In the ever-evolving landscape of the Australian Securities Exchange (ASX), investors are constantly on the hunt for stocks that offer both growth potential and attractive dividends. This month, experts have identified two ASX dividend shares that stand out: Magellan Financial Group Ltd (ASX: MFG) and Metcash Ltd (ASX: MTS). Both companies, despite recent volatility, are currently trading at appealing price/earnings (P/E) ratios and have been marked as buy-rated by leading analysts.
Magellan Financial Group: Stabilizing Amidst Challenges
Magellan Financial Group, known for its diverse portfolio in global, Australian, and infrastructure share strategies, has faced significant challenges over the past few years. According to UBS, a major broker, Magellan’s market capitalisation is heavily supported by its cash and investment holdings. Despite a disappointing investment performance that led to a sharp decline in share prices, recent reports suggest a stabilization in key global and infrastructure strategies.
UBS highlights that Magellan has been proactive in managing its capital, having repurchased approximately 4% of its issued shares since February 2025. This move is seen as a strategic step to strengthen its position. However, the broker warns of elevated outflow risks, particularly in the infrastructure sector, following the departure of key portfolio manager Gerald Stack.
In June 2025, Magellan reported $0.2 billion in net outflows, but its total assets under management (AUM) increased by $0.3 billion to $39.6 billion due to investment gains.
At its current share price, Magellan is poised to offer a partially franked dividend yield of 5.3%, potentially reaching close to 7% with franking credits, making it an attractive option for dividend-focused investors.
Metcash Ltd: A Resilient Wholesale Powerhouse
Metcash Ltd, a leading wholesale distribution company in Australia, operates through three main divisions: food, liquor, and hardware. UBS describes Metcash as a robust entity, particularly noting its food division’s dominance as the largest supplier to independent food retailers under banners like IGA and Foodland. The company’s liquor and hardware divisions also hold significant market positions, supplying to well-known brands such as Bottle-O and Mitre 10.
The recent FY25 results prompted UBS to raise its price target for Metcash to $4.25, citing strong profit performance and cash realisation. The broker anticipates that lower interest rates will bolster trade activity and alleviate cost of living pressures, contributing to operating profit margin expansion in the retail and wholesale segments.
UBS projects that Metcash’s annual dividend per share could increase each year from FY26 to FY30, with a projected dividend of 19 cents per share in FY26, translating to a grossed-up dividend yield of 6.7% with franking credits.
Investment Outlook: Balancing Risks and Rewards
The recommendations for Magellan Financial Group and Metcash Ltd reflect a broader trend among investors seeking a balance between risk and reward in the current economic climate. While both companies have faced their respective challenges, their strategic initiatives and market positions offer promising prospects for dividend-seeking investors.
Magellan’s focus on stabilizing its investment strategies and proactive capital management, coupled with Metcash’s strong market presence and anticipated profit growth, underscore the potential for both share price appreciation and substantial passive income.
As investors navigate the complexities of the ASX, these two dividend shares provide compelling opportunities, though it remains crucial to consider the inherent risks and conduct thorough due diligence. With expert insights suggesting a favorable outlook, Magellan and Metcash stand as noteworthy considerations for those looking to enhance their investment portfolios this month.
