Where the next wave of ASX dividend income could come from

This interview was filmed Monday 2nd March, 2026

Following a stellar run from June 2022 to October 2025 that saw the S&P/ASX All Technology Index (ASX:XTX) rise from 1,803 to 4,319 points – a rise of nearly 140% – growth and tech have taken a backseat over the last six months.

The technology index is down over 30% since October, while some popular names have fallen as much as 50% from their highs. Meanwhile, Australia’s traditional stalwarts, banks and resources, are back in vogue.

And that’s good news for income investors, who have quietly seen the yield on Australian shares whittled away in recent years. While banks have long been seen as dividend-paying blue chips, mature resources companies have shifted from capital-hungry to capital-returning over the last decade. 

It’s a market backdrop that Solaris Investment Management is looking to capitalise on with the launch of Solaris Australian Equity Income Plus (ASX: SET), a new Listed Investment Company that opened its IPO today. 

According to Solaris Investment Management portfolio manager Charles Casey, income investors are benefiting from higher commodity prices and increased payout ratios from resource companies, resulting in stronger dividends. But the selloff in growth names is also presenting an opportunity to buy companies that could grow their dividends from a more attractive starting point.

“It's a really exciting market at the moment for income investors… we've seen a big rotation out of growth areas of the market and into resources and banks… Some of these high-quality companies have been sold off really materially… some are down 25 to 50%.”

Why income investors shouldn’t ignore growth

Growth is an area that’s often overlooked in income portfolios, but Casey believes it’s critical for long-term success. Blindly chasing yield might look appealing in the short term, but it can erode future income potential.

“We want to grow that capital value of the portfolio to generate higher dollar values of income three, five, seven, 10 years down the track.”

Casey likens it to running a family farm. Selling paddocks to fund income might work for a while, but it ultimately reduces the capital base generating that income. This is why the Solaris team includes growth companies, even some currently not paying a dividend, in its Australian Equity Income strategy.

Where dividend opportunities are emerging

Casey points to several areas offering some of the most interesting opportunities for income right now.

Resource company share prices are rising alongside commodity prices. Due to the high level of fixed costs in mining, commodity prices generally rise faster than costs, meaning profits can grow faster than revenues.

Casey points to BHP (ASX: BHP), a long-term portfolio holding, as an example. BHP lifted its payout ratio and gross dividend for its FY26 interim result, while also enjoying a strong balance sheet and franking credit generation.

Another example is Capricorn Metals (ASX: CMM), which announced its maiden dividend in February. The 5 cents per share interim dividend is fully franked, taking the value to 7.14cps for investors eligible to receive franking credits.

Casey also says that banks and industrials are “looking supportive”, with growing dividends expected for the year ahead.

He’s also interested in the prospects for special dividends as overall franking levels rise in the market. Qube Holdings (ASX: QUB) can pay a special dividend of up to 40cps as part of a takeover deal, allowing it to return up to 17cps worth of franking credits to investors. Casey sees potential for others to follow with special dividends and franking credits.

However, he also warns against buying stocks “based on the dividend yield alone.”

"There are a lot of traps at the moment with companies that have overly optimistic expectations of dividends. Beach Energy (ASX: BPT) was one that we've avoided during the last result. Their dividend expectations were too high. There was no cash profit generation, and they had to cut their dividend materially."

Casey says Solaris builds its income portfolios around a diversified selection of roughly 45 to 50 companies, combining high dividend payers with businesses offering strong capital growth potential. With this combination, the strategy aims to generate above-market income while outperforming the broader market over time. It also places a strong emphasis on franking credits, helping eligible investors to achieve stronger after-tax outcomes.

Solaris Australian Equity Income Plus (ASX: SET) will provide access to the strategy via a Listed Investment Company (LIC) structure.

The unlisted strategy has been running for nearly a decade, delivering 8.36% per annum in income, including franking credits, since inception in December 2016 - consistently well above the benchmark. The LIC structure enables SET to pay monthly fully franked dividends and smooth income across market cycles, a key advantage over ETFs and open-ended funds that must distribute all income as received.

The entire Solaris investment team is investing in the IPO alongside shareholders, and the manager is paying all upfront offer costs. There is no performance fee.

“With SET, we are focused on above-market income, while investing to outperform the market by focusing on capital growth and delivering monthly franked income — which is a really positive combination.”

With dividend growth improving and special dividends becoming more common, Casey believes Australian equities remain one of the few asset classes capable of delivering income, franking credits and capital growth in combination.

“From our perspective… we’re seeing very good opportunities for above-market levels of income.” 

Get SET for monthly income, franking & capital growth

The Solaris Australian Equity Income Plus (ASX: SET) IPO is now open and is expected to close on 1 April 2026. Shares are expected to commence trading on the ASX on 17 April 2026, with the first monthly franked dividend targeted for August 2026.

For more information, click here to visit the Solaris website and view the Prospectus or speak to your broker or financial adviser.