Large businesses, sometimes called ASX blue-chip shares, are capable of providing investors with stability and a good dividend yield.

The biggest companies have built their market position over many years. Their market share means they have advantageous scale advantages and can deliver stronger profit margins than competitors.

Additionally, those businesses are not expected to grow that much, considering how big they are, meaning they have a lower price/earnings (P/E) ratio. Let’s look at two interesting contenders.

Origin Energy Ltd (ASX: ORG)

Origin Energy isn’t normally one of the ASX blue-chip shares that I write about for dividends, but it could be a strong pick right now given how large the dividend yield is and its future potential.

The ASX blue-chip share is a provider of electricity and gas to households and businesses as well as solar, LPG and broadband. Its asset base includes power generation, gas exploration and renewables.

Pleasingly, the company’s payout has been increasing over the last five years and the dividends look promising for the coming period.

The broker UBS is predicting that the business could increase its annual payout to 61 cents in FY26, which would be a grossed-up dividend yield of 7.8%, including franking credits, at the time of writing. Pleasingly, the broker UBS is forecasting Origin could deliver a higher dividend per share in subsequent years, with a forecast of 62 cents per share in FY27, 64 cents per share in FY28 and 65 cents per share in FY30.

Finally, I want to highlight the company’s stake of close to a quarter of the European businesses, Kraken Technologies and Octopus Energy. At the end of December, Origin said Kraken was rapidly closing in on its 100 million customer target, well ahead of plan. I think both businesses could grow rapidly, driving value for the ASX blue-chip share.

Telstra Group Ltd (ASX: TLS)

Telstra has proven itself as an appealing ASX blue-chip share over the last few years, as it provided a large and growing dividend.

Its market-leading mobile network is allowing it to generate strong profits. A rising average revenue per user (ARPU) and growing subscriber base is helping drive its mobile division’s revenue higher. Operating leverage enables operating profit (EBITDA) to rise at a faster pace than revenue.

The business paid an annual dividend per share of 19 cents in FY25 and I’m expecting the business to increase its FY26 payout to 20 cents per share. That would be a grossed-up dividend yield of 5.8%, including franking credits, at the time of writing.

With Australia’s growing population and increasing digitalisation, I think Telstra is an effective investment to consider for the long-term, as long as its subscriber base continues rising.

The post 2 ASX blue-chip shares offering big dividend yields appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 shares to buy: experts
• Is this the right time to invest in ASX defensive shares?
• Forget this ASX 200 share and buy Telstra and Zip shares: Experts
• Are Origin Energy shares a buy, hold or sell before earnings results?
• Passive income: How much do you need to invest to make $500 per month?

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

S&P/ASX 200 Index (ASX: XJO) shares are 0.5% higher at 8,917.5 points as earnings season continues on Tuesday.

On The Bull this week, experts reveal three ASX 200 shares with buy ratings, and why they recommend investing in them.

Let’s take a look.

Zip Co Ltd (ASX: ZIP)

The Zip share price is $2.51, up 1.4% on Tuesday and down 23.6% over the past six months.

Tony Paterno from Ord Minnett has a buy rating on this ASX 200 financial share.

Paterno commented that “there’s a lot to like” about the buy now, pay later platform provider’s 1Q FY26 results.

Total transaction volume (TTV) growth in the US was up 47.2 per cent and revenue was up 51.2 per cent. 

Consequently, Zip’s management has increased TTV guidance in the US to more than 40 per cent in full year 2026, which is up from 35 per cent.

Margins were strong across the board, highlighted by an operating margin of 19.5 per cent in the first quarter, which is above the guidance range of between 16 per cent and 19 per cent for full year 2026.

Margins are usually stronger in the second half.  

Zip will release its 1H FY26 results next Thursday, 19 February.

CSL Ltd (ASX: CSL)

CSL shares are $182.15 apiece, up 1% on Tuesday and down 31% over the past six months.

