flow, maintains a good cash balance, and generates useful interest income.

Why is it a strong option for the next decade? It’s growing revenue at a very good pace as more people adopt online shopping.

According to Temple & Webster, the Australian furniture and homewares market has reached online market penetration of 20%, compared to 29% in the UK and 35% in the US. I’m expecting the Australian figure to climb towards 30% in the coming years.

One of the key benefits of this business is that its fixed costs are a lower percentage of revenue as it grows, enabling improved profit margins. Fixed costs were 11.3% of revenue in FY24, and this reduced to 10.6% in FY25.

In a decade, I expect the company’s market share to increase and its profit margins to improve, driven by increased productivity from AI and other technologies.

Home improvement could become an important pillar for the business in the coming years. FY25 saw revenue jump 43% in FY25 to $42 million. Home improvement revenue to 20 November 2025 increased by another 40% year-over-year.

Over the long term, I think this business could become an Australian blue-chip, particularly if it expands successfully overseas (starting with New Zealand).

Tuas Ltd (ASX: TUA)

Tuas is another ASX growth share with a compelling future. It’s a Singaporean telco that’s rapidly gaining customers based on its value offerings.

In the first quarter of FY26, it reported 20% year-over-year growth in mobile subscribers to 1.34 million, 24% revenue growth, and 20% operating profit (EBITDA) growth to $19.9 million. It also generated $9.1 million of net profit and $20 million of operating cash flow.

The ASX share continues to gain market share and the takeover of competitor M1 could deliver a big shift in profit generation for the business and diversifies Tuas’ earnings base.

I think the business could be even more appealing in the coming years as its market share and margins improve. In the next ten years, I expect its Singapore net profit can rise significantly and it could also expand internationally, making it a compelling buy and hold option.

I believe the market is underestimating how much the company could grow earnings over the next decade.

Of course, these aren’t the only ASX shares that could be great investments for the next decade.

The post 2 ASX shares to buy and hold for the next decade appeared first on The Motley Fool Australia.

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

Passive income is one of the greatest advantages of investing in (ASX) shares. I believe there are valid reasons to say that a lower dividend yield could produce better income in the long run than a higher yield idea.

When I think of some of the most popular businesses for passive income, names like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS) come to mind.

Owning a business like that could deliver a solid yield upfront, but may not be the best option in the long term.

Why a lower dividend yield doesn’t mean an inferior investment

If someone invested $1,000 in a dividend-paying business with a 5% dividend yield, it would unlock $50 of annual passive income. A 2% dividend yield would only mean $20 of annual passive income.

For passive income investors, the 5% yield option looks more compelling.

But it’s important to remember why some businesses have lower or higher dividend yields than others.

The dividend yield is influenced by two different factors: the dividend payout ratio and the price/earnings (P/E) ratio.

A high dividend payout ratio and low P/E ratio will certainly produce a high dividend yield.  But that also means the business isn’t priced for much growth and isn’t retaining much profit each year to support its earnings growth.

A lower dividend yield likely means the market expects more growth over time and has a lower dividend payout ratio – it’s retaining more earnings to reinvest in the business to support profit performance in the coming years.

Dividend growth can win

We can’t know for sure what the dividend payouts will be in the coming years, but it’d make things easy if we knew!

If a fast-growing business increases its payout by 15% per year, a 2% dividend yield could grow much larger. It doubles to around 4% in five years and more than 8% in ten years.

If a business with a 5% dividend yield grows its payout at 2% per year, it reaches 5.5% after 5 years and 6.1% after 10 years.

After ten years, that $1,000 investment would pay around $80 per year from the business with a lower yield and around $60 from the higher dividend yield.

Of course, there are no precise examples of businesses delivering those levels of growth. But, companies like Pro Medicus Ltd (ASX: PME), TechnologyOne Ltd (ASX: TNE) and Altium have been names that have delivered significant dividend growth.

ASX shares that I’d back for long-term dividend growth today are TechnologyOne, Lovisa Holdings Ltd (ASX: LOV), Guzman Y Gomez Ltd (ASX: GYG) and Breville Group Ltd (ASX: BRG), among other names.

The post Why a smaller dividend yield can lead to more passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Breville Group, Guzman Y Gomez, Pro Medicus, and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended BHP Group, Lovisa, Pro Medicus, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Running an SMSF often changes how you think about investing.

The focus tends to shift away from short-term performance and towards durability, diversification, and outcomes that can support retirement over many years. For that reason, exchange traded funds (ETFs) can play a valuable role in an SMSF.

They offer broad exposure, transparency, and simplicity, without requiring constant decision-making.

With that long-term mindset in place, here are three ASX ETFs that could be well suited to an SMSF portfolio.

VanEck MSCI International Value ETF (ASX: VLUE)

The VanEck MSCI International Value ETF could be worth considering. It provides exposure to global stocks through a value-focused lens.

