The Zip Co Ltd (ASX: ZIP) share price had a month to forget in January.

Over the month just past, the S&P/ASX 200 Index (ASX: XJO) gained 1.8%.

As for Zip, shares in the ASX 200 buy now, pay later (BNPL) stock closed out December trading for $3.29. When the closing bell sounded on 30 January, shares were changing hands for $2.65 apiece.

This put the Zip share price down a painful 19.4% over the first month of 2026. And it saw the stock take the ignominious title of the worst performer on the ASX 200 in January.

So, what went wrong for the BNPL stock?

Why did the Zip share price come under pressure?

There was no fresh news out from the company in January that would have been likely to spook investors.

In fact, you might have expected the Zip share price to get a boost after United States President Donald Trump announced his desire to impose a 10% cap on credit card interest rates.

As credit card companies and BNPL companies are directly competing for the same customers, an interest rate cap could see credit card companies impose stricter lender criteria, which could lead to customers turning to the services offered by companies like Zip.

So, I think there are two more basic reasons why Zip stock went backwards in January.

First, the stock has been on an absolute tear since plumbing one-year plus lows of $1.19 on 7 April last year.

Running the maths, at the $3.29 31 December closing price, shares had surged 176.5% from those lows. So, some profit-taking is not unexpected. And even at January’s closing price, investors who bought at the low would still have been sitting on gains of 122.7%.

The second reason I think the Zip share price took a hit in January is the outlook for interest rates in the company’s core markets of the US and Australia.

As you’re likely all too aware, rates in Australia may well go up (perhaps even later today following the RBA meeting). And while we may see some more easing from the US Federal Reserve, January saw the market pare back the odds of multiple rate cuts from the world’s most influential central bank.

That’s important because BNPL stocks like Zip have proven to be highly sensitive to interest rate moves.

What’s been sending the ASX 200 BNPL stock soaring?

With the Zip share price currently back up to $2.74, the stock is up 20.4% over 12 months and up 129.8% from its April lows.

Investors have taken note of the company’s rapid growth potential. Zip reported a 98.1% year-on-year increase in its Q1 FY 2026 cash earnings before interest, tax, depreciation and amortisation (EBTDA) to $62.8 million.

The company also reported a 5.3% increase in its active customers to 6.4 million.

The post Why did the Zip share price crash 19% in January? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Why 4DMedical, DroneShield, New Hope, and Zip shares are pushing higher today
• Where I would invest $2,000 in ASX shares in February
• These were the worst-performing ASX 200 shares in January
• Down 40% to 50%! Why I think these ASX growth shares are strong buys

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.

When I think about holding a S&P/ASX 200 Index (ASX: XJO) share for a decade or more, I’m not looking for something that just looks cheap today. I’m looking for businesses with long runways, clear competitive advantages, and markets that are big enough to support years of growth without relying on perfect execution.

With that mindset, these are three ASX 200 shares I’d be very comfortable buying and holding until at least 2036.

ResMed Inc (ASX: RMD)

ResMed operates in one of the most attractive long-term healthcare markets globally, in my opinion.

Sleep apnoea and respiratory conditions remain significantly underdiagnosed. Estimates suggest over a billion people worldwide could benefit from treatment, which gives ResMed a very large and still expanding addressable market. Add ageing populations and rising awareness of sleep health, and the structural tailwinds are hard to ignore.

What makes ResMed especially compelling to me is that it is no longer just selling devices. Its connected hardware, software platforms, and digital health ecosystem mean recurring data-driven revenue is becoming more important over time. That deepens customer relationships and raises switching costs.

For a 10-year-plus investment, I like that combination of essential healthcare demand, global scale, and increasing operating leverage.

Xero Ltd (ASX: XRO)

Xero is one of the clearest long-term growth stories on the ASX, in my view.

The company operates in the global small business and accounting software market, which spans millions of small and medium-sized enterprises worldwide. Even in Xero’s core markets, penetration is still far from complete, and international opportunities, particularly in the US, remain substantial.

What stands out to me is how embedded Xero becomes once a business adopts it. Accounting software sits at the centre of financial operations. Switching is disruptive, which creates strong retention and recurring subscription revenue.

Over a decade-long timeframe, I think the opportunity isn’t just more customers. It’s deeper monetisation through payments, payroll, lending integrations, and ecosystem services. If Xero continues executing, the market opportunity in front of it is far larger than its current revenue base.

