In this holiday episode, Mark and Shani exchange their personal Christmas gifts, share their favourite investing & personal finance books of the year, and reveal Morningstar’s top dividend ideas for 2026.

From Morgan Housel insights, to Adrian Raftery’s tax guide, to Richer, Wiser, Happier, plus three undervalued dividend stocks (Woodside, ANZ, and Aurizon), this episode is packed with practical gift ideas AND genuine investing value.

And as always, a huge thank you to our listeners for an incredible 2025.

You’re able to find Mark’s article on Morgan Housel’s Same As Ever here, where he looks at three underappreciated benefits of cash.

You can also find more insights from our Dividend Outlook report here, as Tyger Fitzpatrick runs through where to look for dividends in 2026.

Shani has written a few of the surprising tax rules from Adrian Raftery’s book here.

You can find the transcript for the episode below:

Shani Jayamanne: Invest Your Way is a different kind of book about money. We want it to be a trusted resource for investors who have graduated from investing 101. For investors who know what a share is and an ETF is, but are struggling to put it all together to get onto the pathway to financial independence.

Mark LaMonica: Too much financial commentary focuses on investments rather than on the people investing. We believe investors are hungry for a new perspective. The investors we talk to tell us that they are tired of aspirational messages that lack the practical steps to put a plan into action. They don’t want bewildering and unrelatable jargon and complexity. They want the focus to be on the only thing that truly matters, creating a better life for themselves and their loved ones.

Jayamanne: Invest Your Way is a guide to successful investing with actionable insights and practical applications. You’re able to purchase the book through the links in the episode notes and at major bookstores or request a copy through your local library.

LaMonica: Welcome to another episode of Investing Compass. Before we begin, a quick note that the information contained in this podcast is general in nature. It does not take into consideration your personal situation, circumstances or needs.

Jayamanne: So welcome to our annual Christmas gifts episode. For those that are new to Investing Compass, we usually gift each other something and then we go through good gifts that you can give an investor in your life.

LaMonica: And what we do is we come up with a theme. So we’ve done this…

Jayamanne: …three years now.

LaMonica: Yeah, I don’t know. It’s been a while. So we come up with a theme. And last year we just started with video. And so the theme was something you can wear. Now, I am wearing…

Jayamanne: …your Christmas gift

LaMonica: …from last year. So for people on audio, it’s like a collage of pictures of Warren Buffett. And then Shani came up with the saying.

Jayamanne: Always be compounding.

LaMonica: Always be compounding. Yeah, exactly.

Jayamanne: I designed it myself.

LaMonica: Right.

Jayamanne: It’s apparent.

LaMonica: For anyone that can see this. So what talk about this year? You decided the theme this year.

Jayamanne: We decided together. This year we have decided that we’re going to gift each other something book related. And that’s because we’ve written a book.

LaMonica: Yes, a great Christmas gift for everyone.

Jayamanne: Yes. Yes. So it seems on theme. So we set a budget of $150, which is triple last year’s budget. But Mark never sticks to the limit anyway.

LaMonica: Okay, but people need to understand how this process works. So what actually happened is Shani came up with an idea. Then she set a theme around the idea. And I assume the idea cost $150 because then you set the budget. It’s basically just the Shani show here. But all right, who goes first?

Jayamanne: I’ll go first.

LaMonica: Okay, can I describe it a little? Well, you can open your card.

Jayamanne: Okay. This is not my gift.

LaMonica: Well, yeah, it is. But I also want to describe why you are getting.

Jayamanne: This is so sweet.

LaMonica: Yeah, I’m a nice guy. So Shani’s had a very big year. You got promoted at the beginning of the year. You were named in Australian Shareholder Association Education Partner. You are doing your advisor. You’re on the board for Forbes advisor. You have been teaching these financial literacy courses. You’re going to New South Wales Parliament and you are talking about financial literacy at New South Wales Parliament. So a lot of stuff going on. And of course, the book. And one of the things about Shani that people don’t know is you are a very giving person and you do all this work for other people and you’ll do all sorts of things for other people. And you wrote about it in the book that you won’t ever get yourself anything. So I wanted to get you something because this has been a stressful year, something that’s relaxing for you. And so I booked.

Jayamanne: This is very loose on the theme, Mark.

LaMonica: Anyway, I booked you a something called the volcanic spa something. I think they put rocks on you or something.

Jayamanne: That’s very nice.

LaMonica: I have all the details. You’ll got the gift certificate tomorrow morning because you can’t set a time. They just say we’ll send it in the morning and you pick a day. So I picked tomorrow.

Jayamanne: Thank you. That’s so nice, Mark. Do I read the card out?

