Snap up these reliable ASX dividend shares for income and upside

Why these two dull stocks could give you a headstart in 2026.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • These two ASX dividend shares both offer attractive dividend yields and trade at prices that leave room for upside.
  • Sonic Healthcare does dull but essential medical stuff with very good prospects. Analysts have set an average target price of $26.73, which points to an 18% upside and could bring the total gain in 2026 to well over 22%.
  • Metcash is a defensive stock that deals in groceries, booze and hardware. Most analysts predict 19% upside and that could lift total earnings, including dividends, close to the 25% mark. 

These two ASX dividend shares have a lot in common — and none of it is flashy.

Sonic Healthcare Ltd (ASX: SHL) and Metcash Ltd (ASX: MTS) both offer an attractive dividend yield, trade at prices that still leave room for upside, and operate in businesses that rarely excite the market.

It's the kind of boring reliability that income investors tend to love.

Here's why.

Smiling woman upside down on a swing with yellow glasses, symbolising passive income.

Image source: Getty Images

Sonic Healthcare Ltd (ASX: SHL)

If you want to kick off 2026 without breaking a sweat, Sonic Healthcare might be the quiet achiever you're looking for. No hype, no heroics, just a dependable healthcare heavyweight getting back into shape.

Sonic does the dull-but-deadly stuff: pathology and diagnostic imaging. Blood tests, scans and biopsies aren't glamorous, but essential. And essential businesses tend to keep the lights on regardless of what markets are doing.

After a pandemic-fuelled sugar rush, Sonic's share price came back to earth as COVID testing revenue faded and costs crept up. Investors lost interest. That's exactly why this ASX dividend stock is worth another look. Expectations are now realistic, maybe even a little too low.

The long-term tailwinds haven't gone anywhere. Ageing populations, rising chronic disease and more preventative testing all mean one thing: more samples through Sonic's labs. You don't postpone medical tests when times get tough.

Sure, risks remain. Government funding pressure and wage inflation won't disappear overnight.

According to Bell Potter, the ASX dividend share is a good choice for passive income. The broker forecasts dividends of $1.09 per share in FY 2026 and $1.11 in FY 2027. With Sonic shares currently at $22.61, this would result in a dividend yield of 4.8% and 4.9%.

The broker has assigned a buy rating and a $33.30 price target to the ASX dividend share. Based on the share price at the time of writing, this implies a potential upside of 32% for investors over the next 12 months.

Bell Potter is on the bullish side, as the average 12-month target price is $26.73. However, that still points to 18% upside, and could bring the total gain in 2026 to well over 20%.

Metcash Ltd (ASX: MTS)

Metcash won't light up your group chat either. No, it's just a solid business quietly getting on with it.

Metcash is the engine room behind IGA supermarkets, Mitre 10, Home Timber & Hardware and a swathe of independent liquor and foodservice retailers.

The big attraction? The dividend. Metcash has built a reputation as a dependable payer, and with the share price sitting at relatively modest levels, the yield of 5.3% looks especially tempting.

Operationally, the ASX dividend share does defensive well. Groceries, hardware and booze don't go out of fashion, even when households tighten their belts. Long-standing relationships with independent retailers create sticky revenue, while diversification across business segments helps smooth out bumps.

The catch? Don't expect fireworks. Growth is steady rather than spectacular, competition is fierce and margins are always under pressure.

UBS projects the ASX dividend share to increase its payout every year between FY25 to FY29. That could be great news for investors focused on passive income.

Early December, the company highlighted that its latest dividend will be worth 8.5 cents per share. It will come fully franked, as the payouts from Metcash tend to do.

Most analysts also predict moderate to strong upside. The average 12-months price target has been set at $3.93, which suggests a share price gain of 19%. That could lift total Metcash earnings, including dividends, close to the 25% mark.  

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Investing Strategies

Children skipping and jumping up a hill.
Small Cap Shares

Morgans has a buy recommendation on this ASX small cap 

This small cap is drawing positive attention today.

Read more »

Stacks of coins in a row with each higher than the last, and a person standing on top of each one watching them grow.
Dividend Investing

How I'd invest $2,000 in high-yield ASX 300 shares

I rate these businesses as strong buys for the long-term.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

3 high-yield ASX dividend shares paying 9% (or more)

These ASX dividend shares pay a consistent dividend payment to shareholders, and at a high rate.

Read more »

Woman holding $50 notes with a delighted face.
Dividend Investing

3 ASX dividend stocks with 4% yields to buy for a winning income portfolio

There are still income stocks out there with hefty yields...

Read more »

Two woman shopping and pointing at a bargain opportunity.
Dividend Investing

Are Wesfarmers shares a good buy for passive income?

After falling more than 10% this year, are Wesfarmers shares still a good pick for passive income?

Read more »

Three excited business people cheer around a laptop in the office
Blue Chip Shares

Why I'd buy and hold these ASX 200 blue-chip shares for at least 5 years

From retail and finance to healthcare, these companies offer different paths to long-term growth within the ASX 200.

Read more »

A person sitting at a desk smiling and looking at a computer.
Investing Strategies

I'd buy BHP and these ASX 200 shares with $5,000 in May

These shares stand out as potential buys, offering a mix of income, growth, and diversification.

Read more »

A panel of four judges hold up cards all showing the perfect score of ten out of ten
Growth Shares

10 excellent ASX shares to buy in May

Here is a selection of high-quality shares that could be in the buy zone this month.

Read more »