Tag: Stock pick

October is almost here, and National Australia Bank Ltd (ASX: NAB) is one ASX bank share I would be happy to buy.

With NAB shares trading around $39.13, I think there is a solid case for adding them to a portfolio next month. Here is why.

A solid earnings outlook

I would not expect explosive growth from NAB. Consensus forecasts point to earnings per share (EPS) of $2.38 in FY26, rising to $2.54 in FY27.

At today’s share price, that values NAB on a PE ratio of around 16 times FY26 earnings and just over 15 times FY27 earnings.

I think that is a reasonable price for one of Australia’s largest banks, particularly given NAB’s strong position in business banking.

That part of the company is one of the main reasons I like it. Australian businesses need banking services across lending, payments, deposits, and other areas, giving NAB another avenue for earnings beyond the highly competitive mortgage market.

What could higher interest rates mean?

The prospect of further Reserve Bank of Australia interest rate rises complicates the outlook somewhat.

Higher rates can be positive for banks if they allow lending rates to rise in a way that supports net interest margins, which measure the difference between what a bank earns on loans and pays for its funding.

But there is another side to that equation.

Higher borrowing costs put more pressure on households and businesses. If rates climb too far, credit growth could slow, customers may become more cautious about taking on debt, and bad debts could eventually increase.

Competition also plays a role. Banks cannot simply assume that every increase in the cash rate will translate into better margins when they are competing for both borrowers and deposits.

For me, that means another RBA rate rise would not automatically strengthen the NAB investment case.

I would instead focus on how the bank manages margins, credit quality, and lending growth through the changing rate environment.

The dividend adds to the case

Passive income is another reason investors may be interested in NAB shares.

Consensus forecasts point to fully franked dividends of $1.70 per share in FY26 and $1.72 in FY27.

At $39.13, the FY26 forecast represents a dividend yield of around 4.3%, before including the benefit of franking credits.

The expected increase in FY27 is small, but the important point for me is that analysts currently expect the dividend to remain well supported with manageable payout ratios of around 71% and 68%.

Foolish takeaway

NAB is not the sort of share I would buy expecting spectacular growth over the next 12 months.

What I see instead is a major bank with a strong business banking franchise, a reasonable forward valuation, and a fully franked dividend that could provide an attractive income stream.

Interest rates could make the next year a little more complicated, particularly if borrowers come under greater pressure. But at around $39, I think there is enough in NAB’s favour for me to be comfortable adding the shares in October and holding them for the long term.

The post Why I’d buy NAB shares in October appeared first on The Motley Fool Australia.

More reading

• NAB vs ANZ: Which big four bank is the better passive income stock?
• Here’s the dividend forecast out to 2028 for NAB shares
• Here are the most popular ASX share superannuation investments in SMSFs
• Is NAB one of the best ASX dividend shares to buy?
• Why I’d invest $50,000 of superannuation into these 3 top ASX ETFs

Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

Codan Ltd (ASX: CDA)’s value has surged past $10 billion, up more than 15% just today, after the company announced a large profit upgrade just three months into the new financial year.

Firing on all cylinders

The technology manufacturer has two main divisions – metal detection and military communications – with both expecting to grow significantly over the full year.

Codan had already issued a trading update on 20 August, saying strong demand for unmanned systems meant that its communications division expected to significantly exceed the previous year’s performance in the first half.

The company said on Tuesday that orders had continued to strengthen during the first quarter and it now had better visibility for results through the second quarter.

Codan said demand outside of conflict regions was strong, and revenue was expected to be up 20% on the previous corresponding period, “with broad-based growth across regions and markets reinforcing the global relevance of our technologies”.

The company added:

Demand from conflict regions is currently exceptionally strong, reflecting the proven performance and reliability of our technology in these contested environments. With this elevated demand, Codan expects revenue generated from conflict regions to represent approximately 50% of Communications segment revenue in H1 FY27 (vs. approximately 20% in the previous corresponding period). Codan now expects the Communications segment to deliver H1 FY27 revenue of between $400 million and $410 million. This compares to $221.8 million in the pcp and $506.2 million in full year FY26.  

The strong demand could also translate into a better EBIT margin of about 40% in the first half, compared to 26% in the first half last year.