The CSL share price has struggled since the company released its FY25 report last August.

CSL’s next big report, covering the first half of FY26, will be out tomorrow.

Jabin Hallihan from Family Financial Solutions has a buy rating on this ASX 200 healthcare share.

Hallihan said:

The share price has fallen from $271.32 on August 18, 2025 to trade at $181.48 on February 5, 2026.

Our fair value is $295 a share.

Short term earnings noise obscures a high quality plasma franchise with structural demand growth.

In a bull market, valuation normalisation and quality should deliver strong upside moving forward. 

Telstra Group Ltd (ASX: TLS) 

Telstra shares are $4.88 apiece, down 0.1% today and down 2.1% over the past six months.

Hallihan also has a buy rating on this ASX 200 telecommunications share, noting strong cash flows and a 31% profit lift in FY25.

Family Financial Solutions values Telstra shares at $5.40 apiece, implying a potential 11% upside from here.

Hallihan said:

Cost discipline, share buy-backs and resilient mobile earnings support steady upside in a market that still rewards defensiveness.

On top of this, Telstra pays reliable, fully franked dividends.

Its full year dividend of 19 cents a share in fiscal year 2025 was up 5.6 per cent on the prior corresponding period.

TLS was recently trading on a dividend yield of 3.85 per cent.  

Telstra will release its 1H FY26 results next Thursday, 19 February.

The post 3 ASX 200 shares to buy: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Telstra Group. 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.

S&P/ASX 300 Metal & Mining Index (ASX: XMM) shares are 1.3% higher on Tuesday as earnings season continues.

ASX mining stocks are a popular investment choice these days amid rising commodity prices.

The materials sector, which incorporates mining companies, had an incredibly strong year in 2025.

The sector returned a staggering 36% to investors as gold and commodities associated with the energy transition surged.

On The Bull this week, experts recommend selling the following three producers.

Let’s take a look.

Northern Star Resources Ltd (ASX: NST)

Northern Star shares are $28.07 apiece, up 1.3% on Tuesday and up 57% over the past 12 months.

Tony Locantro from Alto Capital has a sell rating on this ASX 200 gold mining share.

Locantro comments:

Northern Star’s share price has performed strongly, supported by higher gold prices and improved sentiment towards large market capitalisation producers.

However, the company’s most recent production report disappointed, with output and cost guidance undershooting market expectations.

While the longer term outlook for gold remains positive, recent operational softness tempers near term confidence.

With much of the upside already reflected in the share price, the risk-reward balance favours taking profits at current levels.

Northern Star Resources will release its 1H FY26 results on Thursday.

Iluka Resources Ltd (ASX: ILU)

The Iluka Resources share price is $5.22, up 0.6% on Tuesday and up 12% over the past 12 months.

Tony Paterno from Ord Minnett has a sell rating on this ASX critical minerals mining share.

Paterno explains:

ILU’s mineral sands business clocked up net debt of $473 million at December 31, 2025.

We suspect a capital raising may be an option to address the debt overhang as cash flow is impacted at operations at current prices.

The shares were punished following the company update on January 29, 2026, falling from $6.96 on January 23 to trade at $5.17 on February 5.

Liontown Ltd (ASX: LTR)

The Liontown share price is $1.73, up 2.8% today and up 162% over the past 12 months.

Morgans maintained its trim rating on this ASX lithium mining share after Liontown released a 2Q FY26 update in the last week of January.

The broker increased its 12-month share price target on Liontown from 89 cents to $2.

Morgans commented:

2Q26 result beat expectations on production and costs.

Balance sheet de-risked following LG Energy Solution’s election to convert its US$250m convertible notes into equity, removing debt and strengthening flexibility despite dilution.

Maintain TRIM with much of the near-term upside factored into its share price.

The post 3 ASX mining shares to sell: experts appeared first on The Motley Fool Australia.