LaMonica: I mean, it’s your card. You can do whatever you want.

Jayamanne: And the front of the card says it all. You’ve had such an amazing year of accomplishments. When I first started working with you, I knew you were a star. Now everybody knows your biggest fan, Mark, since you erupted this year, I booked you a volcanic spa session.

LaMonica: My handwriting is terrible, but I put booked in capital letters. Just so people are aware. All right. So now it’s my turn.

Jayamanne: It is.

LaMonica: Do you want me to open the card first.

Jayamanne: Yeah, go for it.

LaMonica: Shani’s very worried that I’m not going to understand the gift. Am I supposed to read this.

Jayamanne: It’s up to you?

LaMonica: Did you put anything embarrassing in here? So congratulations on huge 2025. You continue to serve investors and provide insights that improve their lives. Very lucky to work with you. 2025 was a year of firsts. The release of the first edition of our first book. It’s been a wonderful journey. Looking forward to continuing it in 2026, Merry Christmas. Your friend, Shani.

Jayamanne: That’s the gift.

LaMonica: Your friendship. Well, where can I return that? Okay, so now you’re nervous, right?

Jayamanne: Yeah, I mean.

LaMonica: I think it’s a book. I’m going to go out on a limb here. I’m also struggling to open it. Okay. A Moveable Feast. Yeah, so this is my favorite book. And it looks old. Is there something you would like to describe about it?

Jayamanne: Well, it’s the first edition.

LaMonica: That is amazing. Thank you. Where did you find this?

Jayamanne: It took a bit, but.

LaMonica: Well, that is very sweet. Why don’t you think I’m going to understand it?

Jayamanne: No, I just didn’t know. I just bought you the same book that you have at home. I didn’t know.

LaMonica: Oh, because I’m so old that I was around with the first edition. That is very sweet. So anyone who hasn’t read A Moveable Feast, it is Hemingway looking back on his first days in Paris. So it was written when he was older and there’s some nostalgia involved. But it’s an incredible book and it makes you well, maybe not if you’re my age, but if you’re young, makes you want to move to Paris, which now, of course, is more expensive than it was in the 20s. But yeah, move to Paris and become an author. So thank you, Shani.

Jayamanne: No, worries.

LaMonica: I can’t believe you thought I wouldn’t get that. Okay, so we need to get into the rest of the episode. So as you said, we are going to try to give Christmas gifts to people that are listening or watching this. And so obviously, this is an investing based podcast. So one, we would ask everyone to consider giving Invest Your Way, our book, away to somebody you love or hate, depending upon what you think about the book. But yeah, that’s our first suggestion.

Jayamanne: Yes, that’s our gift of choice. But let’s go on with a few more. The first are books that we enjoyed reading this year. And we can start with one that we both liked, which was Same As Ever by Morgan Housel.

LaMonica: And I wrote an article on one of the lessons I took from this book, and that was the unappreciated benefits of cash.

Jayamanne: But the book really focuses on things that don’t change. And this book is really filled with lessons for investors. And he really drills into the theme of timelessness. And it’s that markets, technologies and fashions may constantly change, but human nature doesn’t.

LaMonica: Yeah, and I think that’s really the message, right? Look at those things that don’t change instead of just chasing trends. So try to figure out the things that that just will continue to endure. And I think a lot of our listeners love the behavioral finance episodes. So that is certainly something that Housel talks about a lot. So I think anyone who likes that side of investing will love the book. And I think the book has just a big focus on how investors behave and just how we’re hardwired to behave in a certain way.

Jayamanne: I think in general, we both really like Morgan Housel’s books because they’re sensible and he’s a great writer. They’re also books that aren’t one and done. You can definitely go back and reread it after a few years and it will remain valuable and serve a few good reminders. So that’s our first pick. For our next pick. It’s a book from an accountant.

LaMonica: Are we doing our book again? You think you’re an accountant?

Jayamanne: No, I’m a pretend one. But this one is just a quick pitch. It’s a book by Adrian Raftery. He releases it every financial year based on the changing tax laws. It’s called 101 Ways to Save Money on Your Tax - Legally. And every time I write an article on tax, it’s very popular. So I know that people will enjoy this one.

LaMonica: Yeah, I don’t know what people’s impression is of the life that you live. But I like walking to work and there’s Shani reading 101 tax tips. But I think, we talked about it. And I think for a lot of people, not every section is relevant for you. But, it’s a good book to use as a reference point, even though it does come out every year, obviously, a lot of the stuff stays the same. And just read through and see if there’s anything in there that you’re actually missing that could save you some money on tax. So Adrian’s picked out parts of tax law that are relevant to as many people as possible. So hopefully it will work well. And he just goes through a deep dive into each section and. And it’s written in a more accessible way than the ATO website. Which you should know you’re on the ATO website.