Codan said demand from conflict regions was difficult to predict over the full year, “and accordingly it is too early in the financial year to determine if demand and margin will continue at similar levels in H2 FY27”.

Metal detection also performing well

The Minelab metal detection division was also performing strongly, driven by demand for the recently launched GPZ8000 and Gold Monster 2000 detectors, Codan said, as well as by the favourable gold price.

On August 20, Codan said that Minelab was tracking broadly in line with second-half FY26 levels.

Minelab’s revenue run rate is now slightly above those levels, Codan said.

In terms of group profit, Codan is expecting a net profit of not less than $160 million for the first half, compared to $71.2 million in the first half of FY26 and $175.2 million for the full year.

Codan shares traded as high as $61.30 before settling back to be 16.8% higher at $60.73.

The post This ASX tech company just surged past the $10 billion valuation mark after a major profit upgrade appeared first on The Motley Fool Australia.

More reading

• Codan trading update: Record H1 FY27 profit and revenue
• Codan vs Megaport: Which ASX Tech Stock Has More Upside?
• 2 ASX 200 shares just upgraded to buy ratings
• 5 things to watch on the ASX 200 on Monday
• This ASX 200 share hit an all-time high yesterday. Is the sky the limit?

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.

The ASX stock Charter Hall Long WALE REIT (ASX: CLW) looks like it could be one of the most effective picks for passive income.

I think investors would be well served by looking at the real estate investment trust (REIT) sector for opportunities right now, given how low share prices have fallen.

There’s an obvious headwind for REITs right now – higher interest rates. It’s a key tactic by central banks to try to reduce inflation by hiking interest rates and trying to take some heat out of the economy.

Higher interest rates are a significant headwind for REITs because they increase borrowing costs and can hurt property valuations.

For Charter Hall Long WALE REIT, this could be the right time to pounce.

Significant diversification

Plenty of Australian investors may have a significant sum of money invested in a single property, whether that’s a residential property or commercial property.

With a REIT like Charter Hall Long WALE REIT, investors can buy exposure to a portfolio of over 500 properties in a single investment, while providing great passive income.

The ASX stock is invested across numerous areas, including government buildings (like Geosciences Australia), hotels, grocery and distribution, data centres, telecommunications exchanges, service stations, banking and professional services, food manufacturing, healthcare, Bunnings properties and so on.

I like how the business can provide exposure to all of those areas with just a single investment. How good is that?

It could become even more diversified in the future, since the ASX stock has the flexibility to invest anywhere for potential returns.

Large dividend yield

Charter Hall Long WALE REIT has a very generous distribution payout ratio of 100% of rental earnings. This means investors can fully benefit from the REIT and earn a higher yield than many other investments currently offer.

Despite the headwind of higher interest rates, the ASX stock expects to maintain its distribution at 25.5 cents per security in FY27, the same as the 2026 financial year.

At the time of writing, its projected payout translates into a forward distribution yield of 7.8%, which is a huge starting yield.

Its organic rental growth could help support the distributions in the coming years. The rental income is growing either in line with inflation or at a solid fixed annual rate. During FY26, the ASX stock achieved average annual net property income growth of 3.1%.

$800 per month of passive income

The ASX stock does not pay monthly, but it does pay quarterly, which I’d describe as pleasingly frequent.

However, we should think of the monthly goal as an annual goal and then divide that by 12. The annual goal is $9,600.

As mentioned, the business expects to pay an annual distribution of 25.5 cents per security. To generate $9,600 of annual passive income, we’re talking about needing 37,648 Charter Hall Long WALE REIT units.

Given it’s trading at a 30% discount to its net tangible assets (NTA) of $4.71 as at 30 June 2026, this looks to me like a great time to invest.

The post I’d buy 37,648 shares of this ASX stock to aim for $800 a month of passive income appeared first on The Motley Fool Australia.

More reading

• 15 ASX shares going ex-dividend next week
• How much is needed in superannuation to target a $95,000 annual passive income?
• How to build a $50,000 passive income from ASX shares
• How much do I need to retire on $75,000 a year at 45?
• How much do I need in superannuation to receive $1,000 passive income per week?

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.

