Listen to Dianne Colledge on Money News with Scott Haywood
Dianne Colledge, private client adviser at Morgans, joined Scott Haywood on Money News on Monday 6 July 2026 to discuss dividend income opportunities ahead of August reporting season, recent stock downgrades, and where to find value in the current market. Listen to the full episode below.
With August reporting season approaching, investors focused on income are asking the same question every year: which ASX shares are likely to deliver reliable, strong yields, and are there any traps to avoid? Dianne Colledge, private client adviser at Morgans, explains which stocks and structures her team is watching for dividend income in 2026, and which sectors carry the most risk right now.
Key summary
- Morgans has downgraded Transurban to a sell, citing slowing toll road traffic and earnings pressure that flows through to distribution growth.
- Financials and banks have also been downgraded, linked to weakness in the property market following recent government policy changes.
- Woodside is offering a yield of around 8 per cent including franking credits (5.6 per cent cash), while BHP and Rio Tinto are also expected to deliver strong yields in August.
- Listed investment companies and trusts (LICs and LITs) that pay monthly, fully franked dividends are a growing option for income-focused investors, typically yielding 5 to 6 per cent including franking.
- The healthcare sector, after a difficult 12 months, is showing early signs of recovery, though the turnaround remains fragile ahead of August earnings.
Which ASX shares has Morgans downgraded, and why?
Transurban: downgraded to sell
Morgans recently downgraded toll road operator Transurban to a sell. According to Dianne, the key concerns are slowing traffic numbers across Transurban's major networks in Melbourne, Sydney and Brisbane, all running below expectations. This has flowed through to earnings pressure, with forecasts downgraded on both EBITDA and free cash flow, directly affecting distribution growth. Rising interest rates and cost of living pressures are reducing how much people use toll roads, which ultimately impacts payouts to investors.
Financials and banks
Morgans has also downgraded a number of financials and bank stocks, linked to weakness in the property market following recent government policy changes. Dianne points to recent auction results as evidence of this pressure building.
Where Morgans still sees value as an inflation hedge
Despite these downgrades, Morgans continues to like hard assets such as infrastructure as a hedge against inflation, though the preference is currently to access this exposure through global assets rather than local ones.
Top ASX dividend stocks to watch for August reporting season
As reporting season approaches, along with a wave of stocks going ex-dividend, Morgans is positioning clients around a handful of reliable yield-payers.
Dianne notes that Woodside's cash yield of around 5.6 per cent is comfortably outpacing both inflation and the current cash rate, assuming the company pays out its expected dividend as forecast.
Monthly dividend income: an underused option for ASX investors
One trend Dianne highlights is the growing number of listed investment companies (LICs) and listed investment trusts (LITs) that pay monthly, fully franked dividends, an option many income-focused investors may not be aware of. These structures typically yield between 5 and 6 per cent including the value of franking credits.
Examples mentioned include:
- Plato Income Maximizer
- Solaris Australian Equity Income
- Whitefield Income Limited
- WAM Income Maximizer
What investors should know before relying on LIC or LIT income
- The franking credits attached to these dividends are generally reliable, since the underlying companies are Australian listed.
- The dividend itself is not guaranteed and can change based on market conditions and company performance.
- This is general information only. Speak with your stockbroker or financial adviser before making investment decisions based on expected yield.
Healthcare: a sector turnaround, or a fragile rally?
Healthcare was arguably the worst-performing ASX sector over the past financial year, and on a one-year view it remains down around 35 per cent. However, the sector has lifted roughly 23 per cent off its lows, with some standout individual moves:
CompanyMove off lowsCSLUp 35%CochlearUp 40%ResMedUp 20%Sonic HealthcareUp 16%TelixUp over 100%Pro MedicusUp nearly 100%
Dianne cautions that this recovery is not yet fully proven. CSL's rally, for example, is viewed more as a momentum trade than a fundamental one at this stage, given the company still needs to appoint a permanent CEO and demonstrate genuine operational improvement. Cochlear has also seen softer product demand, which is expected to affect its earnings in the August reporting season. In other words, this recovery could reverse if upcoming results disappoint.
What's happening in the US market that could affect ASX income stocks
Global markets are in a holding pattern awaiting the minutes from the US Federal Reserve's board meeting under new chair Kevin Walsh, which will offer clues on the Fed's inflation outlook and future interest rate path.
US reporting season is also about to begin, with the market expecting:
- Earnings growth of around 22 per cent for the S&P 500
- Sales growth of around 12 per cent
If achieved, this would represent the strongest earnings growth since the second quarter of 2022, and a second consecutive quarter of sales growth above 10 per cent. Key companies to watch include Goldman Sachs, TSMC, Netflix, and major AI-related stocks, all of which can influence sentiment flowing through to the ASX.
Frequently asked questions
What are the best dividend shares on the ASX right now?
Morgans is currently highlighting Woodside, Santos, BHP, and Rio Tinto as strong yield options heading into August reporting season, alongside a growing range of LICs and LITs that pay monthly, fully franked dividends.
Are there ASX shares that pay monthly dividends?
Yes. A number of listed investment companies and trusts, including Plato Income Maximizer, Solaris Australian Equity Income, Whitefield Income Limited, and WAM Income Maximizer, pay monthly, fully franked dividends, typically yielding between 5 and 6 per cent including franking credits.
Why has Morgans downgraded Transurban?
Morgans downgraded Transurban to a sell due to slowing traffic across its Melbourne, Sydney, and Brisbane networks, combined with earnings pressure that has reduced forecasts for EBITDA, free cash flow, and ultimately distribution growth.
Is the healthcare sector a good buy after its recent recovery?
The sector has risen around 23 per cent off its lows after a difficult year, but the recovery is considered fragile. Companies such as CSL and Cochlear still need to demonstrate genuine operational improvement in the upcoming August reporting season for the rally to be sustained.
Are dividend payments from LICs and LITs guaranteed?
No. While franking credits attached to these Australian-listed structures are generally reliable, the dividend itself is not guaranteed and can vary. This is general information only, and investors should seek advice from a stockbroker or financial adviser before relying on expected income.