Hub24 Ltd (ASX: HUB)

Hub24 may be smaller than the other two, but I think this ASX 200 share’s long-term opportunity is just as compelling.

Hub24 operates in Australia’s wealth management platform market, which oversees trillions of dollars in household savings. While Hub24 is already a major player, it still controls only a modest share of total funds under administration, leaving plenty of room for growth.

The structural shift toward fee transparency, platform-based investing, and professional financial advice continues to work in Hub24’s favour. As advisers consolidate platforms and focus on efficiency, Hub24’s technology-led approach and strong adviser relationships position it well.

What I particularly like for a long-term hold is the operating leverage in the model. As funds under administration grow, revenue tends to scale faster than costs. Over 10 years, that can translate into very strong earnings growth if market inflows remain supportive.

Foolish Takeaway

ResMed, Xero, and Hub24 operate in different industries, but they share some important traits. Each has exposure to a large and growing market, strong competitive positioning, and business models that reward patience.

I wouldn’t expect a smooth ride every year. Markets change, sentiment shifts, and short-term disappointments are inevitable. But if I were building a portfolio to hold until at least 2036, these are exactly the kinds of ASX 200 shares I’d want on my side.

The post 3 super ASX 200 shares I would buy and hold until at least 2036 appeared first on The Motley Fool Australia.

More reading

• Why Morgans just upgraded ResMed shares
• Xero shares charge higher on big AI and US update
• Xero highlights AI progress and Melio momentum in US market update
• 5 things to watch on the ASX 200 on Tuesday
• Xero shares hit a multi-year low. Is now the time to buy?

Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24, ResMed, and Xero. The Motley Fool Australia has positions in and has recommended ResMed and Xero. The Motley Fool Australia has recommended Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Xero Ltd (ASX: XRO) shares are rising on Tuesday morning.

At the time of writing, the cloud accounting platform provider’s shares are up 3% to $96.51.

Why are Xero shares rising?

Investors have been buying the company’s shares after it outlined its long-term growth opportunity in artificial intelligence (AI) and the United States, giving investors more confidence in where the business is heading next.

Xero released the update ahead of an investor briefing, where it will provide detail on its AI strategy and the progress it is making in the large and competitive US accounting and payments market.

While there was a lot of information in the announcement, the key message was that Xero believes it has a clear pathway to drive stronger growth by combining accounting, payments, and AI on one global platform.

Artificial intelligence push

At the centre of the update was Xero’s approach to artificial intelligence. Management said the company is already using AI and machine learning across its platform and now sees a much larger opportunity as it moves from being a “system of record” to a “system of action and decision making” for small businesses.

This means using AI to automate routine tasks, surface insights, and help customers make better decisions faster.

Xero revealed that more than two million subscribers are already benefiting from its AI features, with over 300,000 using newer generative AI tools launched last year. These tools are helping customers save time, manage their businesses more effectively, and unlock growth opportunities, which management believes will support higher engagement and, over time, monetisation.

United States market

The other major focus was the United States, where Xero is aiming to significantly scale its presence. This strategy has been strengthened by the recent acquisition of US-based payments platform Melio, which allows Xero to bring accounting and payments together in one offering.

Since completing the deal in October, Xero has begun integrating Melio into its US operations, embedding bill payments into the Xero platform and unifying sales and go-to-market teams.

Importantly for investors, management provided more clarity on the financial trajectory of Melio. It advised that Melio is expected to reach adjusted EBITDA breakeven on a run-rate basis in the second half of FY 2028.

Guidance update

Xero also reiterated its existing FY 2026 guidance. Total operating expenses as a percentage of revenue is expected to be around 70.5%, including Melio. This ratio is expected to be lower in the second half of FY 2026 compared to the first half.

Management also reaffirmed its FY 2028 aspirations outlined in June, as part of the Melio acquisition.

Those aspirations are that the combined business is expected to significantly accelerate US revenue growth and gives Xero the opportunity to more than double its FY 2025 group revenue in FY 2028, excluding anticipated revenue synergies.

This outcome is expected to support Xero’s aspiration to deliver greater than Rule of 40 outcomes in FY 2028.

The post Xero shares charge higher on big AI and US update appeared first on The Motley Fool Australia.

More reading

• 3 super ASX 200 shares I would buy and hold until at least 2036
• Xero highlights AI progress and Melio momentum in US market update
• Xero shares hit a multi-year low. Is now the time to buy?
• Why analysts say Hub24, New Hope, and Xero shares are buys
• 2 ASX shares highly recommended to buy: Experts

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

ASX blue-chip shares can be some of the safest and most reliable investments on the ASX thanks to their market position, brand power and scale.

