Tag: Stock pick

Holding an ASX share until 2040 is a big commitment.

For me, that means looking for businesses with strong competitive positions, long growth runways, and products or services that should still be relevant many years from now.

These are five leading ASX shares I would be comfortable buying with that timeframe in mind.

Pro Medicus Ltd (ASX: PME)

Pro Medicus would be one of my first choices. Its Visage imaging software is used by major healthcare organisations to manage and view increasingly large volumes of medical imaging data.

What I like is the combination of a highly scalable software model and exposure to a healthcare system that continues to generate more imaging.

The technology company has also shown it can win large customers in the United States, giving it plenty of room to keep expanding internationally.

By 2040, I think medical imaging will be even more digital, data-heavy, and AI-assisted than it is today. Pro Medicus looks well placed to grow alongside that shift.

Commonwealth Bank of Australia (ASX: CBA)

CBA brings a very different type of strength.

It is already Australia’s largest bank, with leading positions across home lending, deposits, and digital banking.

That means I would not expect explosive growth over the next 14 years. The attraction here is the quality and resilience of the franchise.

Banking should remain a core part of the Australian economy for decades, and I think CBA’s scale, customer base, and technology investment leave it well positioned to keep earning attractive returns.

For me, that makes it the major bank I would be most comfortable owning through multiple economic cycles.

Cochlear Ltd (ASX: COH)

Cochlear is another ASX share I think suits a very long investment horizon.

The company is a global leader in implantable hearing solutions, helping people with severe hearing loss regain access to sound.

Ageing populations and greater awareness of hearing loss could continue to increase demand over time, while ongoing innovation should broaden the range of patients who can benefit from treatment.

I also like that Cochlear operates in a specialised medical field where clinical expertise, technology, and trusted relationships with healthcare professionals are difficult to replicate.

That gives me confidence in its ability to remain relevant well beyond the next few years.

Xero Ltd (ASX: XRO)

Xero would provide the portfolio with long-term technology exposure.

Its accounting platform is deeply integrated into the day-to-day operations of small businesses, accountants, and bookkeepers across the world.

However, with a total addressable market estimated to be around 100 million businesses globally, Xero is still only scratching the surface of its market opportunity with its 4.9 million customers.

If the company can keep growing its market share, I think it could be a much larger business by 2040.

NextDC Ltd (ASX: NXT)

This ASX share rounds out my five.

NextDC develops and operates data centres, giving investors direct exposure to the enormous growth in digital infrastructure.

Cloud computing was already driving demand before the current AI boom. Artificial intelligence is adding another layer because training and running increasingly powerful models requires huge amounts of computing capacity.

That creates demand for secure facilities with access to power, connectivity, and large amounts of technical infrastructure.

NextDC still has plenty to execute as it expands its capacity, but I think the structural demand behind the business could run for many years.

Foolish takeaway

A lot can change between now and 2040, so I would not expect every year to be smooth for any of these businesses.

What gives me confidence is that each one is exposed to a long-term need I can still see as important well into the future, whether that is healthcare, banking, small-business software, or digital infrastructure.

That is the sort of foundation I would want before committing to holding an ASX share for the next 14 years.

The post 5 leading ASX shares I’d buy and hold until 2040 appeared first on The Motley Fool Australia.

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• Can the Xero share price climb back to $100?
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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and Xero. 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 Xero. The Motley Fool Australia has recommended 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.

This period of time seems to have heightened uncertainty, with plenty of disruption with energy prices, wider inflation, technology changes, and bond yields. I’m also seeing elevated dividend yields on offer from high-quality ASX dividend shares that pay passive income.

I don’t expect interest rates to stay this high forever, so I believe opportunistic investors can buy stocks at a discount, with a high dividend yield.

With that in mind, I’m going to highlight two ideas that look like unmissable buys right now for investors who want passive income.

Centuria Industrial REIT (ASX: CIP)

I believe the real estate investment trust (REIT) sector is significantly undervalued, considering the consistent rental income it generates and the importance (and scarcity) of the land it owns.

