Here are five things to look for.

Buy businesses you understand

Buffett has repeatedly stressed the importance of staying within his circle of competence.

That means understanding how a company makes money, what drives its earnings and what could threaten its competitive position.

On the ASX, that could mean favouring familiar businesses such as Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) or Wesfarmers Ltd (ASX: WES), provided their valuations make sense.

The point isn't to buy familiar names blindly. It's to avoid investing in ASX shares you can't properly assess.

A durable competitive advantage

Buffett's famous economic moat is central to his strategy. I'd look for ASX shares with something that makes it difficult for competitors to steal customers and profits.

That could be a powerful brand, network effects, switching costs, intellectual property, scale or a structural advantage in an industry.

A company with a strong moat can potentially maintain attractive returns on capital for years.

Consistent earnings and cash flow

Great stories aren't enough. I'd want to see evidence that a business can consistently generate profits and cash.

Strong cash flow gives companies more flexibility to reinvest in growth, reduce debt, pay dividends and potentially buy back shares.

This is particularly important when looking for long-term compounders. A business that repeatedly needs fresh capital to survive isn't the sort of ASX share Buffett typically favours.

A strong balance sheet

Debt can magnify returns when things go well — and magnify problems when they don't.

Buffett has long emphasised financial strength and the ability of businesses to withstand difficult economic conditions. I'd therefore examine a company's debt levels, interest costs, cash position and ability to meet its financial obligations.

A robust balance sheet can give an ASX share the flexibility to take advantage of opportunities when weaker competitors are struggling.

A sensible valuation

Perhaps the biggest mistake investors can make is confusing a great business with a great investment. Even an exceptional company can produce disappointing returns if investors pay an excessive price.

I'd therefore compare the price of an ASX share with earnings, cash flow, growth prospects and the company's historical valuation.

Buffett doesn't try to predict what a share will do next month. He focuses on whether the price makes sense relative to the underlying business.

The Buffett test

Finding Buffett-style ASX shares isn't about discovering a secret formula. I'd look for understandable businesses with durable moats, reliable cash generation, strong balance sheets and attractive valuations.

Then comes the hardest part: having the patience to let those businesses compound.

As Buffett's strategy demonstrates, successful investing is often less about finding the next hot ASX share and more about avoiding bad businesses and paying too much for good ones.

The post 5 things Warren Buffett looks for before buying ASX shares appeared first on The Motley Fool Australia.

Investing for passive income through superannuation makes sense for various reasons, with the low tax rate being a key benefit.

Keep in mind that the net income we receive from our investments is what we receive after taxes. It's possible that an Australian working full-time could lose a third of their passive income to tax, or more, depending on their tax rate.

Based on that, investing in superannuation is a more appealing prospect due to that lower tax rate.

Super has a lower tax rate in the accumulation phase compared to normal individual tax rates for a full-time earner. In retirement, the tax rate could be 0%.

Every Australian's tax position is different, so I'll just talk about targeting a certain income level, without mentioning tax any further.

How much is needed in superannuation for $5,500 of monthly passive income?

Receiving $5,500 per month of dividends translates into $66,000 annually. I'm sure most Australians would love to receive that level of dividends each year without needing to do any ongoing work for it, assuming they don't already receive that much each year.

A key question is deciding what sort of investments Australians want to own and the dividend yield attached to those stocks.

For example, a portfolio with a dividend yield of 6.6% can be half the size of a portfolio with a dividend yield of 3.3%.

For example, if a portfolio is $1 million in size with a 6.6% dividend yield, it would create $66,000 of annual passive income. If a portfolio had a dividend yield of 3.3%, the portfolio would need to be $2 million in size to make the same level of income.

If the portfolio had a dividend yield of 5%, the portfolio would need to be $1.32 million in size to generate an average of $5,500 per month of monthly passive income.

The final dividend yield we'll look at is 4%. It would take a portfolio value of $1.65 million to unlock $66,000 of annual dividends.

The sorts of ASX dividend shares I'd look at

There is a wide range of ASX dividend shares available for superannuation investments, investing in our own name or other structures.

Some of the lower-yielding stocks I'd look at are Wesfarmers Ltd (ASX: WES), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), L1 Long Short Fund Ltd (ASX: LSF) and Lovisa Holdings Ltd (ASX: LOV).

Some of the mid-range yielding stocks I'd consider for passive income include WCM Quality Global Growth Fund (ASX: WCMQ), Telstra Group Ltd (ASX: TLS), Rural Funds Group (ASX: RFF) and Centuria Industrial REIT (ASX: CIP).

Among the higher-yielding ASX dividend shares I'd consider are WCM Global Growth Ltd (ASX: WQG), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

The post How much is needed in superannuation to target a $5,500 monthly passive income? appeared first on The Motley Fool Australia.

A sky-high dividend can quickly disappear if the underlying business struggles. For investors seeking income for decades, I'd rather own high-quality companies with resilient cash flows, sustainable dividends and the potential to increase those payments over time.

The goal is to build multiple income streams that can withstand changing economic conditions.

Start with defensive businesses

A strong ASX dividend portfolio needs dependable cash flow.

Woolworths Group Ltd (ASX: WOW) is a good example. Supermarkets aren't particularly exciting, but Australians still need groceries and household essentials regardless of the economic cycle.

Woolworths faces intense competition, rising costs and changing consumer behaviour. However, its defensive business model and recurring customer demand can provide the earnings stability dividend investors value.

Add essential infrastructure

A long-term ASX dividend portfolio should also include businesses providing services people rely on every day.

Transurban Group (ASX: TCL) owns and operates toll roads across Australia, North America and Canada, collecting toll revenue from millions of journeys.

That infrastructure can provide relatively predictable cash flows, although Transurban faces substantial capital requirements, debt and regulatory risks.

For an ASX dividend portfolio, its toll-road exposure adds an infrastructure income stream that's less dependent on consumer spending or commodity prices.

Diversify your income streams

Concentrating too heavily in banks or miners can leave dividend investors exposed when economic conditions change.

APA Group (ASX: APA) can add another layer of diversification. It owns and operates energy infrastructure, including gas pipelines and renewable energy assets, generating revenue from essential infrastructure rather than relying purely on commodity prices.

Property can also play a role in ASX dividend portfolio.

Charter Hall Retail REIT (ASX: CQR) provides exposure to a portfolio of Australian retail properties, including convenience-focused shopping centres. Its relatively long leases can provide visibility over rental income, although investors still need to monitor interest rates, debt and tenant quality.

Don't forget dividend growth

A high dividend yield today doesn't guarantee a higher income tomorrow.

Commonwealth Bank of Australia (ASX: CBA) has historically rewarded shareholders through dividends and long-term capital growth. Its scale, balance sheet and strong market position make it one of Australia's most closely followed income stocks, although banks remain exposed to economic cycles.

Wesfarmers Ltd (ASX: WES) is another company worth considering. Its dividend yield isn't usually among the highest on the ASX, but that's not necessarily a weakness.

