Top broker says buy this 'compelling' ASX 300 dividend stock now

This under-the-radar stock could be a strong contender for passive income.

| More on:
Modern accountant woman in a light business suit in modern green office with documents and laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 300 Index (ASX: XKO) dividend stock MyState Ltd (ASX: MYS) could be one of the most underrated ASX financial shares around.

MyState describes itself as a diversified financial services group that consists of MyState Bank and TPT Wealth, a trustee and wealth management company.

It has been a good time to own ASX financial shares, with a number of ASX bank shares significantly outperforming the S&P/ASX 200 Index (ASX: XJO) in 2024 to date.

The ASX 200 has risen less than 10% this year, while the Commonwealth Bank of Australia (ASX: CBA) share price has gone up 39%, the Westpac Banking Corp (ASX: WBC) share price has lifted 39%, the ANZ Group Holdings Ltd (ASX: ANZ) share price has climbed 12%, and the National Australia Bank Ltd (ASX: NAB) share price has soared 21%.

The MyState share price has gone up 27% this year, and one broker believes the ASX 300 dividend stock is a buy for the year ahead.

Buy rating on the ASX 300 dividend stock

Tony Paterno from Ord Minnett has written about his positive view on the business on The Bull.

He suggested that the long-term value on offer from MyState shares is "compelling", in Ord Minnett's view.

There are a few reasons why the broker likes the ASX financial share.

First, he suggested that the business can generate "strong" earnings per share (EPS) growth.

Second, Paterno noted that the ASX 300 dividend stock has a high, fully franked dividend yield.

The third reason to like the business is due to its "competent management team".

The broker also pointed out that MyState has proposed to acquire Auswide Bank Ltd (ASX: ABA). Auswide shareholders will vote on the proposed takeover in a couple of months.

This meeting was recently postponed from 2 December 2024 to 3 February 2025.

Auswide and MyState are continuing to work with the Australian Prudential Regulation Authority (APRA) to progress the relevant applications. The two businesses expect to be able to announce the outcome of those applications in early 2025.

Tony Paterno finished his commentary on the ASX financial share with the following thoughts:

MYS is an attractive income stock and should generate capital growth from synergies in the proposed acquisition.

MyState share price snapshot

In the past 12 months, the ASX 300 dividend stock has risen by more than 30%.

According to the projections on Commsec, the MyState share price is valued at less than 12x FY25's estimated earnings with a projected grossed-up dividend yield of 8.5%, including franking credits.

Should you invest $1,000 in Credit Corp Group Limited right now?

Before you buy Credit Corp Group Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Credit Corp Group Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

A businessman carrying a briefcase looks at a square peg or block sinking into a round hole.
Earnings Results

Block share price tanks 8% on FY24 results

Investors didn't wait to react to the company's 2024 numbers.

Read more »

Delighted adult man, working on a company slogan, on his laptop.
Earnings Results

QBE share price lifts off on 31% final dividend boost

ASX 200 investors are piling into QBE shares on Friday. Is this why?

Read more »

Man sitting at desk in front of PC with his head in hands after looking atA worried man holds his head and look at his computer as the Megaport share price crashes today
Earnings Results

Why did the Magellan share price just crash 13%?

ASX 200 investors are sending the Magellan share price tumbling today. But why?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

Guess which ASX 200 financial stock just boosted its dividend by 25%

Up 76% in a year, this ASX 200 financial stock just upped its dividend payout too.

Read more »

Woman and man calculating a dividend yield.
Dividend Investing

Here's why IAG shares are in the red on Tuesday

Why is this ASX insurance juggernaut in the red?

Read more »

Excited couple celebrating success while looking at smartphone.
Earnings Results

2 ASX 200 financial shares going gangbusters on earnings updates

These shares are surging after impressing with their strong half year results.

Read more »

Frustrated and shocked business woman reading bad news online from phone.
Earnings Results

$4.2 billion ASX 200 financial stock sinks 7% on half year results

Let's see how this blue chip performed during the first half of FY 2025.

Read more »

A man looking at his laptop and thinking.
Financial Shares

IAG shares are down 15% in a week. Is now the time to buy the dip?

Are IAG shares a natural buy or a natural peril right now?

Read more »