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

I like to own ASX shares that are growing, but I also like to own ones that pay dividends because it’s a way for investors to benefit from the rising profits these businesses are generating.

Ideally, we don’t want to trigger any capital gains tax (CGT) events if we don’t need to, because that can mean handing over money to the ATO unnecessarily, disrupting the compounding potential of the portfolio.

I’m going to talk about two ASX shares that I’ve long-admired. I’m expecting rising profits and dividends from them over the long-term.

Australian Ethical Investment Ltd (ASX: AEF)

Australian Ethical describes itself as one of Australia’s leading ethical investment managers. It aims to provide investors with investment management products that align with their values and provide long-term, risk-adjusted returns.

One of the main reasons why I think this business is such a compelling fund manager is because it provides customers with a superannuation option. This is compelling due to the consistent contributions that Aussies make to their superannuation, giving the company regular net inflows.

In the update to 31 December 2025, the company reported that it finished the period with funds under management (FUM) of $14.1 billion, with the business experiencing $0.11 billion of net inflows in its superannuation segment.

The company has been working on delivering efficiencies and scalability, which will hopefully help its margins in the coming years.

The ASX share has also pointed out that it continues to be recognised for its leadership in ethical investing, winning Money Magazine’s 2026 best of the best awards for the best ESG superannuation product and best ESG pension product.

The forecast on CMC Invest suggests the business could pay an annual dividend per share in FY26, which would be a grossed-up dividend yield of 5.9%, including franking credits (at the time of writing).

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second-largest funeral operator in New Zealand and Australia. At the last count, it has 208 locations, including 41 cremation facilities and nine cemeteries.

One of the main tailwinds for the business is that death volumes are expected to increase in the coming years because of a growing and ageing population.

According to Propel, Australian death volumes are expected to increase by an average of 2.8% per year between 2025 to 2035 and 2.4% per year between 2036 to 2045. In New Zealand, death volumes are expected to increase by 2% per year between 2026 to 2035 and then 1.8% between 2036 to 2045.

The ASX share had a market share of 9% in 2024, compared to InvoCare’s 21% market share. There is room for the company to expand its position in ANZ with both organic growth and acquisitions.

In the first quarter of FY26, the company delivered 3% growth of both revenue and operating profit (EBITDA) year-over-year. It benefited from a 2.7% rise of the average revenue per funeral and a 1% increase in funeral volumes.

According to the forecast on CMC Invest, it’s expected to pay an annual dividend per share of 15.5 cents in FY27, which would be a grossed-up dividend yield of 4.5%, including franking credits (at the time of writing).

The post 2 ASX shares that I rate as buys for both growth and dividends appeared first on The Motley Fool Australia.

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

The Treasury Wine Estates Ltd (ASX: TWE) share price is higher on Tuesday after the company released a market update.

At the time of writing, the Treasury Wine share price is up 6.38% to $5.50. That move offers some short-term relief, but it comes against a sobering backdrop. The stock is still down roughly 50% over the past year after this month’s brutal sell-off.

Let’s take a closer look at the release.

A long-running US issue finally resolved

In a statement to the ASX, Treasury Wine said it has reached a settlement with Republic National Distributing Company (RNDC) in California. The agreement follows RNDC’s decision to exit the California market last year.

Under the agreement, Treasury Wine will repurchase its Treasury Americas portfolio inventory held by RNDC in California at original sale value. While the financial terms of the settlement are confidential, management said the agreement compensates the group for the disruption caused by RNDC’s withdrawal.

Treasury expects the net cash outflow related to this settlement in the first half of FY26 to be around US$65 million. That figure already factors in the expected resale of the inventory to other customers.

Earnings guidance edges higher

Alongside the settlement update, Treasury Wine provided fresh earnings guidance.

The company now expects first-half FY26 EBITS of approximately $236 million. That compares favourably with its previous guidance range of $225 million to $235 million issued in December.

While the upgrade is modest, it indicates conditions are tracking better than some investors had feared.