Cochlear Ltd (ASX: COH) shares are falling on Tuesday morning after the hearing implant giant gave investors another issue to digest.

The Cochlear share price is currently down 2.12% to $142.05 after the company confirmed it has been hit with a shareholder class action.

It’s another setback in what has already been a difficult year, with Cochlear shares down around 50% over the past 12 months.

The stock has recovered from its April low of $88.74, but remains well below the $296.50 reached over the past year.

So, what exactly is the class action about?

Why are Cochlear shares falling?

In its latest ASX announcement, Cochlear revealed that it has been hit with a class action in the Supreme Court of Victoria.

The claim involves investors who bought Cochlear shares between 15 August 2025 and 21 April 2026, when the company was providing its FY26 profit guidance.

Cochlear didn’t say too much about the case this morning, other than confirming it denies the allegations and plans to defend itself.

However, litigation firm Echo Law has provided a bit more detail.

It claims Cochlear engaged in misleading or deceptive conduct and failed to meet its continuous disclosure obligations.

Basically, the case centres on what Cochlear told investors about its FY26 profit outlook, and whether enough information was provided along the way.

And the dates are worth keeping in mind.

The period ends on 21 April, just one day before Cochlear slashed its profit guidance and its shares crashed more than 40%.

What happened in April?

The class action comes after a brutal few months for Cochlear shareholders.

On 22 April, the company cut its FY26 underlying net profit guidance to between $290 million and $330 million.

That was a big drop from its original forecast of between $435 million and $460 million.

Investors didn’t take the news well, with Cochlear shares tanking over 40% on the day to close at $99.58.

At the time, Cochlear blamed weaker implant demand, hospital capacity constraints, and fewer patient referrals across developed and emerging markets.

Uncertainty in the Middle East also weighed on sales, while lower production volumes and currency movements added to the pressure.

It wasn’t the first warning either.

Back in February, Cochlear had already told investors that FY26 profit was likely to come in at the lower end of its original guidance range.

Where does Cochlear go from here?

Despite the problems earlier this year, Cochlear has managed to recover a decent chunk of its April losses.

The company eventually reported FY26 underlying net profit of $322.4 million, down 22% from the previous year.

Looking ahead, Cochlear expects underlying net profit of between $330 million and $350 million in FY27, representing growth of around 2% to 9%.

There are some positives heading into the new financial year as well.

The Nucleus Nexa implant represented more than 95% of developed market implant sales by June, while Cochlear expects further product launches during FY27.

The post Cochlear shares fall as investors face another setback appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• South32, Cochlear, Westpac shares: Buy, hold, or sell?
• Here are the top 10 ASX 200 shares today
• ASX 200 healthcare shares lead a weaker market amid 82% chance of a rate hike
• 2 ASX shares down over 50% that I would 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 positions in and has recommended Cochlear. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP vs Coles shares

If you’re eyeing ASX shares for reliable passive income, you’ve probably pondered BHP and Coles. Both pay fully franked dividends and are ASX heavyweights, yet they hail from very different sectors and show some striking contrasts. Here’s how they stack up for dividend-focused portfolios.

The case for BHP

BHP is Australia’s mining giant, exporting iron ore, copper, coal, and other resources worldwide. It’s a true blue-chip, not just in size but in its role as a key supplier in global commodity markets. The company’s fortunes are tied closely to demand and pricing for industrial metals—so while the share price can swing with the cycle, BHP has a long track record of strong profits and rewarding shareholders along the way.

Some highlights from the data:

• Market cap: $308.71 billion, dwarfing most other ASX names
• Dividend yield: 3.98%, fully franked, which is tasty for income hunters
• P/E ratio: 22.11
• Dividend history: BHP’s record shows not only continuous payments, but regularly climbing payouts for over a decade—including some bumper years and special dividends
• 2026 full-year dividends: Interim $1.04 and final $1.38, both 100% franked
• YTD return: 38.8%, showing robust momentum in the current year

There’s some volatility given its sector, but the strength of BHP’s dividends (together with generous franking) has long been a drawcard for passive income.

The case for Coles

Coles is about as “core Aussie” as it gets—a household name in supermarkets, liquor, and retail staples. Spun off from Wesfarmers in 2018, Coles now operates a national store network and is seen as an anchor stock for defensive income portfolios.