Wesfarmers has focused on reinvesting in its businesses, improving operations and allocating capital towards attractive growth opportunities. Over time, that approach can support rising earnings and, potentially, a growing dividend.

Foolish takeaway

Building an ASX dividend portfolio for life isn't about finding the highest-yielding shares. I'd rather combine defensive businesses, essential infrastructure, property and dividend growers to create multiple income streams.

The aim isn't simply to collect big dividends today. It's to own businesses capable of continuing to pay – and ideally increase – those dividends for many years to come.

The post Want income for life? Here's how I'd build an ASX dividend portfolio appeared first on The Motley Fool Australia.

That arrangement is changing.

From 1 July 2027, the 50% capital gains tax discount for individuals, partnerships, and trusts will be replaced by inflation-based cost-base indexation. A minimum 30% tax rate will also apply to real capital gains.

The reforms apply to shares and exchange-traded funds, not only investment property. However, they are prospective: gains accruing before 1 July 2027 retain the existing treatment, even if the investment is sold later.

Importantly, the new system will not automatically leave every investor paying more tax. The outcome will depend on the return earned, inflation, and the investor's marginal tax rate. Treasury modelling suggests indexation could have produced a slightly larger effective discount than the current system for average ASX share returns over some historical periods.

Nevertheless, the changing rules provide a timely reason to examine how investment returns are delivered. That brings a much older strategy back into focus.

Income that gives itself a pay rise

Dividend growth investing focuses on businesses capable of growing their earnings, cash flow, and shareholder distributions over time.

The objective is not simply to find the highest yield available today. It is to own companies that can increase their dividends without weakening their balance sheets or starving the business of necessary investment.

Consider a $10,000 investment yielding 4%. That produces $400 of income in the first year, before tax. If the dividend grows by 5% annually, the payment reaches approximately $620 in year 10 without the investor contributing another dollar.

Reinvesting those dividends could increase the income further by adding more shares, although taxes and changing share prices will affect the eventual result.

Unlike an unrealised capital gain, a dividend delivers part of the shareholder's return in cash without requiring the shares to be sold. However, dividends are generally taxable in the year they are received, while capital gains remain deferred until an investment is sold.

That means neither approach is automatically more tax-efficient. The better outcome depends on the business, the price paid, and the investor's circumstances.

Separating a payer from a grower

Not every generous yield is sustainable. A yield approaching 9% may reflect a falling share price and expectations that the dividend will be cut.

Four characteristics can help separate a genuine dividend grower from a potential yield trap.

The first is earnings and free cash flow growth. A dividend cannot keep rising indefinitely unless the business produces more cash to support it.

The second is the payout ratio, which measures how much profit is being distributed. A company paying out almost everything it earns has little room for weaker conditions or further investment.

The third is balance-sheet strength. Heavy debt repayments compete directly with shareholders for the same cash.

Finally, investors can examine capital-allocation discipline and dividend history. A company that has increased its payout through different economic conditions has demonstrated something a forecast cannot.

How Wesfarmers has grown its dividend

Wesfarmers Ltd (ASX: WES) provides a useful recent example.

The conglomerate increased its total dividends from $1.80 per share in FY22 to $1.91 in FY23, $1.98 in FY24 and $2.06 in FY25. Its FY26 interim dividend rose to $1.02 per share, up from 95 cents a year earlier. These dividends were fully franked. That record does not guarantee future increases. Wesfarmers must continue growing its earnings while balancing dividends against investment in businesses such as Bunnings, Kmart and WesCEF.

Washington H. Soul Pattinson and Co. Limited (ASX: SOL) offers a longer example, with FY26 marking its 28th consecutive year of dividend growth. Its record shows why investors may accept a lower starting yield when they believe the payout can compound over decades.

The franking factor

Australia adds another element through dividend imputation.

A 4% fully-franked cash yield equates to approximately 5.7% on a grossed-up basis when the company tax rate is 30%. This accounts for the company tax already paid and attached to the dividend as franking credits.

The investor's final benefit depends on their tax rate, eligibility for refunds, and compliance with the relevant holding-period rules. Some investors may receive excess franking credits as a refund, while those on higher marginal rates may owe additional tax.

Foolish takeaway

Dividend growth investing is not risk-free. Dividends can be reduced, and an excessive focus on income can leave a portfolio concentrated in mature sectors or cause investors to overlook businesses capable of reinvesting capital at attractive returns.

The CGT reforms do not make dividend growth investing universally superior. Some investors may pay more tax under the new rules, while others could pay less.

However, the calculation is changing. For investors thinking in decades rather than quarters, companies capable of growing both their underlying value and their cash distributions may deserve a closer look.

The post How ASX dividend growth shares can build lasting income appeared first on The Motley Fool Australia.

A soft quarter becomes less important, and what matters instead is whether a business will still be comfortably growing its earnings in 2036.

Here are three ASX 200 companies I think comfortably pass that test.

Why I hold ASX shares for a decade

Time is one of the few advantages a retail investor has over a professional fund manager.

Nobody is grading my portfolio every quarter.

That freedom lets me own good businesses through the messy years when the market loses patience.

The three companies below each have a structural growth driver that should still be running long after this reporting season is forgotten.

Wesfarmers: the compounding machine

Wesfarmers Ltd (ASX: WES) may be the closest thing the local market has to a true compounder.

The company's half-year result delivered revenue of $24.2 billion and net profit after tax of $1.6 billion, up 9.3%.

The interim dividend rose 7.4% to 102 cents per share.

Bunnings did the heavy lifting again, with higher sales across every product category, region and customer segment.

Managing director Rob Scott said:

The result reflects strong operational performance and disciplined execution of the Group's strategies to create shareholder value.

The real appeal is capital allocation. Wesfarmers has repeatedly recycled cash out of mature businesses and into newer ones, moving from coal into lithium and health.

At today's prices the stock is not cheap on a price-to-earnings ratio in the low 30s.

But I would rather pay up for a management team that has proven it can redeploy capital sensibly across multiple cycles.

The conglomerate reports its FY26 numbers on 27 August.

Goodman Group: an industrial landlord turned power broker

Goodman Group (ASX: GMG) has become one of the most important data centre developers in the world.

The company's first-half result delivered $1.2 billion in operating profit. The group's power bank also expanded from 5GW to 6GW.

By June 2026, more than $14 billion of its roughly $18 billion work in progress is expected to be in data centre projects.

Founder and CEO Greg Goodman said of the strategy:

Power, sites and capital are critical to being able to service demand and provide delivery certainty.

Goodman owns scarce, powered land in exactly the cities where artificial intelligence infrastructure needs to be built.

The units are down roughly 16% over the past year, which strikes me as an opportunity rather than a warning sign.

Goodman reports its FY26 result today.

CSL: a reset year with a long runway

CSL Ltd (ASX: CSL) just posted the ugliest headline number in its ASX history.

FY26 revenue slipped 1% to US$15.8 billion, and impairments of US$7.1 billion pushed the company to a US$2.6 billion statutory loss. Underlying NPATA still landed at US$3.1 billion.

Investors looked past the write-downs to FY27 guidance of roughly 5% underlying profit growth, comfortably ahead of the 2% consensus.