Management also confirmed the settlement does not change plans to gradually reduce distributor inventory levels in California over the next two years, a process already flagged to the market.

The US business is stabilising

Treasury Wine will continue working with RNDC across other US markets and highlighted that RNDC remains a committed distribution partner outside California.

Notably, Treasury Americas depletions in RNDC-distributed states grew 2.7% in the first half. That indicates demand for the company’s portfolio remains relatively resilient, despite wider pressure across the US wine market.

The company will provide more details when it releases its interim results on 16 February.

A bounce after heavy selling

The positive update has lifted the shares in early trade, but the move follows an extended period of weakness.

Treasury Wine’s shares have been in a steady downtrend for months, weighed down by softer US demand, margin pressure, and investor concerns around inventory levels.

From a technical perspective, the stock remains well below its levels from early last year. As a result, many investors are likely waiting for clearer evidence of a sustained turnaround before becoming more confident.

Foolish Takeaway

Today’s update removes a key operational overhang, but it does not change the broader challenges facing the business.

After a steep decline over the past year, Treasury Wine’s upcoming results will show whether recent US stabilisation can support a sustained recovery.

The post Why Treasury Wine shares are rising today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.

PLS Group Ltd (ASX: PLS) shares are leaping higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock formerly known as Pilbara Minerals closed yesterday trading for $4.17. In morning trade on Tuesday, shares are changing hands for $4.39 apiece, up 5.2%.

For some context, the ASX 200 is up 0.6% at this same time.

Here’s what’s catching investor interest today.

PLS shares lift on Canmax lithium deal

Before market open this morning, PLS announced that it has inked a multi-year offtake agreement with Chinese-listed lithium-ion battery material manufacturer Canmax Technologies Co Ltd (SHE: 300390).

The binding two-year agreement will see PLS supply Canmax with 150 thousand tonnes a year of spodumene concentrate.

PLS shares look to be catching some added tailwinds with the company reporting it has the option to supply additional volumes, as well as an option to extend the agreement for a third year.

The miner noted that its ability to increase volume based on its own discretions gives it the flexibility to respond to evolving market conditions and customer requirements across its portfolio.

The ASX 200 lithium stock will receive a floor price of US$1,000 per tonne (SC6 basis) from Canmax. PLS noted there is no upside price limitation. This provides the miner with downside protection while maintaining full upside leverage should prevailing lithium market prices rise.

As part of the deal, PLS will also receive a US$100 million unsecured interest-free prepayment. That money will be repaid via the spodumene concentrate to be sold to Canmax under the offtake agreement.

The ASX 200 lithium miner said it has the flexibility to supply the new offtake commitments from its Pilgangoora Operation, located in Western Australia.

What did management say?

Commenting on the agreement with Canmax that’s boosting PLS shares today, CEO Dale Henderson said, “This agreement builds on our established relationship with Canmax and reflects both the quality and consistency of Pilgangoora’s spodumene and PLS’ proven capability as a reliable, large-scale operator.”

Hernderson added:

The US$100 million interest-free prepayment and floor price structure demonstrate strong commercial confidence in our product and performance, while preserving full exposure to price upside.

The agreement strengthens our near-term liquidity and preserves operational flexibility through optional volumes, supporting disciplined production and sales decisions as lithium market fundamentals continue to improve.

Deepening our partnership with Canmax further diversifies our customer base and reinforces PLS’ position as a leading, reliable supplier at scale to the lithium materials market.

With today’s intraday gains factored in, PLS shares are up 99.6% in a year and up 285.1% since posting one-year closing lows on 3 June.

The post Up 285% since June, PLS shares lifting off today on multi-year lithium offtake agreement appeared first on The Motley Fool Australia.

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

ASX dividend shares that increase their payout every year could be the reassuring picks that passive income investors are looking for.

A rising payout will offset inflation, boost the amount of cash in investors’ bank accounts, and should signify a rising underlying value (whether that’s rising profits or a larger net asset value (NAV)).