Industrial properties are in high demand in metropolitan locations because of both a shortage of facilities and tailwinds from multiple demand drivers. For example, e-commerce adoption, data centres, and refrigerated space (for food and medicine) are all increasing the value of industrial real estate over time.

During FY26, the business reported 5.2% like-for-like net operating income (NOI) growth. That was partly boosted by 30% positive re-leasing spreads, meaning that new rental contracts are generating 30% more rental income than the old contract.

According to the ASX dividend share, its real estate portfolio is still on average 17% ‘under-rented’, so its rent could continue to grow strongly over the next several years as leases come up for renewal.

It has guided that it will grow its distribution by 3% in FY27 to 17.3 cents, which now represents a distribution yield of 6.1%, which is an impressive starting point.

In my view, it’s very cheap. It reported net tangible assets (NTA) of $4.01 at 30 June 2026. It’s currently trading at a discount of 30% to that figure.

MFF Capital Investments Ltd (ASX: MFF)

The other ASX dividend share I want to highlight is the listed investment company (LIC) MFF.

I think it’s great to be able to invest in one name and get exposure to a diversified portfolio. MFF owns a portfolio and aims to invest in competitively advantaged global businesses with strong outlooks.

Some of the businesses currently in the portfolio include Mastercard, Alphabet (Google), Visa, Bank of America, Amazon, and Microsoft.

By investing in these great companies, MFF is unlocking investment returns which it then uses some of to pay a growing dividend. The retained profits can then be used for further compounding.

I think MFF will grow its FY27 dividend by 19% to 25 cents per share. That translates into a potential forward grossed-up dividend yield of 6.6%, including franking credits, at the time of writing. It has hiked its regular annual dividend every year since 2018, and the payout continues to grow.

The post 2 great ASX dividend share buys for passive income in October appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of Motley Fool Money. Motley Fool contributor Tristan Harrison has positions in Mff Capital Investments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, Microsoft, and Visa. The Motley Fool Australia has positions in and has recommended Mff Capital Investments. The Motley Fool Australia has recommended Alphabet, Amazon, Mastercard, Microsoft, and Visa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Inflation is back in focus on Wednesday after the latest Consumer Price Index (CPI) figures were released.

The Australian Bureau of Statistics (ABS) published its August inflation report this morning, giving investors plenty to digest.

The release comes just one day after the Reserve Bank of Australia (RBA) announced its latest interest rate decision.

With inflation still a key concern for the central bank, today’s numbers could play a part in where interest rates go next.

So, what did today’s numbers reveal?

Inflation climbs back to 4%

The latest figures showed headline inflation rose 4% over the 12 months to August, up from 3.5% in July.

Consumer prices also increased 0.4% during August, although that climbed to 0.7% on a seasonally adjusted basis.

Transport prices were a big part of the increase, rising 4.2% during the month and 5.6% over the past year.

Much of that came from automotive fuel prices, which jumped 14.8% in August and were 13.5% higher than a year ago.

Housing costs also remained high, rising 5.7% over the past 12 months, while education prices increased 4.7% and health costs climbed 3.9%.

Meanwhile, the underlying inflation figures were more stable.

Trimmed mean inflation, which removes some of the more volatile price movements, remained unchanged at 3.6% annually.

It was up just 0.2% during August.

Are more interest rate hikes coming?

Today’s inflation figures could give the RBA another reason to keep interest rates higher.

The central bank lifted the cash rate by 25 basis points to 4.60% yesterday, marking its fourth increase this year.

In its statement, the RBA said inflation remained too high and pointed to several risks that could keep prices elevated.

That included higher energy prices, continued capacity pressures in the economy, and businesses passing higher costs onto customers.

Today’s figures show some of those pressures are still hanging around, particularly with fuel prices jumping during August.

However, the unchanged trimmed mean figure of 3.6% suggests underlying inflation hasn’t moved higher.

The RBA has already made it clear that it is prepared to lift rates again if needed.

Foolish takeaway

From here, the next few inflation reports will be important.

Headline inflation is back at 4%, while underlying inflation remains above the RBA’s 2% to 3% target range.

For me, that keeps another interest rate hike firmly on the table.