The shares surged 17.9% on results day.

Interim CEO Gordon Naylor framed the year as a clearing of the decks:

CSL is positioned for a return to sustainable growth, supported by solid plasma market fundamentals.

Plasma collection remains a true moat, because it takes years and enormous amounts of capital to build a competing network of donor centres.

On top of that, a US$1 billion buyback and a flat US$2.92 dividend suggest management believes the worst is now behind it.

The risks of buying these ASX shares today

None of this is free money.

Wesfarmers carries a premium valuation that leaves little room for a consumer downturn.

Goodman is making enormous capital commitments into a data centre market that could eventually oversupply.

Meanwhile, CSL still has to prove Vifor can stabilise after guiding to a roughly 25% revenue decline.

Foolish takeaway

I am not trying to pick the best performers of the next 12 months, but to own businesses that will be much larger in 2036 than they are today.

Wesfarmers, Goodman Group and CSL each have a credible path to that outcome.

For patient investors interested in long-term compounding, that is the bar these ASX shares need to clear.

The post 3 ASX 200 shares I'd buy for the next decade appeared first on The Motley Fool Australia.

His basic investing concepts include a long-term, value-focused approach to investing, and he has decades of experience identifying high-quality businesses and holding them over the long term.

His investing wisdom boils down to a few key philosophies: rational decision-making, patience, and focus on high-quality businesses.

With that in mind, there are three ASX 200 stocks that I think look like something Warren Buffett would invest in.

Wesfarmers Ltd (ASX: WES)

Warren Buffett famously prioritises good-quality businesses. He always looks for companies with a strong history, trustworthy management, and reliable long-term profit growth. 

Australian conglomerate, Wesfarmers, embodies all three of these key traits. 

The company is well-established and financially sound with a history of reliable growth and stability. 

The retail giant also has a huge and highly diversified exposure across multiple industries and sectors. It owns and operates major everyday brands including Bunnings, Kmart, Target, and Officeworks. It also has operations across health and wellbeing, industrials, chemicals, energy, and even more.

Not only that, but it continually focuses on expanding its markets, product categories and digital capabilities to drive long-term growth. 

It's this stability and consistent long-term net profit growth that make Wesfarmers stand out amongst other ASX blue-chip shares. 

Transurban Group Ltd (ASX: TCL)

One of the key qualities Warren Buffett looks for in an investment is a strong competitive moat.

Major toll-road operators, like Transurban, are a great example of businesses with deep structural advantages that help protect their long-term profitability.

Transurban shares are classically defensive because its services are essential. The company builds and operates major urban toll road networks, tunnels, and bridges and operates 22 assets across Australia, the US, and Canada.

Even in the event of a downturn, people still need to travel to work or transport goods and services. Transurban's toll roads typically have stable traffic volumes year-round, which means the business enjoys resilient cash flow regardless of whether the economy is booming or slowing.

Transurban's tolls generally increase according to inflation or its long-term agreements. That means Transurban can increase revenue over time without necessarily needing to win more customers.

Transurban owns an asset that can raise prices while customers continue using it. That's a very attractive trait for investors like Warren Buffett.

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

Soul Patts is another ASX 200 share which fits perfectly into the Warren Buffett style of investing. 

In fact, the Australian diversified investment house is often compared to Warren Buffett's Berkshire Hathaway because it invests in a broad portfolio of assets. These range from ASX-listed companies, to private credit, to real estate, and others.

It is widely regarded as Australian dividend royalty and it's also one of the few ASX shares that have continually raised its dividend payments over the past 28 years.

Soul Patts is heavily value-orientated. The company explicitly targets businesses capable of long-term compounding. It also focuses on investments where the price paid is justified by the company's underlying quality, cash flows and long-term prospects. That's a classic Warren Buffett strategy. 

The post These 3 ASX 200 shares look like classic Warren Buffett investments appeared first on The Motley Fool Australia.

Of course, we cannot know which ASX shares Buffett would actually buy. He may look at the Australian market very differently from me, and price would also play a major role in any investment decision.

What we can do is look at the types of businesses he has historically favoured and ask which ASX shares appear to share some of those characteristics.

Here are three that stand out to me.

Wesfarmers Ltd (ASX: WES)

One trait I associate strongly with Buffett is a preference for businesses that are relatively easy to understand.

Wesfarmers certainly fits that description in my opinion.

Its portfolio includes consumer businesses such as Bunnings, Kmart, and Officeworks, which sell products millions of Australians regularly buy. These are established brands with large customer bases and strong positions in their respective markets.

I think Bunnings is particularly interesting from a Buffett-style perspective. Its scale, brand recognition, and store network would be extremely difficult for a new competitor to replicate.

Wesfarmers also has a long history of allocating capital across different businesses. That is another characteristic I would look for when trying to identify a company Buffett might appreciate. Strong management teams can create significant value when they have the discipline to invest heavily in attractive opportunities while avoiding poor ones.

The price still has to make sense, but I think Wesfarmers has many of the business qualities I would expect a Buffett-style investor to value.

REA Group Ltd (ASX: REA)

Buffett has often invested in companies with powerful competitive advantages.

REA Group is one ASX share I think fits that profile particularly well.

Its realestate.com.au platform has become an important part of the Australian property market. Buyers naturally want to search where the largest number of properties are listed, while sellers and real estate agents want to advertise where the largest audience is looking.

That creates a powerful network effect. As more buyers use the platform, it becomes more valuable to advertisers. That in turn can attract more listings, which helps keep buyers coming back.

Businesses with this type of competitive advantage can potentially protect their market position for a very long time.

REA Group also benefits from a relatively capital-light digital business model, meaning growth does not necessarily require huge spending on physical assets.

For me, those qualities make it the kind of ASX business that deserves a closer look through a Buffett-style lens.

CSL Ltd (ASX: CSL)

Another Buffett characteristic I would look for is a business with a sustainable leadership position in an industry where replacing an established operator would be difficult.

CSL fits that description for me. The healthcare company has spent decades building its plasma collection network, manufacturing capabilities, scientific expertise, and relationships across global markets.

Those assets cannot simply be recreated overnight.

Demand for many of CSL's therapies is also connected to serious medical needs, giving the business exposure to healthcare demand that can persist through different economic environments.

There is also potential for long-term growth as the company expands production, develops new therapies, and reaches more patients around the world.

CSL is more complicated than some classic Buffett investments, but I think its competitive position, global scale, and long-term focus give it several qualities he has historically looked for in businesses.

Foolish takeaway

Trying to guess exactly what Warren Buffett would buy is unlikely to get investors very far.

I think the more valuable exercise is studying the qualities behind his investments.

Strong competitive advantages, understandable business models, capable management, and the ability to generate attractive returns over many years are all characteristics worth looking for.

Wesfarmers, REA Group, and CSL each appear to tick several of those boxes in my view.

The post How to find ASX shares that Warren Buffett might buy appeared first on The Motley Fool Australia.

At the time of writing, shares in the conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks, and Priceline – are down around 1.5% and are changing hands for $83.58 a piece.