The two businesses below are building a very impressive dividend record.

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

This business currently has the longest-running dividend growth streak. If it keeps increasing the payout, then it will always have the best record on the ASX. The investment house has hiked its regular annual dividend payout every year since 1998, so it’s getting close to 30 years of continuous increases.

There are some US companies that have increased the annual payout for more years in a row than Soul Patts, but I think the ASX dividend share holds one key advantage.

It owns a diversified portfolio of investments across a range of industries. Soul Patts is not stuck with operations in a single industry like a lot of businesses. It’s in resources, telecommunications, industrial properties, building products, financial services, swimming schools, credit, agriculture and plenty more.

That portfolio of investments pays Soul Patts with cash flow each year, allowing it fund a growing dividend and make new investments with the retained amount.

I think this business has the best chance of continuing to grow its payout out of all S&P/ASX 200 Index (ASX: XJO) shares.

At the current Soul Patts share price, I think it could pay a grossed-up dividend yield of around 4%, including franking credits in FY26.

Universal Store Holdings Ltd (ASX: UNI)

This is one of the impressive operators in the retail space when it comes to dividends, in my view. It started paying an annual dividend in FY21 and has increased its passive income each year since then, which not many retailers have done.

There are a few businesses within this ASX dividend share – Universal Store, Perfect Stranger and CTC. The impressive growth of Universal Store and Perfect Stranger has allowed the business to fund that dividend growth.

In FY25, group sales grew 15.5%, with Universal Store sales growth of 15% to $280.9 million and Perfect Stranger sales growth of 83.1% to $25.5 million. This helped earnings per share (EPS) rise by 14.6% to 45.4 cents per share, funding an 8.5% rise of the dividend per share to 38.5 cents.

At 30 June 2025, the business had 111 physical store locations, including 84 Universal Store locations and 19 Perfect Stranger stores. It has an ambition of 100 or more Universal Store locations and at least 60 Perfect Stranger stores.

FY26 has started well – in the first 17 weeks of FY26, Universal Store total sales were up another 11.4% and Perfect Stranger total sales were up 40.5%.

According to the forecast on CMC Invest, the ASX dividend share is projected to pay an annual dividend per share of 39 cents in FY26. That translates into a potential grossed-up dividend yield of 6.5%, including franking credits.

The post 2 ASX dividend shares raising dividends like clockwork appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in 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 Australia has recommended Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Share prices of over $100 can feel daunting, particularly for new investors. But if the value is there, there is no reason not to consider owning fewer shares at a higher price point. Here are five ASX stocks currently priced at over $100 that remain good value.

CSL Ltd (ASX: CSL)

Australian-based multinational biopharma powerhouse, CSL, has long been an investor darling, known for its reliable returns and healthy dividends.

Twelve months ago, it was trading around the $270 mark. Today, it is sitting at around $180 per share. This swing is likely driven by its revenue downgrades for FY2026 in October, investor concerns about efficiencies as the company looks to restructure, and changes in vaccination behaviour in the US.

For me, this presents a rare opportunity for long-term investors. Despite some recent upheaval, CSL boasts a strong track record of consistent execution, solid earnings, a defensive moat, and a robust growth pipeline – excellent fundamentals that suggest this could be a short-term drop.

Macquarie Group Ltd (ASX: MQG)

Diversified financial services powerhouse, Macquarie Group, has been a solid performer for decades. And this is reflected in its share price performance, which is up 50% over the last five years. But in the last year, it has seen some small declines, down 6%, which may be your opportunity to buy into a quality investment.

Despite prices remaining above the $200 mark, I think upside remains. Macquarie Group offers a solid long-term growth outlook, an attractive dividend profile, and positioning as a market leader in several high-growth industries, including infrastructure and renewable energy.   