The businesses I’m going to talk about can provide the stability that investors are after.

I’m also expecting both of the following ASX blue-chip shares to provide investors with good passive income in FY26 and beyond.

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a listed investment company (LIC) that targets large businesses to generate investment returns for the portfolio. It aims to actively invest in the highest-quality Australian companies.

So, instead of just being one ASX blue-chip share, it owns a portfolio of shares.

Some of the businesses that it owns a larger position in compared to the ASX share market’s position sizing include Rio Tinto Ltd (ASX: RIO), Fortescue Ltd (ASX: FMG), Alcoa Corporation (ASX: AAI), James Hardie Industries plc (ASX: JHX) and Medibank Private Ltd (ASX: MPL).

As a company, the board of directors can declare the size of the dividend they want to pay, as long as there is a profit reserve to support the payout. WAM Leaders’ portfolio has delivered an average return of 12.1% per year since inception in May 2016 (before fees, expenses and taxes), outperforming its ASX share benchmark by close to an average of 3% per year, which is an impressive record, in my view.

At 31 December 2025, the LIC had built up its profit reserve to 27.4 cents per share, which is enough to pay a dividend close to three years at the size of the FY25 payout. It has increased its annual dividend every year between FY17 and FY25, which is a pleasing record of consistency.

Its FY25 annual dividend translates into a grossed-up dividend yield of approximately 10%, including franking credits. I’m optimistic about slight dividend increases in the coming years.

Transurban Group (ASX: TCL)

Transurban is one of the largest toll road businesses in the world, with roads in Sydney, Melbourne, Brisbane and North America.

Growing populations in cities are a good tailwind for Transurban’s ASX blue-chip share, increasing average daily traffic (ADT) on its roads. In the first quarter of FY26, group ADT rose 2.7% year-over-year, with Sydney ADT up 1.7%, Melbourne ADT up 3.2% year-over-year, Brisbane ADT up 2.6% and North America ADT up 6.8%.

Additionally, the business occasionally completes a new road (such as WestConnex or the West Gate Tunnel project) that can increase its potential to serve traffic and increase the volume of tolls.

The business is also benefiting from rising tolls over time, which is a promising outlook for revenue and earnings growth. The ASX blue-chip share is planning to increase its distribution per security by 6% in FY26 to 69 cents. That translates into a forward distribution yield of approximately 5%.

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

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• The smartest ASX dividend shares to buy with $1,000 right now
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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 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.

ASX All Ords gold stock Barton Gold Holdings Ltd (ASX: BGD) is edging lower today.

Barton Gold shares closed yesterday trading for $1.130. In early morning trade on Tuesday, shares are swapping hands for $1.125 apiece, down 0.4%.

For some context, the All Ordinaries Index (ASX: XAO) is up 1.1% at this same time.

But today’s underperformance is not par for the course for the Aussie gold miner.

Taking a step back, the Barton Gold share price has gained 301.8% over 12 months, smashing the 6.2% one-year returns delivered by the All Ords.

As you’d expect, the ASX All Ords gold stock has enjoyed steady tailwinds from the surging gold price. Gold is currently trading for US$4,661 per ounce. While that’s down 14% from the near record US$5,417 that same ounce of gold was worth on 28 January, the gold price is still up a blistering 66% since this time last year.

And Barton Gold has been catching plenty of investor interest with its ongoing exploration programs.

ASX All Ords gold stock on the hunt for water

The Barton Gold share price has yet to get a boost after the miner announced that it has kicked off water bore drilling at its Tunkillia Gold Project, located in South Australia.

In May, the company’s Optimised Scoping Study (OSS) estimated annual production potential at Tunkillia of 120,000 ounces of gold and 250,000 ounces of silver.

With both gold and silver prices now exceeding the forecasts used in the OSS, the ASX All Ords gold stock said that it is expediting Tunkillia toward Mining Lease (ML) application.

In light of this, Barton Gold has engaged Underdale Drillers to complete some 900 metres of drilling for preliminary water testing near the OSS open pits. If the miner can locate additional nearby water sources, it could help both de-risk and improve the project economics.

Looking ahead, the company plans to commence a 28,000-metre second phase reverse circulation (RC) resource upgrade drilling campaign in March. Concurrently, it will run a 3,000-metre geotechnical & metallurgical diamond drilling (DD) program.