Jayamanne: Yeah, all the time.

LaMonica: A lot. I’m going to recommend a book that I actually read. I think I read that book in January. So early in 2025. So it is called Richer, Wiser, Happier. It’s by William Green and it was actually a suggestion from a listener. So somebody emailed me and said, you’ll love this book and they were right." I did love this book. And Charlie Munger called it one of the best investment books ever. And that’s a pretty good endorsement. So each chapter of the book is about a different famous investor. So it’s kind of hard to come up with specific lessons because you get lessons in every single chapter that’s out there. But one of the things that I liked about the book is a lot of the lessons weren’t just about investing. They’re also about life and obviously people that have been very thoughtful about life and thoughtful about markets. And I think that will help anyone who reads the book do the same thing.

Jayamanne: All right. So this has been very book heavy. So let’s talk about a couple of other gifts that you can get as investors. And we always have a part in this where we talk about a few of our analysts top picks and we’ve taken a little tilt on it this year. It’s talking about one of the main goals that investors have at... (Technical Difficulty)

LaMonica: Yes, like me. For example. And this is really good timing because Morningstar just released the Australian Dividend Outlook. And that looks at sectors and stocks where our analysts see attractive dividend yields in 2026 and 2027.

Jayamanne: But first, why don’t we go through some of the key takeaways of the report? So the first is that at the time of recording in mid-October, the ASX 200 has been overvalued, translating into less attractive dividend yields than historically. 3.1% as of late August 2025, below the 10-year average of 4.4%.

LaMonica: But even though the overall environment isn’t great from a dividend yield perspective, there are opportunities. And that’s the whole point of our analysts report. So our analysts expect dividends per share to rise over the next two years, which is good news. So 64% of Morningstar’s coverage has increasing dividends in financial year 2026 and 78% of Morningstar’s coverage in financial year 2027.

Jayamanne: 7 of 11 sectors are expected to deliver higher dividend yields than the broader market’s forecast of 4% average over ’26, ’27. And that is energy leading at 5.5%. followed by utilities 5.3%, real estate 4.8% and financial services 4.7%.

LaMonica: Okay, let’s get into the top picks now. So more than half of the list of picks from our analysts have economic moats, which is always nice. So we talk a lot about economic moats on this podcast. But moats are really important. And I’ve talked about this. It’s really important to consider as an income investor, because of course, if they have a competitive advantage, that supports the firm’s ability to maintain consistent cash flows, which then can be returned to shareholders. So no moat-rated stocks may still be suitable if you look at other factors. So financial health, valuation, dividend consistency, all of those come into play. So no moat companies may be suitable if there’s a reasonable level of cash flow stability and a dividend focus for management.

Jayamanne: And over 90% of the pick list who have low or medium Morningstar uncertainty ratings. And the uncertainty rating indicates our analysts’ estimated range of potential outcomes for a company. So it really just reflects underlying business risks. And the lower the uncertainty rating, the less volatile we expect future cash flows to be. So the greater our analysts’ confidence in projecting earnings and dividends.

LaMonica: All right. So with all of that out of the way. Let’s get into the picks. So the first is Woodside. So Woodside has a forecast yield in financial year 2026 of 7.68%. So that’s more than double the overall market yield. So we will say, of course, sometimes when you have high yields, it’s because the shares have been through a bit of a rough time. Woodside certainly fits that. So they have gone down about a third since 2023. And that, of course, has significantly underperformed the broader market. And so while the oil price has fallen, our analysts believe that that price reduction is unwarranted.

Jayamanne: And the shares are near the cheapest relative to the fair value that our analysts have assigned since the tail end of the COVID bear market. And that’s at the middle of October when we’re recording this.

LaMonica: And I think there’s a narrative out there that hydrocarbons are about to stop. We’re about to stop using them. But actually, oil and gas demand is still growing. So predictions of a near term peak followed by a rapid decline seem a bit premature to our analysts. And they think that there needs to be a significant investment in hydrocarbons in most demand scenarios just to backfill this naturally declining supply as we use it.

Jayamanne: Of course, price and dividends are not the only factors that matter. It’s important to understand how the stock fits into your portfolio. Okay, so let’s do another from the pick list. And this one is financial services. It’s ANZ. ANZ is the smallest of the major banks in Australia. And although it’s not as large as its peers, it has cost advantages relative to regional banks and this supports our analyst expectations for above cost of equity returns over the long term.

LaMonica: And ANZ has been going through a period or they resorted to discounting and cashbacks to stem the flow of lost home loan market share. But our analysts do expect investments in process and digital offerings to make the bank more competitive in the future. Has a wide mode, as Shani mentioned, meaning that our analysts believe that it’s able to protect and grow its earnings over at least the next 20 years.