Today's decline follows a 4% drop in the share price yesterday.

Interest rate and inflation concerns, and cost of living pressures have acted as strong headwinds for the company so far this year. 

Wesfarmers shares have been pretty volatile for the year to date, swinging anywhere between an annual low of $71.26 in mid-May and a high of $92.96 in mid-July.

The shares are now around 2% higher for the year to date, but still 7% lower than a year ago.

For context, the S&P/ASX 200 Index (ASX: XJO) is up around 4% for the year to date, and roughly 1.5% higher than 12 months ago.

What do brokers tip next for Wesfarmers shares?

Wesfarmers is due to announce its FY26 results on the 27th of August. 

Investors are eager to find out Wesfarmers' FY26 key group financial metrics and final dividend size. The result is expected to influence the direction of Wesfarmers shares and sentiment about the company's outlook.

Wesfarmers has already paid a fully-franked interim dividend of $1.02 per share. Consensus estimates point to a final FY26 dividend of around $2.20.

It looks like the experts are pretty bearish on the outlook for Wesfarmers shares ahead of its results announcement.

According to Market Index data, the majority of brokers have a sell rating on the conglomerate's shares. The $78.16 average target price implies a potential downside of around 7% at the time of writing.

The data is similar on TradingView. Again, the majority (nine out of 15) have a strong sell rating on the consumer discretionary shares. However, five still think the shares are a hold, and one analyst rates the stock as a buy.

The average $77.56 target price implies a downside of around 7%, at the time of writing. Although some think that the shares have the potential to fall up to 22% to $65.10 over the next 12 months.

Morgan Stanley has a sell rating and a $79 price target. The broker recently warned that the rally in consumer discretionary stocks has "run ahead of fundamentals and is unlikely to prove durable".

Alto Capital's Tony Locantro also has a sell rating. He thinks that much of Wesfarmers' quality and long-term growth outlook is already fully reflected in the current valuation. He added that future upside may be constrained by elevated market expectations.

The post Here's what brokers tip for Wesfarmers shares over the next 12 months appeared first on The Motley Fool Australia.

Solid results are being sold, and weak guidance is being punished without mercy.

The S&P/ASX 200 Index (ASX: XJO) has now fallen for four consecutive sessions, closing Monday at 9,073.2 points.

Here are five lessons from the first half of August.

Lesson 1: FY26 was fine, FY27 is the problem

Company after company has delivered a respectable full-year result, only to watch its share price fall on their expected outlook.

JB Hi-Fi Ltd (ASX: JBH) is the clearest example.

The company reported record FY26 sales of $11.06 billion and lifted its dividend 22.5% to 337 cents per share.

The shares still crashed 12.3% on Monday, their worst day on record, after July comparable sales came in negative.

SEEK Ltd (ASX: SEK) was a similar story.

Revenue rose 10% to $1.2 billion and adjusted net profit jumped 28% to $199.1 million.

However, the shares fell 14.4% because FY27 guidance implied only single-digit growth from here.

Lesson 2: The consumer is the story of this reporting season

The most valuable information this month has come from trading updates, with consumer-facing stocks being particularly hard hit.

Premier Investments Ltd (ASX: PMV) cut its FY26 earnings guidance and posted its first annual sales decline in years.

Similarly, Super Retail Group Ltd (ASX: SUL) fell in sympathy with both.

The banks have not been immune either.

Commonwealth Bank of Australia (ASX: CBA) revealed that mortgage applications had fallen 15% since the May Budget, with investor applications down 28%.

National Australia Bank Ltd (ASX: NAB) also reported the same 15% decline in its third-quarter update.

Lesson 3: Capital returns are flowing freely

The operating outlook may be cautious, but corporate balance sheets are not.

Telstra Group Ltd (ASX: TLS) announced a fresh $1 billion buyback and lifted its full-year dividend 10.5% to 21 cents.

JB Hi-Fi raised its payout ratio to 75% of net profit.

For its part, Suncorp Group Ltd (ASX: SUN) added a 10 cent special dividend alongside a buyback of up to $250 million.

More than $2 billion of buybacks have been announced in the past fortnight alone.

Lesson 4: Being big does not protect you

CBA delivered a cash profit of $10,982 million, up 7.1%, and lifted its full-year dividend to $5.05. The shares fell 2.2% the following session anyway.

Telstra grew underlying EBITDAaL 4% to $8,341 million and still closed 3.2% lower on results day.

When expectations are already high, a good result may not always be enough.

Lesson 5: Volatility is at extraordinary levels

SEEK fell 14.4% to $13.76 on results day.

Two sessions later it rose 9.1% to $15.18.

Nothing changed about that business in 48 hours. The market simply changed its mind about what the FY27 guidance actually meant for investors, which tells you how thin conviction is across the market right now.

The reporting season week ahead

The next few days are the busiest of the entire reporting season.

BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), Cochlear Ltd (ASX: COH) and Pro Medicus Ltd (ASX: PME) all report on Tuesday.

Goodman Group (ASX: GMG) follows on Thursday.

Fortescue Ltd (ASX: FMG), Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are all due before the end of the month.

Foolish takeaway

The pattern running through this reporting season is consistent enough to be useful.

Backward-looking numbers are being ignored, whereas forward-looking commentary is moving share prices significantly.

For long-term investors, this environment creates opportunity.

Quality businesses are being marked down heavily on a single soft quarter of trading.

The trick is to separate a cyclical wobble from a longer-term problem and identify ASX stocks that have been unfairly marked down.

The post Reporting season half-time report: 5 lessons from August so far appeared first on The Motley Fool Australia.

For me, I would want businesses capable of increasing their earnings over time, but I would also place plenty of weight on dependable cash flows, dividends, diversification and companies that can hold up reasonably well through different economic environments.

With that in mind, here is how I would think about building a 10-share ASX retirement portfolio.

Start with dependable income

I would want a meaningful part of the portfolio invested in companies with relatively predictable cash flow.

Telstra Group Ltd (ASX: TLS) would be one of my first choices. Australians are unlikely to stop needing mobile and internet services in retirement, recessions or booming markets, giving Telstra a large base of recurring revenue.

I would add Transurban Group (ASX: TCL) for exposure to long-life toll road infrastructure. Traffic growth and regular toll increases can help its cash flows rise over time.

APA Group (ASX: APA) would give my retirement portfolio another source of infrastructure income through its extensive energy network.

For exposure to the banking sector, I would probably choose Commonwealth Bank of Australia (ASX: CBA). Its strong market position and history of paying substantial dividends make it a natural retirement candidate in my view.

Add defensive businesses

I think a retirement portfolio also needs defensive companies whose products and services remain important regardless of the economic backdrop.

Coles Group Ltd (ASX: COL) fits that description for me. People need groceries in almost every economic environment, while its supermarket network gives the company a large and established position in Australian retail.

I would also include CSL Ltd (ASX: CSL). Healthcare demand can be resilient, while CSL's global operations and long-term growth opportunities give the portfolio something more than income alone. It also currently offers a reasonable dividend yield.