Here’s what pops in the numbers:

• Market cap: $31.15 billion—a fraction of BHP’s, but still a major ASX player
• Dividend yield: 3.36%, fully franked, with a pattern of reliable semi-annual payouts
• P/E ratio: 28.56, higher than BHP’s, perhaps reflecting sector defensiveness
• Recent dividend history: Consistent fully franked dividends (final 2026: $0.37, interim: $0.41) and a stable payout trajectory since relisting post-2018
• YTD return: 11.8%—steady, if not spectacular, reflecting the market’s regard for Coles as a “safe haven” in uncertain times

For investors prioritising reliability over big yield swings, Coles is an attractive option, offering predictable income from the supermarket aisles to your portfolio.

Valuation comparison

Here’s how the major passive income metrics line up:

	BHP	Coles
Market Cap	$308.71 billion	$31.15 billion
P/E Ratio	22.11	28.56
Dividend Yield	3.98% (100% franked)	3.36% (100% franked)
Dividend per Share (most recent year)	$2.42	$0.74

Both offer fully franked dividends, but BHP edges ahead on yield. Coles commands a higher P/E ratio, which may reflect the supermarket sector’s perceived stability and lower earnings volatility.

Recent share price performance

Comparing recent share price activity up to 25 September 2026:

• BHP closed at $60.72, down 0.5% for the day. The stock is up 38.8% year to date, suggesting robust performance for 2026.
• Coles closed at $23.19, up 1.3% for the day. Year-to-date, Coles shares have delivered an 11.8% return, reflecting more modest but steady progress.

Which is the better buy?

If I’m aiming for passive income, my pick would be BHP. Its higher yield (3.98% vs 3.36%) sets the pace here, supported by a long history of fully franked, sometimes generous, payouts and recent share price momentum. Volatility is a risk with any mining stock and commodity cycles can knock earnings around, but the dividend stream has stayed robust even through some tough years.

Coles offers stability and predictability, backed by defensive, non-cyclical earnings. But for genuine income-seeking investors, the slightly lower yield and less adventurous growth means it struggles to match BHP’s overall proposition on the numbers supplied.

Of course, if I was after absolute rock-solid steadiness and could accept a somewhat lower yield, Coles would still sit very comfortably in my core portfolio. But for now, I’d lean toward BHP as the income choice—with the bonus of some capital gain upside in a strong year.

The post BHP vs Coles: Which ASX share is better for passive income? appeared first on The Motley Fool Australia.

More reading

• Experts name 3 popular ASX 200 shares to buy this week
• Expert names Woodside and BHP shares as top buys today
• Should I buy BHP shares in October?
• How much is needed in superannuation to target a $10,000 monthly passive income?
• Buy, hold, sell: CBA, BHP, CSL shares

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 recommended BHP Group. 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.

The ASX share WAM Microcap Ltd (ASX: WMI) is the stock in my portfolio with the highest dividend yield. But I like the business for more than just the passive income it offers.

WAM Microcap is a listed investment company (LIC) that aims to invest in the most exciting undervalued growth opportunities in the microcap end of the ASX share market.

It has been in my portfolio for a long time and I still own it for a few compelling factors.

Small-cap exposure

There are hundreds and hundreds of businesses on the ASX of a variety of sizes. We’re familiar with the large businesses within the S&P/ASX 200 Index (ASX: XJO), but there are a lot of other stocks with smaller market capitalisations.

A lot of ASX shares can produce good returns, particularly the smaller ones because they may be underrated by the market and they could have a lot of growth ahead of them.

I think those smaller stocks are worth getting exposure to with their return potential, but I’m using the WAM Microcap investment team to pick those stocks at the small end of the ASX share market.

In my view, the smaller you go down the market capitalisation list, the more important it is to fully understand the business, the balance sheet and so on.

Despite difficult investing conditions, the WAM Microcap portfolio has performed very well over the long term. Since June 2017, it has delivered an average annual return of 13.5%, before fees, expenses, and taxes. That’s close to double the return of its benchmark.

Diversification

The portfolio is not just a few small-cap names, but dozens of small ASX shares with good return potential. It really adds to my diversification with the various names in the portfolio.

