There are many detractors from investment returns. Tax, transaction costs, management fees, inflation. The list of additions is much shorter.

It is no wonder that many Aussie investors place preference on ASX shares that offer a franking credit. My colleague Mark LaMonica has written about how valuable franking credits actually are for investors—an important consideration when allowing investors to appropriately weight them in investing decisions.

The conclusion from his model is that the same share listed in Australia would be worth around 10% more to an Australian investor than a global share. This is not an amount to sneeze at.

Adding to their appeal, Australia’s median income sits at a 30% tax rate. Fully franked dividends provide a 30% tax credit. That is a dividend which requires a payment of 0% in personal income tax.

No investment decisions should be based on how much tax you can save. However, it is important for investors to think about the total return they receive from an investment.

Here are three, five-star stocks with fully franked dividends (at 12 June 2026).

Endeavour (ASX.EDV) ★★★★★

  • Fair Value estimate: $5.40 (40% discount at 12 June)
  • Moat: Wide
  • Uncertainty Rating: Low
  • Star Rating: ★★★★★

The company is Australia’s largest liquor retailer, owning household names such as Dan Murphy’s and BWS as well as operating more than 300 pubs, clubs and hotels nationwide. Endeavour’s recent trading update saw sluggish sales momentum, growing by 1% year to date. Despite this, our analyst Johannes Faul highlighted the company is gaining liquor market share over its main competitor Coles. Comparatively, Coles has seen a 4% drop in liquor sales through to March this year.

While near term economic headwinds persist, Johannes believes the market is underappreciating Endeavour’s long-term outlook. Weak consumer confidence is expected to turnaround next year with a forecast reduction in petrol prices acting as a catalyst. Over the long run, liquor demand remains relatively defensive. Liquor sales are structurally driven by inflation, population growth and premiumisation.

The company’s wide moat rating is driven primarily by the liquor business, where it controls approximately half of the market. Key competitors include Coles (Liquorland), with around 17% share and Metcash supplied independents, which collectively account for roughly 30%. Endeavour’s scale advantage versus peers allows it to dominate through its superior margins. At the current price, Endeavour is materially undervalued and its current yield is 5.6% fully franked. Endeavour is committed to a dividend payout ratio of 50% to 75%. Johannes believes this to be an appropriate approach given Endeavour’s newly found ability to implement strategy independent of Woolworths Group.

ASX (ASX.ASX) ★★★★★

  • Fair Value estimate: $67 (20% discount at 11 June)
  • Moat: Wide
  • Uncertainty Rating: Low
  • Star Rating: ★★★★★

The ASX is Australia’s primary securities exchange operator and a leading financial market infrastructure provider globally. Our analyst Roy Van Keulen notes that the ASX has long been protected from competition through various exclusive licenses to clearing and settlement. This is a reason for its wide economic moat which is backed by intangibles and network effects. However, over the past decade the ASX has faced increasing calls from the federal government, regulators and industry bodies for more competition.

More recently, the ASX guided operating expenses to grow by 13%-16% in fiscal 2027 and lifted capital expenditure guidance by a little over 10%. While growing cost concerns have spooked investors, Roy notes the shares are significantly undervalued. Roy believes the incoming CEO, Anthony Attia, former CEO of Euronext Paris, can provide an opportunity for a reset of relations with market participants and crucially, regulators. The share price has fallen 31% over the past year which has inflated the current yield. The dividend yield is 4.47% which is fully franked.

Beach Energy (ASX.BPT) ★★★★★

  • Fair Value: $2.50 (58% discount at 12 June)
  • Moat: None
  • Uncertainty Rating: High
  • Star Rating: ★★★★★

Midsized Aussie oil and gas company Beach Energy produces in multiple wholly owned projects and joint ventures in the Cooper, Perth and Eromanga basins as well as offshore in the Otway, Bass and Taranaki basins. In February, the company reported a 9% decline in first-half underlying net profit after tax to USD 144 million. Our analyst Mark Taylor noted net profit after tax was in line with his expectations and the fiscal 2026 EPS forecast is little changed at $0.19.

Taylor highlighted that earnings were weaker due to lower pricing and the costs to facilitate Waitsia liquid natural gas sales. More recently Beach Energy agreed to sell its entire 60% interest in Otway Basin permit VIC/P43, which contains Artisan gas discovery. The sale will generate $70 million in cash upfront as well as royalty payments of $3.75 per gigajoule of production. Mark notes this adds a further $140 million over the life of the field.

Mark notes that at current levels, Beach shares remain materially undervalued. The market is primarily concerned about the potential cost to replace reserves, especially considering repeated cost blowouts at Waitsia. Taylor reiterated Beach Energy is well placed to build on Waitsia’s cash flow via drilling and/or an acquisition. The current dividend yield is 6.5% fully franked.

Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn more about how to identify companies with an economic moat, read this article by Mark LaMonica.

^ What do the different star ratings designations mean?

5 stars indicates an investment idea with a high probability of significant risk-adjusted appreciation from the current market price during a multi-year time frame. Scenario analysis developed by our analysts indicates that the current market price represents an excessively pessimistic outlook, limiting downside risk and maximizing upside potential.

4 stars indicates that appreciation beyond a fair risk-adjusted return is likely.

3 stars indicates that investors are likely to receive a fair risk-adjusted return (approximately cost of equity).

2 stars indicates that investors are likely to receive a less than fair risk-adjusted return and should consider directing their capital elsewhere, in our opinion.

1 star indicates a high probability of undesirable risk-adjusted returns from the current market price over a multi-year time frame. Our scenario analysis indicates the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

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