What did management say?

Commenting on the upcoming drilling programs that could help boost the ASX All Ords gold stock, Barton managing director Alexander Scanlon said:

The Tunkillia OSS demonstrated the financial and capital leverage available to large-scale bulk processing operations, with the major advantage of a higher-grade ‘Starter Pit’ that can pay back development costs 2x over in the first year.

With recent Resource upgrade drilling results further de-risking this profile, we are advancing our other development drilling programs in support of planned JORC Ore Reserves, a PFS, and a Mining Lease application by the end of 2026…

Our objective is to bring Tunkillia online as soon as possible to realise our gold production target of 150,000 ounces annually.

The post Up 302% in a year, why is this ASX All Ords gold stock now drilling for water? appeared first on The Motley Fool Australia.

More reading

• Considering ASX small-cap gold shares? Expert advice on how to decide

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.

S&P/ASX 200 Index (ASX: XJO) shares can be some of the best choices for passive income for retirees, thanks to the combination of a good dividend yield (helped by franking credits) and stability. I think the business Medibank Private Ltd (ASX: MPL) is one such opportunity at the larger end of the ASX share market.

Medibank is the largest private health insurer in Australia, with its Medibank and ahm brands, as well as a number of additional healthcare businesses.

Healthcare is a defensive sector that can provide resilient earnings for the company – people don’t choose when they need healthcare. Medibank is a good way to take a diversified approach to the sector without being overly exposed to any one service or treatment.

I think Medibank’s earnings are resilient and offer solid growth potential, which is the foundation for good dividends.

Dividend potential of the ASX 200 share

If I were a retiree, I’d want to own investments that I had a high degree of certainty that wouldn’t cut my passive income. If the payments are being increased, then they obviously aren’t being cut.

Medibank has increased its annual dividend per share each year since 2020 (which was affected by COVID-19 impacts). In fact, over the past decade, 2020 was the only year that the business implemented a dividend cut – in every other year it has hiked the payout.

In FY25, the ASX 200 share paid an annual dividend per share of 18 cents. That translates into a grossed-up dividend yield of 5.5%, including franking credits.

But, the past is the past. The next dividends are more important for retirees.

The projection on Commsec suggests the ASX 200 share could increase its payout to 20.2 cents per share, representing a year-over-year increase of 12.2%. That potential increase, translates into a grossed-up dividend yield of 6.25%, including franking credits.

The forecast on Commsec shows that the annual payout could grow by another 6.4% year-over-year to 21.5 cents per share. That would be a grossed-up dividend yield of 6.6%, including franking credits. That’d be a great yield for retirees, in my opinion.

So, ultimately, analysts are expecting the business to continue delivering investors rising passive income.

Rising earnings predicted

The most important thing to fund dividends is profit generation by the ASX 200 share.

Medibank has seen ongoing growth over the years of its Australian resident and non-resident policyholders, which is a strong tailwind for earnings. The acquisitions it has made in recent times add to its earnings power and diversify its profit base.

The prediction on Commsec suggests the business could generate earnings per share (EPS) of 24.9 cents in FY26 and then increase EPS to 26.3 cents in FY27.

That means it’s now trading at less than 19x FY26’s estimated earnings, which looks like an appealing valuation to me.

The post Why this ASX 200 share is a retiree’s dream 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 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.

Qoria Ltd (ASX: QOR) shares have returned from their trading halt with an almighty bang.

In morning trade, the ASX tech stock is up 50% to 50.5 cents.

Why is this ASX tech stock rocketing?

Investors have been fighting to get hold of the cyber monitoring company’s shares after it entered into a binding merger implementation deed with Aura Consolidated Group.

According to the release, the agreement will see Qoria acquired by Aura through an Australian scheme of arrangement, subject to the satisfaction of certain conditions and the listing of Aura on the Australian share market.

Aura is a US-based provider of intelligent online safety solutions to individuals and families. Its advanced suite of products includes all-in-one protection from identity theft, scams, and online threats, alongside tools that help parents protect children from predators, cyberbullying, and technology-driven mental health risks.

The two parties believe their combination will establish a world-leading safety and online security platform for home, work, and school, unlocking cross-market cross-sell potential and innovation scale.

They note that this platform is expected to deliver immediate value via an enhanced product distribution network, an expanded global portfolio, operational synergies, and robust cross-selling opportunities in a vast, growing addressable market.

What are the terms?