I like how its portfolio is spread across a number of sectors – more than 9% of its portfolio is invested in industrials, consumer discretionary, financials, IT, healthcare and materials.

It’s a pleasing addition to my portfolio, and only after considering the two elements above am I happy to enjoy the business’s passive income.

Big dividend income

As a listed investment company, WAM Microcap has the ability to turn investment returns into dividend cash payments for shareholders.

It’s helpful for the LIC to pay huge dividend income to ensure the LIC stays small – that’s important when it comes to small-cap investing, otherwise the LIC would become too big.

WAM Microcap has grown its annual dividend every year since FY18, except for FY24, when it maintained the dividend. That’s a great record of stability.

In FY26, it grew its annual dividend per share by 1% to 10.7 cents per share. That translates into a grossed-up dividend yield of more than 11.6%, at the time of writing. It has a profit reserve of 49.8 cents per share as of August 2026, so it already has enough accounting funding to pay dividends for close to five years.

It’s a great ASX share for dividend income.

The post Why I own this ASX share with a dividend yield of 11.5% appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares with dividend yields above 9.5%

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.

Megaport Ltd (ASX: MP1) shares are on watch on Tuesday after the tech company announced almost $1 billion in new AI contracts.

The Megaport share price finished yesterday’s session down 3.92% at $18.85, although the stock has still climbed around 60% in 2026.

Megaport has delivered a raft of positive updates this morning, giving investors plenty to think about when trading gets underway.

So, let’s take a closer look.

Megaport lands almost $1 billion in new contracts

The biggest news this morning is the signing of three new AI infrastructure contracts through Megaport’s Latitude.sh business.

The deals are worth roughly $978.6 million in total and cover GPU and CPU compute, network, and storage services.

Two are with new customers, while the other expands an existing relationship.

Megaport will also receive around $322.6 million in prepayments, with roughly $281.5 million coming from one new customer before services are delivered.

Once everything is up and running, the company expects its pro forma annual recurring revenue (ARR) to reach around $1.1 billion.

That takes the total value of strategic contracts announced since April to about $2.3 billion.

CEO Michael Reid said:

Since April, we’ve announced approximately A$2.3 billion in total strategic contract value.

He added that the company is “just getting started”.

Business continues to grow

There was also a positive update on how the rest of the business is tracking.

Network ARR reached $302.6 million in August, up 29% year on year on a constant currency basis.

Net revenue retention increased to 116%, compared with 110% a year ago.

But it’s the Compute side of the business where the numbers are really starting to grow.

Compute ARR reached $201.4 million as of 22 September, up 90% since the end of June and 227% since Megaport completed the Latitude.sh acquisition.

Megaport is now billing more than $500 million in Group ARR, not including the full impact of the contracts announced today.

FY27 guidance upgraded

With all of this coming through, Megaport has upgraded its FY27 guidance as well.

Revenue is now expected to come in between $720 million and $810 million, compared with the previous range of $620 million to $730 million.

EBITDA margins are also expected to be higher, with guidance increasing to 42% to 44%.

Of course, all this growth comes at a cost.

Megaport now expects FY27 capital expenditure of between $1.78 billion and $1.88 billion, which is around $500 million higher than its previous guidance.

Despite the higher investment, Megaport says it remains fully funded, with pro forma liquidity of approximately $362.2 million.

The post Megaport shares on watch after locking in almost $1 billion of new AI deals appeared first on The Motley Fool Australia.

More reading

• Megaport lifts FY27 outlook after landing $1B in new AI infrastructure deals
• Codan vs Megaport: Which ASX Tech Stock Has More Upside?
• Dicker Data vs Megaport: Which ASX tech share has more upside?
• 2 of the best ASX artificial intelligence shares to buy
• Morgans tips 3 ASX 200 companies to rise between 35% and 106%

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 Megaport. 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 Medibank Private Ltd (ASX: MPL) share price has drifted lower, whcih this has given investors the chance to buy with a larger dividend yield.

When a share price declines, it means the dividend yield rises at a similar rate.

For example, if a business had a dividend yield of 5% and the share price declines 10%, then the dividend yield becomes 5.5% – a rise of 10%.