Then there is Wesfarmers Ltd (ASX: WES). Businesses such as Bunnings and Kmart give Wesfarmers exposure to some of Australia's strongest retail brands, while management has a long record of investing capital across different opportunities.

Keep some growth in the portfolio

Retirement could last for decades, so I would not want to give up on growth.

Goodman Group (ASX: GMG) would be one of my preferred choices here. Its logistics property portfolio already gives it exposure to high-quality global assets, while data centres could become an increasingly important growth engine.

I would also include TechnologyOne Ltd (ASX: TNE). Its recurring software revenue, expanding international presence and long customer relationships give it the kind of compounding potential I would be happy to own for many years.

Finally, I would add Pro Medicus Ltd (ASX: PME). Its medical imaging software has gained significant traction with major healthcare organisations, and I think its international growth runway remains substantial.

These growth shares may not provide the largest dividends today, but they can help the portfolio's earnings base grow over time.

Foolish takeaway

For me, a strong retirement portfolio needs to provide dependable income today, businesses capable of protecting that income, and enough growth to help the portfolio keep pace with a retirement that could last 20 years or 30 years.

I think this mix would give me all three.

The post How to build a strong ASX retirement portfolio with 10 shares appeared first on The Motley Fool Australia.

Three of the biggest choices are the Vanguard Australian Shares Index ETF (ASX: VAS), Vanguard MSCI International Shares ETF (ASX: VGS) and Vanguard Diversified High Growth ETF (ASX: VDHG).

Here's how they compare.

VAS: the Australian dividend favourite

VAS aims to track the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to around 300 Australian companies.

Its portfolio is heavily weighted towards the country's biggest banks and miners. Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) each account for more than 10%, while Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), Rio Tinto Ltd (ASX: RIO) and Telstra Group Ltd (ASX: TLS) are also major holdings.

That concentration can be a strength and weakness. Investors get exposure to established Australian businesses and their dividends, but less geographic and sector diversification.

This Vanguard ETF charges a management fee of just 0.07% per year. It has returned around 4% year to date and 3% over the past year, with a five-year total return of roughly 16%.

VGS: the global growth option

VGS offers exposure to more than 1,200 companies across developed markets outside Australia.

This Vanguard ETF has just hit a record high of $164.45, delivering a 12% gain over the past year and around 62% over five years.

The United States makes up roughly 75% of the portfolio, while information technology accounts for about 30%. Its largest holdings include NVIDIA, Apple, Alphabet, and Microsoft.

That gives investors significant exposure to powerful trends such as artificial intelligence, cloud computing, digital advertising and e-commerce.

The trade-off? VGS can be more vulnerable to falls in US technology stocks and currency movements.

VDHG: the set-and-forget option

VDHG takes a very different approach. Rather than investing in one market, it combines several Vanguard index funds under one ETF. It includes VAS and VGS, alongside exposure to smaller international companies, emerging markets and bonds.

That means investors can gain exposure to thousands of shares and bonds through a single investment. The portfolio of this Vanguard ETF is regularly rebalanced, meaning investors don't have to constantly adjust their holdings.

For someone who wants a simple buy-and-hold strategy, that's a major attraction.

VDHG has returned around 8% over the past year and 26% over five years.

Which ETF is best?

On returns, VGS is the clear winner of the three top Vanguard ETFs, with its international exposure delivering significantly stronger gains over the past five years.

But the best Vanguard ETF depends on what you're after. VAS could appeal to investors seeking Australian shares, dividends and exposure to familiar local companies. VGS looks more compelling for those chasing international diversification and stronger growth potential.

VDHG, meanwhile, may suit investors who value simplicity and broad diversification above all else, combining shares and bonds under one ETF.

So while VGS has been the standout performer, VDHG could still be the better choice for investors who want a simple, set-and-forget portfolio.

The post Which is the best Vanguard ETF? VAS, VGS and VDHG compared appeared first on The Motley Fool Australia.

Rather than having to research and buy a dozen or more dividend paying stocks, you can get that diversity, and more, from an ETF with a single investment.

I mention buying a dozen or more dividend stocks because you don't want to simply buy one or two high yielding companies. While that may work out in the shorter-term, even quality companies with a good track record of annual dividend payouts can run into headwinds that could slash the passive income you were expecting to bank.

While ASX ETFs don't remove all of that risk, they do work to help smooth your returns over time.

With that said…

Two top passive income ASX ETFs to buy today

The first fund I'd buy is the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

One of the appealing things for passive income investors is that this ASX ETF gives investors instant diversity through its portfolio of 40 to 60 high-yielding, blue-chip ASX shares. The fund's management team screens these for high dividend and franking outcomes based upon expected future gross dividend payments.

As of 31 July, the ASX ETF's top three holdings are Commonwealth Bank of Australia (ASX: CBA) BHP Group Ltd (ASX: BHP) and Wesfarmers Ltd (ASX: WES).

And HVST pays out dividends on a monthly basis, so your next passive income payout is never too far away.

Because the ETF's holdings are actively managed and rebalanced every three months to target higher yielding ASX dividend stocks, the annual management fee is 0.72%.

As at 31 July the HVST had 12-month trailing yield of 5.6%, 63% franked. Those franking credits bring the grossed-up yield to 7.1%.

Which brings us to the second ASX ETF I'd buy to target $10,000 a year in passive income, the iShares S&P/ASX Dividend Opp ESG Screened ETF (ASX: IHD).

IHD provides exposure to 50 of the highest-yielding shares on the S&P/ASX 300 Index (ASX: XKO). The fund will appeal to ESG investors, with management screening stock selection to avoid companies engaged in serious ESG controversies.

As at 31 July, IHD's top three holdings are BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

IHD trades on a 4.1% trailing dividend yield, franked at around 76%. That equates to a 5.5% grossed-up yield.

How much do I need to invest today?

Working with the grossed-up trailing dividend yields here – and taking note that future yields could be higher or lower – just how much would you need to invest in these two ASX ETFs for $10,000 a year in passive income?

Well, assuming you invest the same amount in each fund, then you'll receive an average grossed-up yield of 6.3%.

So, for $10,000 a year in passive income, you'd need to invest $158,730 today.

You can also invest a smaller amount on a monthly basis, and you'll reach your income goal in good time.

The post Why I'd buy these 2 ASX ETFs for $10,000 a year in passive income appeared first on The Motley Fool Australia.

And it is. But it is not some magical number that only high-income earners can ever reach.

For many Australians, the path to a seven-figure super balance is about doing several sensible things for a very long time.

Start with the power of time

The biggest advantage most Australians have is time.

Superannuation is built for long-term investing. Contributions go in during working life, returns can be reinvested, and compounding has years to do its work.

That final point is important. Compounding is what happens when returns start earning returns of their own. Early on, the progress can feel slow. But over decades, it can become powerful.

If someone started from zero and invested $500 per month into super, a 10% average annual return could grow that balance to $1 million in roughly 30 years.

At $1,000 per month, the timeframe could fall to around 23 years.

These are only rough examples and returns are never guaranteed. But they show the basic idea that the earlier someone starts, the more time their money has to work.

