ASX small-cap shares are often some of the most exciting ideas to buy because of how they may be undervalued relative to their potential.

Many of the largest companies have reached a mature stage where revenue growth is now fairly subdued. Smaller companies are much earlier on in their growth journey, so there’s much more compounding potential for earnings to grow in the future.

The business I’m going to highlight today is Beacon Lighting Group Ltd (ASX: BLX). It’s one of the top picks inside the investment portfolio of WAM Microcap Ltd (ASX: WMI), a listed investment company (LIC) that targets some of the smallest ASX stocks to generate returns for shareholders.

The WAM investment team recently highlighted why they think the business is an opportunity.

Accelerating sales momentum for the ASX small-cap share

The Beacon Lighting share price has taken a bit of a beating in recent times; it’s down by 42% over the past year, at the time of writing.

At this lower price, it could be undervalued, and WAM is attracted to the specialist residential and commercial lighting retailer.

In August 2026, the Beacon Lighting share price rose strongly (up 18.7%) after the release of its FY26 results.

That 2026 annual report showed record underlying sales of $340.3 million and continued momentum across its growing trade division.

FY26 trade sales grew by 14.5% during the year and represented more than 43% of relevant sales, which highlighted the “success of the company’s strategy to expand its exposure to commercial customers”.

The WAM investment team also noted that the Beacon Lighting share price responded positively to accelerating sales momentum, with comparable store sales increasing 7.1% in the fourth quarter of FY26.

Wilson Asset Management said that this momentum has continued into the start of the 2027 financial year.

The fund managers and analysts overseeing WAM Microcap remain positive on Beacon Lighting Group’s outlook, citing its strong balance sheet and multiple growth opportunities, including store expansion, digital initiatives, and increased trade penetration.

What is the Beacon Lighting valuation?

According to the projection on CMC Invest, the ASX small-cap share is valued at 14 times FY27’s estimated earnings. The business is also projected to pay an annual dividend that equates to a dividend yield of 4.25% excluding franking credits and 6.1% including franking credits.

The forecast on CMC Invest suggests the business could see further earnings growth in FY28, with potentially 10% profit growth. The dividend could also increase again.

At those valuations, I can see why WAM thinks the ASX small-cap share is a compelling buy.

The post An ASX small-cap share to buy for its bright future appeared first on The Motley Fool Australia.

More reading

• Beacon Lighting Group share price jumps 14%: FY26 profit drops despite higher sales

Motley Fool contributor Tristan Harrison has positions in Wam Microcap. 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.

The Meridian Energy Ltd (ASX: MEZ) share price is in focus after the company reported national hydro storage rising to 155% of average and total August generation up 21.1% on last year.

What did Meridian Energy report?

• National hydro storage at 155% of historical average by 7 September 2026 (from 128% a month prior)
• South Island storage reached 178% of average; North Island storage fell to 79% of average
• August 2026 generation was 1,432 GWh, up 21.1% year on year
• Meridian’s August inflows were 145% of average, supported by wet conditions in the South Island
• Retail sales volumes in August dropped 4.7% compared to the same month last year
• Average generation price received fell 62.3% year on year in August

What else do investors need to know?

August saw record peak electricity demand in New Zealand, with Meridian and its peers supporting the grid through strong renewable generation and battery systems. Despite the headline drop in retail volumes, large business segment sales climbed by 5.1% compared to August 2025.

The company’s hydro catchments remain healthy, with Waitaki storage at 161% of historical levels and Waiau at 172% by month’s end. El Niño conditions are strengthening, which may mean drier conditions overall, but could also bring extra rainfall to the hydro catchments.

What did Meridian Energy management say?

Chief Executive Mike Roan said:

We and the sector comfortably met that demand peak in early August, through high renewable generation and the system benefits of North Island batteries. It was another sign of a system that’s performing extremely well.

El Niño conditions continued to strengthen through August, and are building further, supporting Meridian’s high winter-end storage levels. While El Niño may bring dry conditions, particularly in eastern regions, it can also bring increased rainfall to our hydro catchments, so we’re optimistic of maintaining strong hydro storage through the summer.

What’s next for Meridian Energy?

Looking ahead, Meridian expects its high hydro storage to provide flexibility heading into summer, even as El Niño weather patterns develop. The company continues to monitor regional rainfall closely while keeping an eye on electricity demand and market pricing.

Ongoing investments in hydro and wind capacity, as well as battery infrastructure, should help Meridian stay resilient and adaptable in New Zealand’s changing energy landscape.

Meridian Energy share price snapshot

Over the past 12 months, Meridian Energy shares have declined 14%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post Meridian Energy reports record hydro storage and August generation growth appeared first on The Motley Fool Australia.

More reading

• ASX 200 utilities shares gained 7% while the broader market fell heavily last week

Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

National Australia Bank Ltd (ASX: NAB) shares may be a compelling pick for dividends for the foreseeable future.

Banks can be useful for passive income because they often offer a generous dividend payout ratio and trade at a relatively low price-to-earnings (P/E) ratio compared to other sectors.

NAB’s dividend yield is typically materially higher than that of Commonwealth Bank of Australia (ASX: CBA), making NAB more appealing.

We’re going to take a look at how big the NAB dividend could be in the coming period and what it would take to generate $9,000 of passive income.

NAB dividend projection

The ASX bank share has provided investors with a steady, slightly growing dividend over the last few years. The bank’s consistent dividends have been pleasing, and analysts expect further solid payouts.

According to Commsec’s projection, the business is expected to pay an annual dividend of $1.72 per share in FY27, a 1.2% year-over-year increase from FY26.

Dividend growth isn’t guaranteed, but I think any growth is attractive in the current economic climate. Credit growth looks more challenging amid the Australian taxation changes and higher interest rates.

The biggest portion of NAB’s earnings comes from lending to businesses. However, a weaker economic environment can be challenging for that segment.

If NAB does pay an annual dividend per share of $1.72 in FY27, that would be a dividend yield of 4.5% excluding franking credits and 6.3% including franking credits.

That’s more passive income than what an Australian could get from a term deposit.

Let’s take a look at what it would take to unlock $9,000 of annual passive income by owning NAB shares throughout FY27.

$9,000 passive income from the ASX bank shares

If investors are willing to own enough NAB shares, it could lead to significant passive income from the ASX bank share.

To generate $9,000 of passive income from NAB, if it pays $1.72 per share, an investor would need to own 5,233 NAB shares for that level of passive income cash.

However, if we also include franking credits in the income goal, an investor would need to own only 3,663 NAB shares.

NAB is certainly a potential option for dividends, but is the NAB share price actually an attractive opportunity?

According to the Commsec collation of analyst recommendations, there are currently 16 ratings. Four of them are a sell, nine of them are a hold and three are a buy rating.

Therefore, it seems like there are better ASX share opportunities out there worth choosing first.

The post How many NAB shares do I need to buy for $9,000 of passive income? appeared first on The Motley Fool Australia.

More reading

• Is the NAB share price a buy at $38.48?
• Here are the top 10 ASX 200 shares today
• 9 ASX shares just upgraded by the experts
• ASX 200 dives to a 6-week low. What’s behind today’s sell-off?
• How much superannuation do I need to earn $100 a day in passive income?

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 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.