At the time of writing, the Medibank Private share price has declined by 14% since 7 August 2026, as shown in the chart below.

The business could be an attractive opportunity to look at for passive income. Let’s take a look at whether it’s a good buy today.

Dividend projection

The company reported a solid set of numbers in FY26, and this could continue into the 2027 financial year.

FY26 saw 22,100 (or 1.1%) net resident policyholder growth, with health insurance operating growth to $769.8 million. Segment operating profit rose 6.4% to $870.5 million, partly thanks to Medibank’s healthcare segment profit rising 31.3% to $100.7 million.

The company’s 6.7% rise in group operating profit to $813.5 million helped fund a 6.7% rise in the dividend per share to 19.2 cents.

At the current Medibank Private share price, the FY26 dividend translates into a grossed-up dividend yield of 6%, including franking credits, at the time of writing.

The projection on CMC Invest suggests that the ASX healthcare share could increase its annual dividend per share by 6.25%, leading to the company’s FY27 grossed-up dividend yield rising to 6.4%, including franking credits, at the time of writing.

That’s an impressive dividend yield for a business offering defensive earnings and exposure to the long-term tailwind of ageing demographics. It looks more appealing than the term deposit rates at the moment.

The company’s FY27 guidance of resident policyholder growth, non-resident private health insurance gross profit growth, and an increase in healthcare segment profit suggests to me that the 2027 financial year could be another good year.

Is this a good time to invest at the current Medibank Private share price?

According to CMC Invest, there have been seven analyst ratings on the business within the last three months. Two of those analyst ratings were a buy, and five analyst calls were a hold.

A price target tells us where analysts think the share price will be in 12 months from the time of the investment call.

The average price target of those seven analyst ratings is $5.03. Therefore, those analysts collectively suggest that the Medibank share price could rise by more than 10% over the next 12 months.

Combined with the dividend return, the business could be a market beater over the next year.  

The post Is the Medibank share price a buy for its 6% dividend yield? appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $10,000 monthly passive income?
• How much do I need to retire on $75,000 a year at 45?
• 2 ASX passive income ideas I’d use to generate $400 a month in 2027
• How much do I need to retire on $80,000 a year at 50?
• Buy, hold, sell: Medibank Private, Ansell, South32 shares

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.

DroneShield Ltd (ASX: DRO) shares fell to a fresh 52-week low on Monday, closing the day down another 2% to just $1.58 a piece.

The drone operator’s shares have now lost around 53% of their value so far in 2026, and are down 64% over the past 12 months.

What happened to DroneShield shares in 2026?

After some heavy selling in late 2025, DroneShield shares started strong in 2026. Concerns around geopolitical volatility and instability in the Middle East saw governments around the world hike their defence budgets.

But by April, investors started turning their backs on the ASX defence stock amid concerns about whether the company’s future growth prospects are large enough to justify its share price.

The share sell-off accelerated in May when DroneShield announced that the Australian Securities and Investments Commission (ASIC) had requested that the company provide reasonable assistance in connection with an investigation under the Corporations Act. The investigation relates to market announcements and share trading in November 2025.

Sentiment slumped even further when the company posted a disappointing first-half FY26 result last month.

DroneShield posted a 74% increase in revenue for the six months ending 30th of June, and a 229% increase in recurring revenue. But DroneShield also posted a statutory net loss after tax of $32.2 million, compared with a $2.1 million profit a year earlier. Underlying EBITDA also came in at a $12.4 million loss, compared with an $8 million profit posted in the first half of FY25.

DroneShield’s revenue came in line with guidance expectations. But recurring revenue was a miss, at $11.5 million versus guidance of $14.2 million for the six-month period.

Even this month’s news of DroneShield’s new RfRecon weapon and new non-executive director, Lynne Saint, hasn’t been enough to reignite confidence in the stock.

So, can DroneShield shares bounce back? Or has the defence stock well and truly passed its peak?

Are the shares a buy, sell, or hold now?

The experts are still divided on their outlook for DroneShield shares over the next 12 months, which means it’s unclear whether the stock has the potential to rebound from the latest low.

TradingView data shows that of the four analysts, two have a strong buy rating and two have a sell/strong sell rating.