The ASX tech stock revealed that Aura will acquire all Qoria shares through an all-scrip deal at a price equivalent to 72 cents per share. This represents a 111% premium to where the company’s shares ended last week. Though, it is worth noting that due to a heavy decline in recent weeks, it is only marginally higher than where Qoria’s shares were trading a month ago.

Nevertheless, it values the combined business at approximately $3 billion.

The Qoria board is unanimously recommending shareholders vote in favour of the scheme. Each director intends to vote all their shares in favour of the scheme, subject to there being no superior proposal and the independent expert’s report.

The ASX tech stock’s managing director, Tim Levy, said:

The internet was created to connect us, yet online safety has eroded, making trust paramount for parents, guardians and organisations, in general, for the protection of our activities online. The combination of Aura and Qoria pioneers a lifelong digital safety ecosystem; a new category that meets the urgent need for technology, education, and trust to protect people – confidently and safely, throughout their entire lives.

Aura’s founder CEO, Hari Ravichandran, adds:

Today’s announcement marks a definitive step forward in our mission to deliver holistic online safety to everyone. In a world where our digital lives are fragmented across home, school, and work, threats easily exploit the gaps between them. By uniting Aura’s AI-powered protection with Qoria’s school safety leadership, we unlock a new standard of safety – seamless, continuous protection for every setting and stage of life.

The post ASX tech stock rockets 50% on Aura takeover deal appeared first on The Motley Fool Australia.

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• Bell Potter says this ASX stock can rebound 80% after its selloff
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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 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.

Neuren Pharmaceuticals Ltd (ASX: NEU) shares are having a tough time on Tuesday.

In morning trade, the ASX 200 healthcare share was down as much as 22% to $12.66.

The pharmaceuticals company’s shares have recovered a touch since then but remain down 12% at the time of writing.

Why is this ASX 200 healthcare share crashing?

Investors have been hitting the sell button today after it was dealt a major blow in Europe.

This morning, Neuren Pharmaceuticals advised that its licensee, Acadia Pharmaceuticals Inc. (NASDAQ: ACAD), has provided an update on its marketing authorisation application (MAA) for trofinetide for the treatment of Rett syndrome in the European Union (EU).

According to the release, Acadia was informed by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) of a negative trend vote on its MAA for trofinetide, following its recent CHMP oral explanation.

Subject to the outcome of the CHMP vote in February, Acadia intends to request a re-examination of the opinion by the CHMP upon its formal adoption.

Acadia’s CEO, Catherine Owen Adams, was disappointed with the news, but remains hopeful that approval will be achieved in time. She said:

While the negative trend vote is disappointing and not what we hoped for, we believe the strong data that supported the approval of trofinetide for the treatment of Rett syndrome in the United States, Canada, and Israel speak to the meaningful benefits that trofinetide can deliver. We now have more than 1,000 patients on active treatment globally, from newly diagnosed 2-year-olds to adults who have lived with their disease for decades.

Our ongoing real-world experience study in the U.S. continues to show outcomes that closely mirror the impact observed in rigorous randomized clinical trials conducted across a broad age range. We look forward to working with the EMA and other stakeholders to advance trofinetide as an important potential treatment option in the EU. Our commitment to the Rett syndrome community in the EU remains steadfast, and we are fully dedicated to making trofinetide available to individuals and families who urgently need a new therapeutic option.

What’s next?

Neuren notes that pursuant to EU legislation, an applicant has the right to request a re-examination of a CHMP opinion within 15 calendar days of receipt of the opinion. This is followed by submission of the grounds for the request for re-examination within 60 calendar days of receipt of the opinion.

The CHMP then has up to 60 days after receipt of these grounds to re-examine its opinion.

Neuren’s CEO, Jon Pilcher, commented:

Given the totality of experience with trofinetide in clinical trials and real world use over many years, this negative trend vote is frustrating for us and the Rett syndrome community in the EU. We fully support Acadia’s intention to seek re-examination of the CHMP opinion in February, if necessary.

The post Guess which ASX 200 healthcare share is crashing 22% on Tuesday on European blow 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 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’m a big advocate of ASX dividend shares because they can provide investors with excellent passive income.

The best dividend businesses can provide investors with both a good dividend yield and capital growth over time.

I consider the three ASX dividend shares below as three of the best options – I thought that five years ago, I think that today, and I’m confident they will be great dividend income picks in five years.

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

I view Soul Patts as one of the very best passive income businesses because of the incredible dividend growth streak it has provided.