REA Group Ltd (ASX: REA)

Market leader, REA, is best known to consumers for the popular realestate.com.au property search website. It also offers commercial property search, mortgage broking, and property data services, with revenue streams in Australia and Asia.

Over the last year, it has experienced share price declines of around 35%, from around $270 in early February 2025 to below the $170 mark in early February 2026. The fall has been potentially spurred by several factors, including softer listing volume in 2025, earnings pressure, and investor concern about its high valuation.

That said, it continues to deliver solid results. Analysts can see the upside at current prices, as can the company itself, if recent buybacks are anything to go by.

If you’re thinking about making a move on REA, you have an attractive entry point right now.

Cochlear Ltd (ASX: COH)

Implantable hearing device pioneer Cochlear has been leading the way in treating hearing loss for over 40 years. It is widely known for its disciplined approach, characterised by low debt, solid capital management, and consistent cash generation.

In the last 12 months, it too has seen some share price declines, dropping 18%. It’s likely these were mostly driven by concerns about high valuations, given that Cochlear continues to deliver impressive results.

And conditions are ripe for this market leader to continue delivering in the long term. It already has robust global operations that generate the majority of its revenue, and that’s likely to grow given the world’s ageing population. In fact, the World Health Organization predicts that 1 in 10 people globally will require hearing intervention by 2050, up from 1 in 20 today.

For me, Cochlear’s recent share price falls are likely short term and provide an excellent opportunity for investors looking to get in on a quality stock with a long-term runway for success.

Pro Medicus Ltd (ASX: PME)

Pro Medicus is a leading provider of radiology and imaging software to hospitals and imaging companies. Its dominant position in the market, capital-light SAAS model, and notable customer retention rates have all made it an investor favourite.

It has experienced significant share price volatility over the last 12 months, dropping from circa $285 a year ago to around $160 right now. This was likely driven by broader softening in the tech sector and overvaluation concerns amongst investors.

Right now, for me, it’s a buy. It has exceptional financials, a positive long-term outlook, and is successfully growing its footprint in the lucrative US market. In an industry that is being reshaped by AI, Pro Medicus is poised to continue delivering.

The post 5 ASX stocks that are still good value at over $100 a share appeared first on The Motley Fool Australia.

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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 CSL, Cochlear, and Macquarie Group. 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 Macquarie Group. 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.

Codan Ltd (ASX: CDA) shares were one of the standouts in 2025. And the tech company hasn’t disappointed so far this year, surging 27%.

Codan shares opened the trading week with a gain of 4.4% to $36.10.

That move caps a stunning run. Codan shares are now up 121% over the past 12 months, cementing their place among the ASX’s top-performing tech stocks.

So, what’s powering the rally — and is there still upside left?

Tech, just not the usual kind

Codan isn’t your standard ASX tech darling. Based in Adelaide, it runs a dual-engine business spanning communications and metal detection. It’s a rare combo that gives it leverage to both defence budgets and goldfields.

Right now, that mix is paying off.

The communications arm has become the real growth engine for Codan shares. It designs mission-critical communications systems, drones, and defence and public-safety equipment. As global defence spending ramps up, Codan is steadily reducing its reliance on the boom-and-bust cycles of gold prospecting.

That said, Minelab still matters — a lot. Acquired nearly 20 years ago, the brand remains a global leader in metal detection, with products used by everyone from weekend gold hunters to humanitarian demining teams and security agencies.

Gold, growth, and a dream run

Codan shares were on fire in 2025, and they’ve been keeping the rally alive in the first weeks of the new year. In January, the $6.3 billion tech stock surged to fresh all-time highs. This came after the company delivered a standout first-half FY26 trading update.

The company expects group revenue of approximately $394 million for the half. This represents a growth of around 29% compared to the prior corresponding period. Underlying net profit after tax (NPAT) is expected to be at least $70 million, up roughly 52% year on year.

The next test Codan faces will be when it reports the first-half results on 19 February. Any further gains will likely depend on Codan delivering solid margins and cash flow. 