Invest for growth first

A person trying to build a $1 million superannuation balance should probably think carefully about growth.

That does not mean taking reckless risks. But if retirement is decades away, a portfolio sitting too heavily in cash or low-growth assets may struggle to compound at the rate required.

This is where shares can play an important role.

Long-term compounders could include businesses with strong market positions, growing earnings, and the ability to reinvest for many years.

Examples on the ASX might include the likes of Goodman Group (ASX: GMG), Xero Ltd (ASX: XRO), ResMed Inc (ASX: RMD), REA Group Ltd (ASX: REA), and Wesfarmers Ltd (ASX: WES).

Exchange traded funds (ETFs) can also help investors spread money across hundreds or thousands of companies rather than relying on a few individual shares.

Add more when possible

Investment returns matter, but so do contributions.

One of the most practical ways to build superannuation is to add extra money when possible, whether through salary sacrifice, personal contributions, or other contribution strategies.

This does not have to be big. Even small extra contributions can make a difference when they are invested for many years. The key is consistency.

A pay rise, bonus, tax refund, or lower household expense can all create an opportunity to put more money into superannuation. The money may not feel life-changing in the moment, but inside a long-term investment structure, it can become far more powerful.

Investors do need to keep contribution caps and personal circumstances in mind. But the principle is simple: the more that goes in early, the harder compounding can work later.

Then protect the result

Getting to $1 million is only one part of the story.

As retirement gets closer, investors may want to gradually shift the portfolio from maximum growth toward a balance of growth, income, and capital preservation.

That could mean holding more dividend-paying ASX shares, infrastructure assets, listed property, bonds, cash, or diversified funds. The right mix will depend on age, risk tolerance, spending needs, tax position, and retirement goals.

Foolish takeaway

A $1 million superannuation balance is not built overnight. It is built through time, contributions, investment returns, and discipline.

The key is creating your plan and sticking with it through thick and thin.

The post How an Australian could retire with $1 million in superannuation appeared first on The Motley Fool Australia.

I want them to hold good quality ASX shares that can stand the test of time. That's high-quality businesses with strong fundamentals, a competitive advantage and maybe even a steady passive income. 

Here are the ASX 200 shares I'd be happy for my kids to own for the next 20 years.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is a premier blue-chip Australian stock with a well-established and financially sound history of reliable growth and stability.

The retail giant has a huge and highly diversified exposure across multiple industries and sectors. It owns and operates major everyday brands including Bunnings, Kmart, Target, and Officeworks. It also has operations across health and wellbeing, industrials, chemicals, energy, and even more.

Over the past 12 months, the ASX 200 shares have climbed around 1% to $89.50 at the time of writing. 

But quick returns aren't my goal. Wesfarmers may not be a growth stock, but it generally and steadily trends upward over time. And a company of this size isn't going anywhere.

The best part is that, thanks to its sheer size and market dominance, it has been able to pay its shareholders a regular fully-franked dividend dating back to 2004. 

The conglomerate most recently paid its shareholders a fully-franked interim dividend of $1.02 per share in March. And as the company's earnings climb, its payout is expected to rise too. Wesfarmers is expected to pay an annual $2.13 dividend per share for FY26. Based on the current share price, that translates to a forward dividend yield of around 2.4% for FY26. 

Origin Energy Ltd (ASX: ORG)

Unlike Wesfarmers, Origin is a defensive stock. This means the company is generally resilient to sharemarket volatility and global uncertainty. After all, energy is an essential service. People won't stop powering their homes because the purse strings have tightened. Australians will always need power.

And Origin's assets operate under long-term contracts, often with rising income, which gives it another strong defensive quality.

The ASX 200 company's shares are a great option for passive income because they generate substantial cash flows, especially when energy prices are elevated. This means Origin can then pay high yields to shareholders.

In the first half of FY26, Origin Energy paid its investors 30 cents per share, fully franked. The business is forecast to pay an annual 61 cent per share dividend for FY26. Using the $10.91 share price at the time of writing, this translates to a forward yield of around 5.6%, including franking credits, at the time of writing.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is an entirely different type of ASX 200 stock again. It's not cyclical or defensive, but it's shares do have the potential to give strong growth and good compounding benefits over the long term. 

The business is aggressively expanding and is heavily focused on growing its Software-as-a-Service (SaaS) annual recurring revenue and scaling its enterprise solutions internationally.

The company provides enterprise software to customers which include councils, universities, government agencies, and large businesses. It also has a cloud-based software model which generates recurring revenue. It has a sticky subscriber base because, once customers adopt its software, switching is costly and disruptive.

The ASX 200 business also has the potential for a long runway for growth as more customers migrate to its platform.

What's better is that it looks like TechnologyOne is one of few tech companies which actually benefits from (AI) product development, rather than challenging it. 

The company pays a small dividend to its shareholders too, dating back to 2004. It most recently paid an interim 8 cents per unit dividend, 75% franked, in June. Using the $33.12 share price at the time of writing, that implies a yield of around 0.5%.

The post 3 ASX 200 shares I'd want my kids to own for the next 20 years appeared first on The Motley Fool Australia.

Two of Vanguard's biggest Australian-listed funds, the Vanguard Australian Shares Index ETF (ASX: VAS) and Vanguard MSCI Index International Shares ETF (ASX: VGS), offer very different paths to wealth.

So, which one has come out on top?

VAS: The Aussie dividend machine

The Vanguard Australian Shares Index ETF tracks the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to around 300 Australian companies in a single trade.

And VAS has been no slouch. Vanguard's largest ETF gained around 6% over the past month and is up roughly 6% year to date. Over five years, it has delivered about 19%, while its 10-year return sits at approximately 55%.

The portfolio is packed with familiar names, including Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES) and Telstra Group Ltd (ASX: TLS).

In other words, banks and miners are doing a lot of the heavy lifting. That concentration has its perks. Investors get exposure to some of Australia's biggest companies and a healthy stream of dividend income.

The catch? Australia's market isn't exactly a diversification champion. Financials and resources make up a hefty chunk of the index.

Still, VAS is exceptionally cheap, charging a management fee of just 0.07% per year. It also recently paid a distribution of 48.99 cents per unit.

VGS: The global growth engine

This Vanguard ETF takes the opposite approach. Rather than putting most of your eggs in the Australian basket, it provides exposure to more than 1,300 large and mid-sized companies across developed markets worldwide.

And lately, that strategy has been winning. VGS is up around 1% over the past month and 6% year to date. Over the past 12 months, it has gained approximately 12%, while its five-year return is around 63%.

But the real eye-catcher is its 10-year performance: approximately 195%, comfortably ahead of VAS.

The fund owns global heavyweights including Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL) and Nvidia Corp (NASDAQ: NVDA), alongside leading technology, healthcare, consumer and industrial companies.

Investors pay a little more for that global exposure, with VGS charging a management fee of 0.18%. It recently paid a distribution of 80.11 cents per unit.

So, which Vanguard ETF wins?

Both ETFs can have a place in a long-term portfolio, but they do different jobs.