Jayamanne: And ANZ’s got new management and it’s reviewing strategic priorities to cut costs and lower nonfinancial risks. And this should help drive earnings growth and return on equity. Our analysts also believe that the acquisition of Suncorp Bank will modestly improve bank efficiency, increasing its funding from low cost transaction accounts and leveraging its investments in tech. But like with many acquisitions, it’s drawn out integration and associated costs have caused ANZ to take a hit. So the positives are unlikely to be materially valuable.

LaMonica: And ANZ has had some regulatory issues and they have been fined a lot. So our analysts do think that there’s potential for them to modestly lower the dividend. But even if they do trim it, it still has a significantly higher yield than any of its other banking peers. So there’s a forecast yield of 5.08% for the 2026 financial year.

Jayamanne: Okay, let’s do one more and we’ll pick from the industrials. We’ve got Aurizon. Aurizon shares offer an attractive yield and our analysts forecast yield for 2026 at 5.92%. The company is high quality rail infrastructure and haulage operations and Morningstar’s analysis has considerable downside risk priced into the share. And the analysis suggests the risks for investors are skewed to the upside.

LaMonica: And they have had some lower volumes due to two things. So low coal prices and high royalties charged by the Queensland government. And this downturn has extended longer than we thought because of wet weather in prior years. But we are expecting growing demand from India and Asia for Aussie coal. And that will help prices. It will increase volumes. And we expect that to happen over the medium term.

Jayamanne: And earnings should also benefit from CPI linked tariffs as well as recent developments and acquisitions. So our analysts believe that environmental concerns are overblown. And this gives investors an opportunity to get in to an above average company at a decent discount.

LaMonica: And Aurizon largely hauls coking coal and it comes from these globally competitive mines up in Queensland. And at this point, our analysts just don’t see a commercially viable alternative to coking coal to make steel. And so we think for a long time there will still be demand.

Jayamanne: So there’s three quick stock pitches from our dividend outlook pick list from Morningstar equity analysts.

LaMonica: All right. So it’s been a big year for us, Shani. So we obviously published a book that we talked about and we do really, really appreciate the support that we’ve received from everybody. I think, we both do this Shani because we’re hoping that we can make some sort of difference in people’s lives, help people achieve their goals. And we want to make sure that everything we put out at Morningstar from the two of us is free and accessible. And the podcast, of course, is one way that we love to do that. And, I feel like we’ve formed a connection with a lot of listeners, a lot of people email me. We’ve been doing this for five years now, which is, which is a lot. And it just means a lot for both of us, for all the support we’ve received from people.

Jayamanne: Yeah, I definitely agree. And we couldn’t do it without you guys. And the only goal we have is hoping that we’re able to help someone make a better decision. And we’re very lucky that we’re able to do that with Morningstar support and with independence, making sure that everything that we say is in your best interests and not anyone else’s. And we also couldn’t do it without Will. Will is the only reason this stuff is as polished as it is. And he is truly the best in the business. We’re lucky to work with him. And he’s also had a big year. He got married and he’s about to head off on a very long honeymoon.

LaMonica: And we have a gift for Will. Now, Will, you were off camera. So, I mean, opening, it’s not that exciting. I’m just going to pull it out of the bag. But this is actually related to your wedding, which of course, Shani skipped. But since you ruined my Sunday by putting this on every table, we got you a bottle of Hennessy so that maybe you some point can ruin one of your days after drinking the whole bottle. But big thank you. Thank you very much, Will. We really appreciate it. Thank you, Shani. And thank you, everyone who’s listening and watching.

(Disclaimer: Any advice in this podcast is general advice or regulated financial advice under New Zealand law prepared by Morningstar Australasia Proprietary Limited and/or Morningstar Research Limited without reference to your financial objectives, situations or needs. You should consider the advice in light of these matters and any relevant product disclosure statement before making any decision to invest. To obtain advice for your own situation, contact a financial advisor.)

Invest Your Way

A message from Mark and Shani

For the past five years, we’ve released a weekly podcast and written on morningstar.com.au to arm you with the tools to invest successfully. We’ve always strived to provide independent, thoughtful analysis, backed by the work of hundreds of researchers and professionals at Morningstar.

We’ve shared our journeys with you, and you’ve shared back. We’ve listened to what you’re after and created a companion for your investing journey – Invest Your Way. Invest Your Way is a book that focuses on the investor, instead of the investments. It is a guide to successful investing, with actionable insights and practical applications.

If anyone would like to support this project you can buy the book now. Thanks in advance!

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