Rather than targeting fast-growing or high-momentum stocks, this ASX ETF invests in developed market companies that score highly on traditional valuation measures such as earnings, book value, and cash flow. The result is a diversified portfolio of established businesses spread across regions and sectors.

For an SMSF, this approach can be appealing because it emphasises fundamentals and discipline. Many of the stocks held within this fund generate consistent cash flows and operate in mature industries, which can help smooth returns over time.

It was recently recommended by analysts at VanEck.

Betashares Australian Quality ETF (ASX: AQLT)

The Betashares Australian Quality ETF is another ASX ETF to consider for an SMSF. It focuses on quality within the Australian share market.

This fund selects local stocks based on metrics such as high return on equity, low debt, and earnings stability. This means it tends to favour businesses with strong balance sheets and resilient business models rather than those chasing growth at any cost.

For SMSF investors, the Betashares Australian Quality ETF offers a way to access Australian shares while filtering out weaker operators. It can provide exposure to stocks that have demonstrated an ability to perform across economic cycles, which is particularly relevant when managing retirement savings.

The team at Betashares recently recommended this fund.

iShares S&P 500 ETF (ASX: IVV)

A final option is the classic iShares S&P 500 ETF. This hugely popular ASX ETF offers direct access to the US share market through the S&P 500 Index.

This ETF holds 500 of the largest stocks in the United States, spanning technology, healthcare, consumer goods, financials, and industrials. Many of these businesses are global leaders and household names.

For an SMSF, the iShares S&P 500 ETF can provide essential offshore diversification. It reduces reliance on the Australian economy and allows retirement savings to benefit from innovation, productivity, and scale in the world’s largest equity market.

The post The best ASX ETFs to buy for an SMSF 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 iShares S&P 500 ETF. The Motley Fool Australia has recommended 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.

ASX dividend stocks can be a great source of cash flow for our bank accounts. While higher dividend yields can be seen as riskier, certain businesses can provide a high level of passive income.

I’m going to highlight businesses with high dividend yields that I think have a good chance of increasing their payouts in the short- and long-term.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop is a leader in Australia and New Zealand in retailing hair removal products across its 125 stores. It sells items such as electric shavers, clippers, trimmers, and wet-shave items. It also sells a range of products across the oral care, hair care, massage, air treatment, and beauty categories.

The company’s market prominence has enabled it to offer exclusive products from certain suppliers, giving it a unique selling point for customers.

The ASX dividend stock is looking to grow its profits by opening new stores, offering a wider range of beauty and self-care items, selling more online, and growing its own brand, Transform-U. A recovery in overall Australian consumer spending could also help improve profit.

It increased its annual dividend per share each year from 2017 to 2024. It maintained the dividend per share in FY24 and then grew the payout again to 10.3 cents per share in FY25. At the time of writing, this translates into a grossed-up dividend yield, including franking credits, of 9.6%.

I expect it will increase the payout again by another 0.1 cent per share in FY26, which would give the business a grossed-up dividend yield, including franking credits, of 9.7%.

Chartre Hall Long WALE REIT (ASX: CLW)

This business is a real estate investment trust (REIT) that owns a vast portfolio of commercial properties across Australia.

It has deliberately built its portfolio to include properties on long-term leases with tenants. It had a weighted average lease expiry (WALE) of around 9 years at June 2025, providing investors with long-term stability.

I like how the ASX dividend stock has built its portfolio to include a number of sectors, including pubs and hotels, Bunnings properties, telecommunications exchanges, grocery and distribution centres, food manufacturing and more.

In a move that’s good for the distribution yield, it pays out 100% of its operating earnings each year. It’s expecting to pay a distribution per unit of 25.5 cents in FY26 – an increase from 25 cents per unit in FY25. The projected payout translates into a distribution yield of  6.4%.

Another benefit of the passive income from the ASX dividend share is that payments are delivered quarterly, providing investors with a steady stream of income throughout the year.

While these aren’t the only two high-yield names, they’re two I expect to increase the payout in FY26.

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

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

Zip shares have been left for dead more times than a budget smartphone.

Yet quietly, Zip Co Ltd (ASX: ZIP) is starting to look less like a fallen fintech and more like a leaner, battle-hardened survivor.

With Zip stocks still a long way off former highs – 75% lower than 5 years ago – investors are being offered a rare second chance.

Here are three reasons the buy now, pay later (BNPL) company deserves a fresh look.

The business has finally grown up

Zip’s wild growth-at-any-cost era is over. Management has slashed costs, exited loss-making markets and sharpened its focus on profitability. The result? A business that looks far more disciplined than it did two years ago.

Operating expenses are down sharply, bad debts have stabilised, and Zip is now consistently generating positive cash flow in its core regions.

Consensus forecasts indicate EPS rising 27% to 7.9 cents in FY26, followed by a further 53% increase to 12.1 cents in FY27. This is not speculative optimism. It signals a company that has moved beyond survival and is now beginning to demonstrate clear operating leverage.