The RBA has already shown this year that it is prepared to lift rates if inflation remains too high.

If inflation stays around these levels, borrowers could be facing another interest rate hike over the coming months.

The post Inflation jumps back to 4%. Are more interest rate hikes coming? appeared first on The Motley Fool Australia.

More reading

• With $2.4 billion in FY26 profits, are Telstra shares a good buy today?
• This ASX biotech could rise almost 50%, Morgans says
• Why are Northern Star shares rocketing 8% on Wednesday?
• Commonwealth Bank vs ANZ: Which is better for passive income?
• 3 reasons why the Vanguard Australian Shares Index ETF (VAS) is a solid buy

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 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.

Telstra Group Ltd (ASX: TLS) shares are marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) telco closed yesterday trading for $4.77. In late morning trade on Wednesday, shares are changing hands for $4.80 apiece, up 0.7%.

For some context, the ASX 200 is up 0.1% at this same time.

Taking a step back, Telstra shares have also modestly outperformed the benchmark index over the past year, with the ASX 200 down 1.5% in 12 months while Telstra stock has slipped a lesser 0.5%.

And we shouldn’t discount the passive income Telstra stockholders receive.

Over the last 12 months, Telstra has paid out two dividends, both franked at 90%, totalling 21 cents a share. The ASX 200 telco currently trades on a 4.4% trailing dividend yield.

Which brings us back to our headline question.

With the company’s full-year FY 2026 profits climbing to $2.4 billion, should you buy shares today?

Telstra shares: Buy, hold, or sell?

Red Leaf Securities’ John Athanasiou recently ran his slide rule over the ASX 200 telco (courtesy of The Bull).

“Telstra provides relatively defensive earnings and reliable cash flow during what has been a volatile period for equity markets,” he said.

Commenting on the company’s growth in FY 2026, Athanasiou noted:

Reported net profit after tax of $2.4 billion in full year 2026 was up 2.7 per cent on the prior corresponding period. Reported earnings per share of 19.9 cents were up 5.3 per cent. The company announced a further on-market share buyback of up to $1 billion in full year 2027 when releasing its full year results in August.

The mobile division remains the key earnings driver, while infrastructure assets add stability.

Connecting the dots, Athanasiou issued a hold recommendation on Telstra shares.

“However, expectations are already reflected in the share price, and recent network service concerns create reputational risk,” he said. “Hold for income rather than substantial near term capital growth.”

What’s happening with the new $1 billion share buyback?

Telstra released its FY 2026 results on 13 August.

After completing the previous $1.25 billion on-market share buyback in June, the company announced a new buyback of up to $1 billion on the day.

Commenting on the share buyback, Telstra CEO Vicki Brady said:

Buy-backs allow us to lower our cost of capital and manage our sources of funding more efficiently. This approach also supports earnings and dividend per share growth and, together with increased dividends, demonstrates our confidence in our financial strength and outlook.

Despite that news, Telstra shares closed down 3.2% on the day of the results release.

The post With $2.4 billion in FY26 profits, are Telstra shares a good buy today? appeared first on The Motley Fool Australia.

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• How much is needed in superannuation to target a $10,000 monthly passive income?

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 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.

Morgans says cryopreservation company Vitrafy Life Sciences Ltd (ASX: VFY) is at a crucial juncture in its development, with success likely to unlock significant value.

Vitrafy shares are already up 163% on a 12-month basis, but Morgans has an even more bullish price target on the company which I’ll get to shortly.

Firstly, let’s have a look at the business.

Major developments over the past year

Vitrafy said in its recently-released annual report that while it remained an early-stage business, progress made during the year had, “materially strengthened the foundation for the Company’s future”.

The company’s technology involves software and controlled freezing techniques, which it says “preserves biomaterial value, enhances reproducibility, and streamlines cryopreservation workflows at scale”.