Soul Patts has increased its regular annual payout every year since 1998. No other ASX share has a growth streak that started in the previous century.

On top of that, the investment house has paid an annual dividend every year since it listed more than 120 years ago, including through world wars, global pandemics and economic recessions.

This S&P/ASX 200 Index (ASX: XJO) share doesn’t rely on one core activity for its earnings – it has a diversified portfolio across a range of ASX shares, privately-owned businesses, property and credit. It has maximum investment flexibility to find the best opportunities with its money and create a portfolio that generates cash flow in all economic conditions.

I’m expecting the ASX dividend share’s FY26 payout to be a grossed-up dividend yield of around 4%, including franking credits, at the time of writing.

They are the key reasons why I’ve made this business my largest ASX dividend shareholding.  

Future Generation Australia Ltd (ASX: FGX)

I’ve held this listed investment company (LIC) in my portfolio for several years and I expect it be a holding for many years to come.

There are multiple reasons to like the LIC. For starters, there are no management fees involved – instead, it donates 1% of its net assets each year to youth charities. It’s invested in a variety of funds from different fund managers who all work for free to enable those charitable donations.

The fact it’s invested across more than ten funds means it provides investors with significant diversification across hundreds of underlying holdings.

In terms of being a top ASX dividend share, it has grown its annual payout every year for the last decade and currently offers investors a grossed-up dividend yield of 7.7%, including franking credits, at the time of writing.

MFF Capital Investments Ltd (ASX: MFF)

MFF built a reputation as one of the leading LICs on the ASX by investing in a portfolio of high-quality shares, namely some of the leading global US tech shares and payment giants.

The business recently expanded into funds management by making an acquisition, giving it another growth avenue and providing more investment team capabilities to MFF.

One of its main goals is to increase its dividend each year. It has hiked regular payout each year over the last several years at an impressive double-digit rate thanks to the strong performance of its portfolio.

I’m predicting MFF will increase its annual payout to 21 cents per share in FY26, translating into a forward grossed-up dividend yield of 6.2%, including franking credits, at the time of writing.

The post 3 of the best ASX dividend shares to buy for income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Mff Capital Investments, 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 Australia has recommended Mff Capital Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Droneshield Ltd (ASX: DRO) has become one of the ASX’s most talked-about defence technology stocks, and it’s easy to see why. 

The company builds cutting-edge counter-drone technology products supported by geopolitics and defence spending, both themes that investors believe could drive strong long-term growth for the DroneShield share price.

This comes after a tough week for DroneShield investors, where shares fell around 25% as markets reacted to mixed signals on the company’s future sales pipeline, insider selling, and a broader pullback in defence stocks after a strong run.

The sell-off reflects a reset in expectations about future performance rather than a deterioration in fundamentals, reinforcing that anticipated future earnings remain the key driver of where the share price heads next.

Valuation is built on tomorrow, not today

As a growth stock, DroneShield’s value is not based on past earnings and results. 

Instead, the share price reflects what the market believes DroneShield can earn several years from now.

For a stock that is trading with a P/E ratio above 400, expectations become critical. 

When investors become more confident that revenue growth will translate into scalable, repeatable profits, the valuation multiple expands. 

Conversely, any sign that margins, revenue, or the future size of the market may disappoint can quickly compress the share price.

EPS growth is the credibility test

For DroneShield, earnings per share (EPS) growth is the ultimate proof point.

Recent results from DroneShield suggest that, although growth remains strong, the future revenue pipeline may be smaller than originally anticipated, prompting investors to reassess their assumptions about this stock. 

What are the experts saying? Well, Bell Potter still expects DroneShield’s EPS growth to be 331% in 2026 and 53% in 2027, meaning that expectations remain sky-high. 

Small changes in forecasts can move the stock

Because much of DroneShield’s valuation is tied to future earnings, even modest changes in analyst forecasts can have an outsized impact. 

A small upgrade to future EPS expectations can justify a much higher share price today, but the reverse is also true.

That’s why investors should keep an eye out for any indications of what the market may look like in the future, how efficient DroneShield is in converting revenue into earnings, and whether new technologies are on the horizon that may make DroneShield’s products obsolete. 

Foolish bottom line

DroneShield’s long-term opportunity remains compelling, but the stock’s performance will ultimately be decided by whether current expectations about the future are realistic or optimistic. 

As demonstrated in last week’s results, even a small adjustment to these expectations can have an outsized impact on the stock price.

The post Why Droneshield’s future earnings matter more than ever appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. 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.