In a market that now rewards earnings over hype, this reset matters. Investors no longer need to believe in blue-sky forecasts. Zip shares are showing tangible progress, quarter by quarter.

The American dream is still alive

While Australia is solid and steady, the real prize remains the US. Zip has carved out a niche as a flexible, app-based BNPL provider that sits somewhere between credit cards and short-term instalments.

Importantly, it has stayed in the US while several rivals have pulled back or collapsed. That gives Zip shares more room to grow without burning cash. As consumer spending stabilises and interest rates edge lower, US volumes are starting to improve.

If Zip can scale this market while keeping losses tight, earnings leverage could be powerful.

Valuation leaves room for upside

Zip shares are still trading at a fraction of their pandemic-era highs, currently at $3.10, after hitting $12.35 in February 2021. But the market may be underestimating how different the company looks today.

With a cleaner balance sheet, improving margins and a clearer path to sustained profitability, Zip doesn’t need heroic growth assumptions to justify a higher valuation.

Even modest revenue growth, paired with tighter costs, could translate into outsized earnings gains. For investors willing to tolerate volatility, that risk-reward balance is starting to look attractive.

According to Trading View data, brokers are more than upbeat. Most of them rate Zip shares a buy or strong buy. They also see plenty of room for growth, with the average 12-month price target set at $5.36. This points to a 73% upside.  

The post 3 reasons why Zip shares are worth a look 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 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.

Materials led the 11 ASX 200 market sectors for a second week, rising 3.86% as rising commodities continued to propel mining shares.

Some commodities have risen by more than 25% and even up to 70% in just a month, and many miners hit multi-year highs last week.

They included the ASX 200’s largest mining share, BHP Group Ltd (ASX: BHP), as well as fellow diversified miners, Mineral Resources Ltd (ASX: MIN) and South32 Ltd (ASX: S32).

Others that hit multi-year highs included ASX 200 lithium major PLS Group Ltd (ASX: PLS), gold large-cap Newmont Corporation CDI (ASX: NEM), copper pure-play Sandfire Resources Ltd (ASX: SFR), and aluminium stock Alcoa Corporation CDI (ASX: AAI).

The broader market also had a strong week. The benchmark S&P/ASX 200 Index (ASX: XJO) rose 2.13% to finish at 8,903.9 points.

Nine of the sectors finished the week in the green.

Let’s review.

ASX 200 mining shares’ unstoppable trajectory

The BHP share price reached a two-year high of $49.75 per share on Thursday.

BHP shares closed 2.66% higher for the week at $48.99 on Friday.

The Fortescue Ltd (ASX: FMG) share price rose 0.48% to $22.82 while Rio Tinto Ltd (ASX: RIO) lifted 3.63% to $148.25.

The Mineral Resources share price lifted 4.71% to $59.78 while South32 gained 8.05% to $4.16.

Among the ASX 200 pure-play copper stocks, Sandfire Resources shares ascended 2.68% to close at $19.15.

Capstone Copper Corp CDI (ASX: CSC) shares finished 7.72% higher at $15.63.

ASX 200 lithium shares also had a good week, with PLS Group shares lifting 0.65% to $4.68.

PLS Group shares hit a two-and-a-half-year high of $5.04 on Thursday, and profit-taking was apparent on Friday.

The Liontown Ltd (ASX: LTR) share price rose 4.88% to $2.15, while IGO Ltd (ASX: IGO) increased 2.66% to $8.88.

ASX 200 gold shares benefited from another resetting of the gold price record at US$4,642.58 on Wednesday.

The ASX 200’s largest gold share, Northern Star Resources Ltd (ASX: NST), rose 8.54% to close at $26.83 on Friday.

The Evolution Mining Ltd (ASX: EVN) share price rose 2.34% to $13.12, and Newmont lifted 7.53% to $169.25.

Among ASX 200 ASX rare earths shares, Lynas Rare Earths Ltd (ASX: LYC) increased 9.79% to $15.48.

Arafura Rare Earths Ltd (ASX: ARU) shares fell 5% to 28 cents per share.

Bauxite and alumina producer Alcoa rose 4.45% to $95.28 per share on Friday.

Soaring ASX 200 mining shares prompted many brokers to issue revised 12-month share price targets last week.

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
Materials (ASX: XMJ)	3.86%
Consumer Discretionary (ASX: XDJ)	2.84%
Financials (ASX: XFJ)	1.93%
Energy (ASX: XEJ)	1.86%
Industrials (ASX: XNJ)	1.8%
A-REIT (ASX: XPJ)	1.72%
Consumer Staples (ASX: XSJ)	1.31%
Healthcare (ASX: XHJ)	1.07%
Communication (ASX: XTJ)	0.09%
Information Technology (ASX: XIJ)	(1.38%)
Utilities (ASX: XUJ)	(3.05%)

The post ASX 200 materials sector outperforms as mining shares continue their ascent appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Alcoa, BHP Group, and South32. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lynas Rare Earths Ltd. 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.