The target prices also vary. The average target price of $1.99 implies a potential 26% upside over the next 12 months, at the time of writing. 

But the minimum $1.45 target price implies an 8% downside at the time of writing. And the maximum $2.60 target price suggests DroneShield shares could rise another 65% over the next 12 months.

My view on DroneShield shares

I think that at the current trading price, DroneShield shares are probably below fair value. But without any visibility of tailwinds to drive the share price higher over the next few months, I can’t see a meaningful increase before the end of the year. All eyes will be on the company’s full-year FY26 result, expected in February next year.

The post Can DroneShield shares recover from a fresh 52-week low? appeared first on The Motley Fool Australia.

More reading

• Buying DroneShield shares? Meet your new board director
• These are the 10 most shorted ASX shares
• DroneShield shares crashed 52%. This new weapon could flip the script
• Electro Optic Systems vs Droneshield: Which ASX defence share wins?
• These are the 10 most shorted ASX shares

Motley Fool contributor Samantha Menzies 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.

The Megaport Ltd (ASX: MP1) share price is in focus after the company secured three new AI infrastructure contracts worth nearly $1 billion and upgraded its FY27 guidance.

What did Megaport report?

• Three new AI infrastructure contracts with a combined total contract value (TCV) of A$978.6 million
• Group pro forma annual recurring revenue (ARR) lifted to around A$1.1 billion, with over 85% from North America
• Prepayments on these contracts total A$322.6 million, supporting future growth
• Group FY27 revenue guidance raised to A$720–810 million (from A$620–730 million)
• FY27 EBITDA margin guidance increased to 42–44% (previously 38–40%)
• FY27 planned capital expenditure (capex) raised to A$1.78–1.88 billion, reflecting new contract requirements

What else do investors need to know?

Megaport’s new agreements have brought the combined total contract value for strategic contracts announced since April 2026 to A$2.3 billion. The contracts span GPU and CPU compute, networking, and storage for AI and inference workloads, and include prepayments that help fund capital expenditure and bolster liquidity.

Network ARR as of 31 August 2026 reached A$302.6 million, up 29% year-on-year on a constant currency basis, while Compute ARR (September 2026) stood at A$201.4 million, up 90% from June and up 227% since acquisition. Megaport’s Net Revenue Retention for the network climbed to 116%. The company remains fully funded for its updated strategy, ending with pro forma liquidity of approximately A$362.2 million.

What did Megaport management say?

Michael Reid, Megaport CEO said:

Since April, we’ve announced approximately A$2.3 billion in total strategic contract value…Together with our existing business, these contracts support approximately A$1.1 billion in Group ARR once deployed.

Earlier deployments, new contracts, and Network growth underpin our upgraded FY27 revenue and EBITDA margin guidance. Customers have committed approximately A$323 million in prepayments on today’s contracts, supporting the infrastructure investment behind future growth.

We’re broadening our customer base, replenishing our GPU pool, and expanding our AI inference platform. Our progress has been extraordinary, and we remain focused on delivery and disciplined investment. We’re just getting started.

What’s next for Megaport?

Megaport expects these new contracts to begin billing progressively through FY27, helping the business reach its full run-rate ARR by Q4 FY27. The company is also investing heavily in replenishing its GPU pool and securing infrastructure to maintain growth momentum.

Looking ahead, management sees strong demand for AI infrastructure services and is targeting continued expansion of its platform and customer base. With growth driven by both existing and new strategic contracts, Megaport’s upgraded guidance reflects confidence in execution and sector opportunities.

Megaport share price snapshot

Over the past 12 months, Megaport shares have risen 22%, outperforming the S&P/ASX 200 Index (ASX: XJO).

View Original Announcement

The post Megaport lifts FY27 outlook after landing $1B in new AI infrastructure deals appeared first on The Motley Fool Australia.

More reading

• Codan vs Megaport: Which ASX Tech Stock Has More Upside?
• Dicker Data vs Megaport: Which ASX tech share has more upside?
• 2 of the best ASX artificial intelligence shares to buy
• Morgans tips 3 ASX 200 companies to rise between 35% and 106%
• Top brokers name 3 ASX shares to buy next 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 positions in and has recommended Megaport. 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.