VAS offers Australian exposure, dividend income and a cheap way to own the local market. VGS provides considerably broader geographical diversification and exposure to some of the world's fastest-growing companies.

If past performance is the scoreboard, VGS is the clear winner.

That doesn't necessarily make VAS a loser. For many investors, owning both Vanguard ETFs could provide a compelling combination of Australian income and global growth.

The post VAS vs VGS: One Vanguard ETF has clearly pulled ahead appeared first on The Motley Fool Australia.

The retail giant has a huge and highly diversified exposure across multiple industries and sectors.

It owns and operates major everyday brands including Bunnings, Kmart, Target, and Officeworks. It also has operations across health and wellbeing, industrials, chemicals, energy, and even more.

At the time of writing, the business is the 6th largest company listed on the ASX with a market cap of around $102 billion. 

The company is well-established and financially sound with a history of reliable growth and stability. 

As a retail company, Wesfarmers is typically considered to be a cyclical stock. But its highly diversified portfolio means it also has some strong defensive qualities.

That's one of the key benefits of this type of cyclical stock, is that it tends to outperform during an economic recovery.

This year is a great example. Wesfarmers shares crashed in February as Australians tightened their purse strings and prepared for ongoing instability. 

But then the stock rebounded strongly starting in late-May after new signs of interest rate cuts and improving inflation figures.

At the time of writing, Wesfarmers shares are trading for $89.54 a piece, which is around 3.5% below a year-to-date peak recorded in late-July.

It's clear that Wesfarmers shares are resilient, and combined with the company's sheer size and market dominance, it has been able to pay its shareholders a consistent passive income.

But what does that passive income look like?

Let's find out.

How many Wesfarmers shares can I get for $10,000?

The current $89.54 share price means a $10,000 investment will buy you around 112 shares.

What dividend does Wesfarmers pay its shareholders?

Wesfarmers has a long history of paying regular fully-franked dividends dating back to 2004. These are typically paid out every six months, in March and September.

The conglomerate most recently paid its shareholders a fully-franked interim dividend of $1.02 per share in March.

And as the company's earnings climb, its payout is expected to rise too.

Looking ahead, Wesfarmers is expected to pay an annual $2.13 dividend per share for FY26, and then $2.31 in FY27.

Based on the current $89.54 share price, that translates to a forward dividend yield of around 2.4% for FY26. The yield could be roughly 2.6% for FY27.

So, what's the estimated passive income off of a $10,000 investment in FY27?

Using the estimated payout figures above, we can calculate roughly how much income to expect from a $10,000 investment in Wesfarmers shares.

If the conglomerate pays the expected $2.13 per-share dividend in FY26, your 112 shares would generate $238.56 in annual passive income.

Assuming Wesfarmers then pays the forecasted $2.31 dividend in FY27, those 112 shares would generate another $258.72 in passive income for the year.

It's not a mind-blowing amount of passive income. But you're paying for a blue-chip name and the stability that comes with it.

The post If I invest $10,000 in Wesfarmers shares, how much passive income will I get in FY27? appeared first on The Motley Fool Australia.

But with the shares trading near $89.45, some experts think investors should hit the sell button.

Wesfarmers shares were down a modest 0.7% in Monday afternoon trade, broadly tracking the market's 0.5% decline.

The issue isn't the business. It's the price.

Wesfarmers keeps finding new ways to grow

There's plenty to like about Wesfarmers shares. The company has opened five Anko stores in the Philippines and plans to add another five by the end of FY27.

Back home, Bunnings continues to expand into new categories, including pet products and automotive accessories. Kmart is also testing larger K Home stores as it looks to capture more of the furniture market.

Bunnings and Kmart remain exceptional retailers, combining strong brands, competitive pricing, and impressive returns on capital.

Wesfarmers is also developing potential growth engines through Priceline, OnePass, customer data, retail media, and its Mt Holland lithium project.

OnePass is particularly interesting because it could encourage customers to shop across multiple Wesfarmers businesses.

The company is also deploying artificial intelligence across merchandising, marketing, supply chains, and productivity.

So what's the problem?

The valuation is getting spicy

At the current share price, Wesfarmers trades at almost 33 times estimated FY27 earnings. That's a hefty valuation — and one that leaves little room for disappointment.

Morgan Stanley has a sell rating and a $79 price target. The broker warned that the rally in consumer discretionary stocks has "run ahead of fundamentals and is unlikely to prove durable".

Alto Capital's Tony Locantro also has a sell rating, arguing that much of Wesfarmers' quality and long-term growth prospects are already reflected in the share price.

What do other analysts think?

TradingView data paints an even gloomier picture.

Of 15 analysts, nine rate Wesfarmers shares a strong sell, five say hold, and just one recommends buying.

The average price target is $77.35, implying around 13% downside. The most bearish forecast sees the shares falling 27% to $65.10.

The dividend could soften the blow

Wesfarmers will report its FY26 results on 27 August, with investors watching its financial metrics and final dividend.

The company has already paid a fully-franked interim dividend of $1.02 per share, while consensus expects a final dividend of around $2.20.

Analysts forecast FY27 dividends could reach $2.33 per share, up 7.9%. That's a prospective yield of roughly 2.6% at the current price.

It's hardly a monster yield, but the growing dividend could still appeal to income-focused investors.

Foolish Takeaway

Wesfarmers remains an outstanding collection of businesses. The question is whether $89.45 is an outstanding price to pay for them.

With the shares trading at a lofty earnings multiple and most analysts expecting downside, investors may want to consider whether the company's excellent growth prospects are already baked into the price.

The upcoming FY26 result could provide the next major test.

The post Wesfarmers shares are up 10%: Why experts are saying sell appeared first on The Motley Fool Australia.

With $5,000 to deploy, the goal is not to find the next rocketship.

The goal is to own a handful of quality businesses, understand why you own them, and start the compounding process.

Here are three I would consider.

1. The core of a first ASX shares portfolio: Betashares Australia 200 ETF

The first of my three ASX shares is not a company at all.

The Betashares Australia 200 ETF (ASX: A200) holds the 200 largest businesses listed on the ASX in a single trade.

That includes the banks, the big miners, the supermarkets, and everything in between.

The ETF's management fee is 0.04% per year. On a $2,000 holding, that works out to roughly 80 cents annually.

Distributions are paid quarterly and typically arrive with franking credits attached.

For a first portfolio, this ETF does the heavy lifting on diversification and takes the guesswork out of stock picking.

2. The blue chip: Wesfarmers

Wesfarmers Ltd (ASX: WES) owns Bunnings, Kmart, Officeworks and a chemicals and fertilisers division.

It is a business most Australians are familiar with. Sometimes, familiarity is useful when learning how to analyse companies.

The conglomerate has also kept growing through a difficult stretch for household budgets.

Many of its businesses are defensive, meaning consumers continue to buy products even during a downturn. For example, Bunnings and Kmart both run everyday low-price models, which tends to help when shoppers tighten their purse strings.