The company said further in its annual report:

The clear highlight of the year was the successful completion of our Phase II in-vitro platelet study with the U.S. Army Institute of Surgical Research (“USAISR”), part of the Defense Health Agency. Conducted across 20 donors at commercial volumes — our largest blood testing program to date — the study found that every protocol tested using the Vitrafy ecosystem met or exceeded the relevant regulatory and quality guidelines for platelet use. Our simplified “no-wash” protocol achieved a mean post-thaw platelet recovery of 94%, outperforming the wash-based standard on platelet recovery, clot strength and the retention of the platelet receptors critical to clotting function.

Vitrafy said its technology could provide “surge capacity” in settings where a reliable supply of platelets was constrained, such as regional hospitals, emergency response, or battlefield environments.

The company added:

With no FDA-approved no-wash cryopreserved platelet product currently available in the United States, the Board believes these results position Vitrafy to address a genuine unmet market need with a differentiated, first-line offering, supported by independent U.S. Army validation.

Vitrafy in FY26 grew revenues 80% to $3.6 million and made a net loss of $16.2 million.

Shares looking cheap, broker says

Morgans said in a research note to clients that the company had spent the year “turning a single commercially unproven cryopreservation platform into three separate, partially validated commercial pathways”.

The broker said this current year would turn on whether those pathways could be converted into material contracts.

They added:

Commercial success is far from a foregone conclusion, but strong scientific data, a forced re-equipment cycle, and a funded runway make VFY a viable contender, in our view, to become the replacement standard in US frozen blood infrastructure, with Cell and Gene Therapy (CGT) and animal reproduction providing optionality on top of that core case.

Morgans has a 12-month price target of $5.06 on Vitrafy shares, compared with $3.43 currently.

Vitrafy is valued at $213.8 million.

The post This ASX biotech could rise almost 50%, Morgans says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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.

Northern Star Resources Ltd (ASX: NST) shares are charging higher on Wednesday morning.

The Northern Star share price is currently up 8.12% to $25.18, after closing yesterday at $23.29.

At one stage, the gold miner climbed as high as $25.59, taking its gains over the past week to almost 15%.

There hasn’t been a new announcement from Northern Star today.

Instead, investors are reacting to reports that Gold Fields Ltd (NYSE: GFI) could sweeten its takeover proposal after being rejected.

Gold Fields may come back with more cash

The latest development comes after Northern Star revealed on Monday that it had rejected a $38.7 billion takeover proposal from Gold Fields.

The offer would have given Northern Star shareholders 0.3125 new Gold Fields shares and $7.25 cash for each share they owned.

That valued Northern Star at $27 per share when the proposal was made on 14 September, representing a 22% premium to its previous closing price.

However, around 73% of the consideration was made up of Gold Fields shares.

Northern Star wasn’t interested, arguing the proposal materially undervalued the company and would expose shareholders to greater jurisdictional and operational risks.

But Gold Fields doesn’t appear ready to walk away.

Bloomberg reports the South African miner is considering increasing the cash component of its proposal as it looks for a way to win over Northern Star’s board.

No decision has been made, and there’s no guarantee another proposal will arrive.

Still, today’s share price reaction suggests investors are betting that the first offer may not be the last.

Why does Gold Fields want Northern Star?

There is a pretty clear reason Gold Fields is interested.

The two miners have significant operations in Western Australia, creating plenty of opportunities to cut costs and make better use of existing infrastructure.

Gold Fields believes a combination could deliver between US$4 billion and US$5 billion in synergies.

The combined company would produce around 4.1 million ounces of gold annually.

That would make it the world’s second-largest gold producer behind Newmont Corp (ASX: NEM).

What happens next?

I think the next move from Gold Fields will be worth watching closely.

Northern Star has made it clear that $27 per share, with most of the consideration in Gold Fields shares, isn’t enough.

But with Northern Star shares now trading above $25, the gap between the market price and the rejected offer has narrowed considerably.

If Gold Fields wants to get Northern Star’s board to the negotiating table, it may need to put more cash and a higher price on the table.

And judging by today’s 8% jump, investors seem to think there’s a decent chance it will.

The post Why are Northern Star shares rocketing 8% on Wednesday? 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 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.

