Disclosure: This article documents my personal portfolio and investing process. It is general information only and does not take your objectives, financial situation or needs into account. Figures are from Sharesight and remain subject to transaction reconciliation.
FY26 was a useful test for My Income Factory.
The portfolio did what I mainly built it to do: it produced more cash flow. For the financial year from 1 July 2025 to 30 June 2026, Sharesight recorded $35,180.93 of income across the portfolio.
That is the highest income figure I have recorded so far. It was also a reminder that income investing is not just about chasing the biggest yield. Some holdings delivered excellent income and capital growth. Others paid distributions but leaked capital value along the way.
That is the real FY26 lesson: the income factory kept producing, but not every machine on the factory floor worked equally well.
Portfolio impact summary
| Question | FY26 result |
|---|---|
| Portfolio value at 30 June 2026 | $680,243.86 |
| Total FY26 income | $35,180.93 |
| Capital gain | $16,868.25 |
| Total return | $52,047.57, or 7.85% |
| VDHG benchmark return | 13.03% |
| Main strength | Diversified income growth across ETFs, income holdings, direct shares and credit funds |
| Main weakness | Listed credit funds generated income but suffered capital weakness |
These figures include open and closed positions.
The income kept growing
The best part of FY26 was the income growth. My portfolio income has now increased for four consecutive financial years.
| Financial year | Income | Year-on-year growth |
|---|---|---|
| FY23 | $25,223.29 | – |
| FY24 | $28,044.75 | +11.2% |
| FY25 | $32,447.49 | +15.7% |
| FY26 | $35,180.93 | +8.4% |
FY26 income was about 39.5% higher than FY23. That is the heart of the Income Factory idea. I want a portfolio that can keep producing cash even when market prices are noisy.
But the slower growth rate in FY26 is also worth noting. Income grew, but not as quickly as FY25. Some of that reflects portfolio mix, timing of distributions, and the fact that income does not rise in a perfectly straight line.
Where the FY26 income came from
The portfolio’s income was well spread across the four main buckets. That is encouraging because it means the income stream is not dependent on one sector, one fund manager, or one type of asset.
| Asset group | FY26 income | Share of income |
|---|---|---|
| Income holdings | $10,828.13 | 30.8% |
| Passive ETFs | $10,090.15 | 28.7% |
| Credit funds | $7,655.02 | 21.8% |
| Direct shares | $6,607.63 | 18.8% |
The most useful observation is that the portfolio now has several income engines. Passive ETFs provide broad-market exposure. Income holdings such as high-yield ETFs and LIC-style holdings provide targeted cash flow. Direct shares add franked dividend exposure. Credit funds add regular income, but also bring a different kind of risk.
The standout holdings
The standout income holdings in FY26 were clear.
| Holding | FY26 income | FY26 total return | Comment |
|---|---|---|---|
| VAS | $6,911.67 | $11,388.19 | Core Australian ETF income engine |
| VHY | $4,929.89 | $11,388.91 | Strong income plus capital contribution |
| SOL | $1,515.94 | $7,541.44 | Quality income and capital growth |
| MOT | $3,008.26 | -$3,636.10 | High income, but capital weakness hurt |
| BKI | $1,125.39 | $1,783.22 | Reliable LIC-style income contributor |
| WBC | $684.20 | $1,104.05 | Useful bank income and capital gain |
| TLS | $692.88 | $1,283.76 | Defensive income contributor |
| NHC | $606.78 | $3,393.14 | Strong return, but more cyclical |
VAS and VHY were the cleanest examples of what I want: meaningful income with positive capital contribution. SOL also stood out because it gave the portfolio both income and a strong capital tailwind.
The direct-share bucket had some strong performers too. NHC, DDR, APA, TLS, WBC and APE all helped the FY26 result. The lesson there is not that every one of those should automatically get more money in FY27. The lesson is that direct shares can still play a useful role when position sizes are controlled and the dividend story is supported by business quality.
Credit funds: income was real, but so was the risk
The credit-fund bucket is where FY26 gets more complicated.
Credit funds produced $7,655.02 of income. That is a serious contribution. But the same bucket had -$8,464.71 of capital movement, leaving it slightly negative overall at -$811.30.
This is the uncomfortable truth about yield. A distribution can be real cash in the bank, but the market price can still move against you. Listed credit funds can trade at discounts, react to sentiment, and suffer from liquidity or duration concerns even when the underlying loans continue paying income.
MOT was the clearest example. It paid more than $3,000 of income, but its total return was negative because capital weakness was larger than the income received. KKC and MRE also showed why I cannot look at headline yield in isolation.
That does not mean credit funds have no place in the portfolio. It means they need position-size discipline, distribution-quality checks and a clear reason for every dollar allocated.
What FY26 says about my FY27 strategy
FY26 makes me more confident in the income strategy, but less tolerant of weak capital discipline.
For FY27, my practical approach is simple:
- Keep broad ETFs as the base. VAS, A200 and VGS help stop the portfolio becoming a collection of yield bets.
- Add selectively to quality income holdings. VHY, SOL, BKI and similar holdings remain useful, but valuation and concentration still matter.
- Use direct shares for franked income and dividend growth. I want sustainable dividends, not just temporarily high yields.
- Be more selective with credit funds. Income is attractive, but capital preservation now gets a louder vote.
If I were allocating fresh money in FY27, I would not simply chase the highest distribution yield. I would probably direct most new money toward broad ETFs and quality income holdings first, then add to direct shares where the dividend looks sustainable. Credit funds would still have a role, but I would add cautiously and only where the risk/reward looks clearly better.
MyIncomeFactory verdict
FY26 was a record income year, but not a clean victory.
The portfolio generated more income than ever before, and that is the main success. The income stream is broader and more diversified than it was a few years ago. That gives me confidence that the Income Factory idea is working.
But FY26 also showed that yield is not enough. Credit funds produced useful cash flow but reminded me that capital risk still matters. The next phase of the strategy is not just about making the income number bigger. It is about making the income more resilient.
My FY27 goal is therefore clear: grow income, but demand better capital resilience from every new dollar invested.
Source note: Portfolio figures are from my Sharesight MyIncomeFactory portfolio for FY23-FY26, reviewed on 2 July 2026, with open and closed positions included.