In its most recent earnings, its FY26 half-year result in February, Wesfarmers managed to grow revenue 3.1% to $24.2 billion, while growing statutory net profit after tax 9.3% to $1,603 million.

The board declared a fully franked interim dividend of $1.02 per share, an increase of 7.4%.

Return on equity excluding significant items came in at 32.7%, which is an outstanding figure for a business of this size.

Wesfarmers is scheduled to report its full-year result in late August.

3. The income leg of your ASX shares portfolio: Telstra

Telstra Group Ltd (ASX: TLS) rounds out my three ASX shares.

The telco is about as defensive as the local market gets. Australians keep paying their phone bills regardless of what interest rates do.

In its first-half result, Telstra grew mobile services revenue 5.6% and declared an interim dividend of 10.5 cents per share.

The company also expanded its stock buy-back from up to $1 billion to up to $1.25 billion for FY26.

Telstra may not be a growth company, but it is a steady, cash-generative business that pays you while you wait.

Foolish takeaway

A reasonable split might be $2,000 into A200 and $1,500 into each of the two companies.

That gives you broad market exposure, a quality operator, and a reliable income payer.

None of these ASX shares will double overnight, and so for investors looking to get rich quick these may not be the right picks.

But for investors serious about creating long-term wealth, these three are a good starting point.

The post Top 3 ASX shares to invest your first $5,000 in appeared first on The Motley Fool Australia.

But would I buy any of these shares at present?

I see a strong long-term opportunity in one, a share I would avoid for now, and a high-quality company that I would approach more carefully at its current price.

Here's my verdict on all three.

NextDC shares

I would buy NextDC shares for long-term exposure to artificial intelligence (AI).

AI requires far more than advanced chips and software. It also depends on enormous amounts of secure data centre capacity, electricity, cooling, and connectivity. NextDC is building the infrastructure that allows hyperscalers, cloud platforms, and AI companies to run increasingly demanding workloads.

Demand is already turning into major customer commitments. NextDC's contracted utilisation reached 667 megawatts in April after increasing by 60%, while its forward order book grew by 83% to 544 megawatts. The company expects its contracted capacity to generate more than $1 billion of EBITDA over time as new data halls are completed and customers begin paying for them.

I think this is an important distinction. NextDC is investing heavily because customers have already committed to taking capacity, giving the company greater visibility over future revenue.

The scale of the expansion still creates execution risk. NextDC must fund, build, and energise its facilities while controlling construction costs. Power availability and planning approvals could also slow development.

Even so, I believe the AI infrastructure opportunity is large enough to justify buying NextDC shares with a long investment timeframe.

Westpac shares

I would pass on Westpac shares for now.

My main concern is the bank's exposure to Australian housing and retail banking. Westpac had an Australian mortgage portfolio of approximately $536 billion at the end of March, making home lending a major influence on its earnings and risk profile.

That leaves the bank exposed to changes in housing activity, mortgage competition, interest rates, and the financial health of Australian households. A weaker housing market could slow credit growth, while pressure on borrowers may eventually lead to higher arrears and bad debts.

Westpac's current mortgage credit quality remains sound, with 90-day delinquencies and impaired mortgages still at relatively low levels. However, I am more cautious about where housing conditions could head from here and how much growth Westpac can generate from such a mature market.

For me, the concentration in retail banking makes the risk and reward less attractive than the opportunities available elsewhere on the ASX.

Wesfarmers shares

My view on Wesfarmers sits somewhere between a hold and a buy.

I continue to love the underlying business. Bunnings and Kmart are exceptional retailers with strong brands, low-price positions, and impressive returns on capital. Wesfarmers is also building new growth avenues through Priceline, OnePass, customer data, retail media, and the Mt Holland lithium project.

OnePass is particularly interesting because it can encourage customers to spend across several Wesfarmers businesses. Management is also using artificial intelligence to improve merchandising, marketing, supply chains, and productivity throughout the group.

The difficulty is the entry price. Wesfarmers shares are trading around $91.28 after a strong run, which translates to a forward PE ratio of 33x estimated FY27 earnings. I think that suggests investors already expect plenty from the company.

I would be comfortable holding Wesfarmers and perhaps buying a modest position today. A cheaper share price would make me far more enthusiastic about adding heavily.

Foolish takeaway

NextDC is my strongest buy of the three because AI demand is creating a substantial pipeline of contracted growth.

I would avoid Westpac for now and treat Wesfarmers as a hold to moderate buy. I remain very positive about Wesfarmers as a business, although patience could provide a better opportunity to own more of it.

The post Should I buy NextDC, Westpac, and Wesfarmers shares today? appeared first on The Motley Fool Australia.

Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are all scheduled to report on consecutive days.

Their combined consensus net profit runs to more than $5.6 billion.

As a result, these three companies are a great barometer of Australian consumer behaviour on the calendar.

Why this week matters for ASX consumer staples shares

Households have spent two years absorbing cost-of-living pressures.

This year they absorbed something else as well. The RBA lifted the cash rate three times before pausing, taking it to 4.35%.

Rate rises take time to work through household budgets.

The FY26 results will be the first full-year window into how that tightening has changed what Australians end up putting in the trolley.

One technical note is worth making here. Wesfarmers is not classified as a consumer staples business, since Bunnings and Kmart sit in the discretionary bucket.

I have included Wesfarmers because it is a great indication of Australian household spending habits.

What recent earnings set the bar at

February's half-year results gave us the hurdle each company must clear.

Woolworths delivered the best results of the three.

Group EBIT rose 14.4%, and the board declared a fully franked interim dividend of 45 cents, up 15.4%.

Coles was more mixed.

Sales revenue lifted 2.5% to $23.6 billion, and group EBIT excluding significant items rose 10.2% to $1,231 million.

Supermarkets EBIT grew a strong 14.6%.

But statutory net profit fell 11.3% to $511 million, hit by a $235 million provision relating to the Fair Work Ombudsman proceedings.

The interim dividend still rose 10.8% to 41 cents, fully franked.

Wesfarmers grew revenue 3.1% to $24.2 billion and net profit 9.3% to $1,603 million.

Its interim dividend rose 7.4% to $1.02 per share, fully franked.

All three lifted their payouts, which tells you something about how confident these boards were halfway through the year.

The numbers these ASX consumer staples shares must beat

Share prices on results day are driven by the gap between reported profit and consensus, not by the size of the profit itself. A record result that misses expectations will often trade lower.

Margins are where I would focus.

Coles reported supermarket price inflation of 1.9% in the second quarter, or 1.7% excluding tobacco.

Low inflation is welcome for shoppers. However, it also removes an easy lever for revenue growth, which places all the pressure on volumes and cost control.

Investors should watch the gross margin lines closely.

A supermarket growing sales through promotional activity is not the same business as one growing through genuine volume.

Foolish takeaway

Three results across three days will produce a lot of noise.

The questions that matter for ASX consumer staples shares are the following.

Are volumes growing without discounting? Are margins holding as inflation fades? And is management confident enough about FY27 to say so plainly?

The post 3 days, 3 supermarkets: the reporting week that will shape ASX consumer staples shares appeared first on The Motley Fool Australia.