Commonwealth Bank of Australia vs ANZ shares

Looking for a steady stream of passive income from ASX bank shares? Commonwealth Bank of Australia (ASX: CBA) and ANZ Group Holdings Ltd (ASX: ANZ) are two of Australia’s banking heavyweights, but they aren’t identical when it comes to dividend income, value, or recent momentum. Here’s my take on which could come out on top for investors chasing reliable returns and regular dividends.

The case for Commonwealth Bank of Australia

Commonwealth Bank of Australia, or CommBank, is a true giant in Australian banking. It’s not only the largest of the big four by market capitalisation, but also one of the most recognisable brands in the country. CBA’s operations stretch beyond Australia, with a presence in New Zealand, the UK, the US, as well as several Asian markets. The company’s product suite covers everything from day-to-day banking through to superannuation, insurance, and wealth management offerings.

A couple of numbers really stand out:

• As of the latest data, CBA’s market cap sits at a whopping $253.56 billion, making it one of the ASX’s biggest blue-chips.
• It boasts a fully franked dividend yield of 3.35%. Every dollar you receive from CBA’s $5.05 per share dividend can be boosted by franking credits, making it an appealing income stock, especially for those who can make use of the credits.
• The shares trade on a price-to-earnings (P/E) ratio of 23.14. By big bank standards, that’s at the higher end, but CBA does have a reputation for quality and steady profits.

The company’s long-term dividend history is a feature, with consistent, fully franked payouts stretching back decades.

The case for ANZ

ANZ is no minnow itself – it’s a banking powerhouse spanning Australia, New Zealand, and about 30 other markets. Like CBA, ANZ caters to a huge base of retail, business, and institutional customers, and its international focus means it’s well diversified for an Australian bank.

Here are the highlights I notice:

• ANZ currently offers a market capitalisation of $115.90 billion, making it a significant player, though not in CBA’s league on pure size.
• Its dividend yield is a healthy 4.39%, notably higher than CBA’s. However, recent dividends have only been 75% franked, so the after-tax benefits for certain investors may be less than a fully franked rival.
• ANZ shares change hands at a P/E ratio of 19.18, which is lower than CBA’s. This could appeal to bargain-hunters or income investors keen on getting more yield for each dollar invested.

While ANZ’s trailing dividend is lower than pre-pandemic years and its franking has varied, it remains a popular option for dividend-focused portfolios.

Valuation comparison

Given both sit within the big four banks, it makes sense to hold them up side-by-side. Here are the main numbers at a glance:

	Commonwealth Bank	ANZ
Market Cap	$253.56 billion	$115.90 billion
P/E Ratio	23.14	19.18
Dividend Yield	3.35% (100% franking)	4.39% (75% franking)
Earnings Per Share	6.517	1.973
Dividend Per Share	$5.05	$1.66

Note: Franking levels for ANZ have recently shifted between 56% and 100%, with the most recent payout at 75%.

Also, ANZ’s reported P/E ratio and EPS figure may reflect different earnings measures, so don’t expect those numbers to tally up precisely for valuation comparisons.

Recent share price performance

Comparing recent share price action up to 25 September 2026:

• Commonwealth Bank closed at $150.83 per share as of 25 September 2026, a modest rebound from its recent soft patch, though it’s down -2.92% year-to-date.
• ANZ closed at $37.84 per share on 25 September 2026, having logged a strong year-to-date gain of 6.41%.

Which is the better buy?

For passive income, my nod goes to ANZ. The headline dividend yield is higher at 4.39%, and it comes at a lower P/E compared to Commonwealth Bank. While CBA’s dividends are 100% franked (a huge plus for maximising after-tax returns, especially for retirees or those on lower tax rates), ANZ’s yield advantage is big enough to matter, even with only 75% franking on the latest payout.

ANZ has also shown better share price momentum this year, adding to its appeal for income-focused investors who care about capital preservation or mild growth on top of regular payments.

CBA still has a lot going for it – size, brand, consistency and the comfort of fully franked dividends. But given ANZ’s relatively strong yield and value stats, I’d lean toward ANZ as my pick right now for those seeking the best blend of dividend income and reasonable valuation in the banking sector.