Valuation reality check

Now, valuation looks like the pressure point. After such a blistering run, some analysts are increasingly warning that a lot of the good news may already be priced in.

Broker sentiment has cooled noticeably. Most now see Codan shares trading closer to fair value, with consensus recommendations sitting around neutral.

The average 12-month price target of $39.01 implies 8% upside from current levels.

Bell Potter lifted its earnings forecasts and valuation after the Codan trading update in mid-January. However, the broker believes the ASX share is now fairly priced after its strong rally.

It has reiterated its hold rating and raised its price target to $36.70, up from $27.80. This is broadly in line with the current share price of around $36.10.

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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.

For more than a decade, US stocks have done the heavy lifting for global equity returns. 

From Big Tech dominance to relentless earnings growth, American markets have rewarded investors who stayed the course.

However, thoughtful investors know markets move in cycles. Leadership changes. And when one region stumbles or simply delivers more modest returns, others can quietly step into the spotlight.

That is where emerging markets may come back into focus and why this ASX ETF could be an opportunity if US stocks disappoint.

A strong but narrowing US run

There is no denying the strength of the US markets in recent years. In 2025, American shares delivered a better-than-average year, supported by resilient consumer demand, strong corporate balance sheets, and the obvious enthusiasm for artificial intelligence and productivity gains. ETF investors did well, with total returns, including dividends, of 17.88% for the 2025 calendar year.

However, that performance has also led to concentration risk. A small number of mega-cap companies now account for a significant share of index returns. Valuations were elevated by historical standards, and expectations for continued earnings growth are high in 2026.

If those expectations are merely met — rather than exceeded — future returns may be more subdued.

This does not mean US stocks are destined to fall. It simply raises a reasonable “what if” question for long-term investors building diversified portfolios.

Emerging markets quietly outperformed in 2025

While US stocks captured headlines, emerging markets delivered a quietly impressive year in 2025.

Across Asia, Latin America, and parts of Eastern Europe, equity markets benefited from easing inflation pressures, stabilising interest rates, and improving economic momentum. In several regions, earnings growth outpaced developed markets, helped by younger populations, rising consumption, and improving productivity.

Importantly, emerging markets entered 2025 from a position of relative valuation discount after years of underperformance. That combination — improving fundamentals and lower starting valuations — helped produce returns that rivalled, and in some cases exceeded, those of the US.

Why 2026 could keep the theme alive

Looking ahead to 2026, several structural factors continue to support the emerging markets case.

Many emerging economies now have healthier balance sheets than in past cycles, with higher foreign exchange reserves and more flexible currencies. Supply chains are also diversifying, with manufacturing, energy, and technology investment spreading beyond traditional developed markets.

At the same time, demographic trends remain favourable. Growing middle classes across Asia and parts of Latin America continue to drive demand for housing, healthcare, financial services, and technology.

None of this guarantees another strong year. But it does suggest emerging markets remain relevant for investors thinking beyond a single economic cycle.

One simple way to gain exposure

For Australian investors, the iShares MSCI Emerging Markets ETF (ASX: IEM) offers a straightforward way to access this theme.

Rather than betting on individual countries or companies, the ETF provides broad exposure across dozens of emerging economies and hundreds of businesses. That diversification matters in a region where political, regulatory, and economic conditions can change quickly.

For long-term investors, it can act as a complement to US-heavy portfolios, helping reduce reliance on a single market driving returns.

Foolish Takeaway

This is not a call to abandon US stocks. They remain home to some of the world’s strongest businesses.

However, if US markets deliver more modest returns in the years ahead, emerging markets could matter a lot more than many investors expect. Having diversified exposure in place before leadership changes is often easier than reacting after the fact.

The post If US stocks disappoint, this overlooked ASX ETF could matter a lot more appeared first on The Motley Fool Australia.

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Motley Fool contributor Leigh Gant 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.