The post Commonwealth Bank vs ANZ: Which is better for passive income? appeared first on The Motley Fool Australia.

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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 draft. 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.

There’s a wide variety of exchange-traded funds (ETFs) out there that investors can choose. The Vanguard Australian Shares Index ETF (ASX: VAS) is the most popular ASX-listed ETF, and for good reason, in my opinion.

When I say it’s the most popular, I’m talking about how much money is currently invested in the ETF.

At the end of August 2026, $26.9 billion was invested in the VAS ETF, a significant sum that has grown substantially over the last few years as more investors allocate money to ETFs.

Easy way to invest in the ASX 300

ETF investing has made it very easy for everyday Australians to gain access to the stock market without needing an advanced understanding of shares to gain access to the market average return.

You don’t need to make gigantic returns to see pleasing financial results thanks to the power of compounding. If an investment delivers an 8% return per year, it will double in value in approximately nine years.

Investing in the VAS ETF gives investors exposure to the S&P/ASX 300 Index (ASX: XKO), an index of 300 of the largest and most impressive ASX shares.

The biggest businesses get the largest allocation in the portfolio. For the Vanguard Australian Shares Index ETF, the largest 10 holdings represent 47.5% of the total ETF. Those 10 holdings are:

• BHP Group Ltd (ASX: BHP)
• Commonwealth Bank of Australia (ASX: CBA)
• National Australia Bank Ltd (ASX: NAB)
• Westpac Banking Corp (ASX: WBC)
• ANZ Group Holdings Ltd (ASX: ANZ)
• Wesfarmers Ltd (ASX: WES)
• Macquarie Group Ltd (ASX: MQG)
• CSL Ltd (ASX: CSL)
• Rio Tinto Ltd (ASX: RIO)
• Woodside Energy Group Ltd (ASX: WDS)

Another underrated aspect of investing in the VAS ETF (and others like it) is that the portfolio regularly updates. We don’t need to think about which stocks to buy and sell – the ETF does that for us and simply holds the names that correspond with where they fit in the index.

If a current holding suffers, it will drop down the holding list and play a smaller part in the ETF’s future returns. If there’s a newcomer that is soaring, it will play a bigger part in the ETF’s holdings as time goes on.

Passive income

One advantage the ASX share market offers, compared with many other share markets, is the scale of passive income it provides.

The ASX 300 has a pleasingly high dividend yield thanks to the fact that the largest businesses have a high dividend payout ratio and a relatively low price/earnings (P/E) ratio compared to other sectors like technology and healthcare.

According to Vanguard, at the end of August, the VAS ETF had a dividend yield of 3.1%, excluding franking credits. Compared to most share markets, that’s a solid level of dividend income.

It’s a good idea to re-invest dividends for long-term compounding, but investors can also enjoy the passive income payments for their life spending.

Low costs

One of the best reasons to invest in the VAS ETF is the very cheap management costs. The lower the fees, the more of the net returns stay in the hands of the investor.

According to Vanguard, the VAS ETF has an annual management fee of just 0.07%. That’s extremely low and means we can virtually match the ASX 300 return.

Of course, it’s important to note that the VAS ETF does provide a lot of exposure to the largest holdings, so it could be a good idea to balance with other investments.

For example, an investor could utilise the VanEck Australian Equal Weight ETF (ASX: MVW) or pick market-beating individual ASX stocks to boost their portfolio’s overall return.

The post 3 reasons why the Vanguard Australian Shares Index ETF (VAS) is a solid buy 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 positions in and has recommended CSL, Macquarie Group, and Wesfarmers. The Motley Fool Australia has recommended BHP Group, CSL, Macquarie Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The analysts at Barrenjoey are tipping significant upside for Navigator Global Investments Ltd (ASX: NGI) shares following the company’s sale of its stake in Invictus Capital.

Strong return on investment

Earlier this week, Navigator said New York Life Investment Management would acquire a 60% stake in Invictus Capital Partners from Navigator and other shareholders, with the remaining interest to be purchased in 2031.

Navigator said the deal delivered it material upfront proceeds of US$40 million to US$43 million, with a potential earn-out of up to US$32 million in 2030.

An additional consideration would be determined by Invictus’ future business growth, Navigator added.

The company said the transaction implied a materially higher valuation for Invictus compared to its initial investment in 2022.

Navigator added:

For NGI, the Transaction represents a partial realisation at an attractive valuation, while retaining meaningful exposure to Invictus’ ongoing growth and performance over the multi-year period to 2030 through retained interests, existing carried interest and fund investments, and potential future consideration. The Initial Closing is expected to occur in the first quarter of 2027, subject to customary closing conditions and regulatory approvals. It is anticipated to deliver a significant return on NGI’s invested capital, with value realised through upfront proceeds at the Initial Closing, potential earn-out consideration and additional consideration at the Deferred Closing in 2031.

Navigator Chief Investment Officer Ross Zachary said the deal “serves as an example of how NGI’s partnership model can create value for all stakeholders of alternative investment management firms”.

Navigator added:

NGI first partnered with Invictus in August 2022, with total consideration of approximately US$115 million paid over three years. Since then, Invictus has more than tripled gross assets, generating strong outcomes for its investors and extending its leadership position in the U.S. residential mortgage credit market. The results of the partnership, including distributions received by NGI and the growth in the value of NGI’s interests before consideration of the Transaction, have exceeded NGI’s return targets and generated an attractive return for shareholders.

Analysts like the look of the deal

Barrenjoey analysts said in a note to clients that the deal highlights that the price for one of Navigator’s private market firms was well above the valuation it is trading on.

They added:

We estimate a PE for the sale in the high teens, perhaps into the 20s based on management fee-only profits.

Barrenjoey has a price target of $4.20 for Navigator shares, compared with the current $2.43.

Macquarie also issued a new research note on Navigator following the announcement, with a price target of $3.24.

Navigator is valued at $1.51 billion.

The post Barrenjoey tips this ASX financial stock to rise 73% appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Macquarie Group. 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) shares are taking off on Wednesday morning.

The DroneShield share price is currently up 8.98% to $1.76, after closing yesterday at $1.615.

At one stage, the counter-drone stock climbed as high as $1.82 as investors reacted to an update released before market open.

It’s a welcome move for shareholders after a difficult year, with DroneShield shares still down more than 60% over the past 12 months.

So, what has the company announced today?

DroneShield lands huge US opportunity

According to the release, DroneShield’s US subsidiary has secured a new contract with the US Joint Interagency Task Force 401 (JIATF-401).

The 3-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract has a ceiling value of US$500 million.

It gives DroneShield the opportunity to compete for future orders as the US rolls out more counter-drone systems across the country.

These systems will be used to protect military bases, critical infrastructure, and other high-priority locations from drone threats.

However, there is one thing investors need to keep in mind before getting too excited.

The US$500 million isn’t guaranteed revenue, and DroneShield said the contract doesn’t lock in any orders at this stage.

Still, I think this is a pretty big development.

DroneShield now has a way to compete for some potentially large US defence orders over the next 3 years.

US relationship continues to grow

It’s important to note this isn’t DroneShield’s first piece of work with JIATF-401.

Earlier this year, the company secured a $24.9 million contract to supply mobile and fixed-site counter-drone systems.

DroneShield has since delivered its DroneSentry-X Mk2 systems, completing installation, testing, and operator training in around 80 days.

Another 3 systems are also planned under a modification to the original contract.

Could short sellers add fuel to the rally?

There could also be another factor helping DroneShield shares today.

The latest data shows short interest in the company was sitting at 14.76% as of 23 September.

That puts DroneShield at the top of the list as the most shorted stock on the ASX, with plenty of traders betting its share price will fall.

Keep in mind, though, today’s announcement could put some of those short sellers under pressure.

DroneShield shares are already up almost 9%, and if the buying continues, some short sellers could decide it’s time to close their positions.

To do that, they need to buy DroneShield shares back on the market.

That could add more buying pressure and give the share price another boost.

I’d keep a close eye on this stock before the year’s end.

The post Why is the DroneShield share price surging 9% on Wednesday? 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 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.