Buy Hold Sell: 4 reader-favourite ASX income stocks - a mid-year verdict

Late last year, more than 2,700 Livewire readers nominated their favourite income stocks for the year ahead. We already ran the ruler over the first half of that list - you can find that episode here. Now we're back for the second half.

A lot has changed in the past six months, so there's no better time to take stock, so to speak. Geopolitical tensions have rattled commodity prices, bond yields have pushed higher, and the question of what actually makes a reliable income stock has never felt more relevant. A high yield can be a gift, or it can be a trap. 

In this episode of Buy Hold Sell, Hugh Dive from Atlas Funds Management and Jason Teh from Vertium Asset Management are back to debate the remaining names on the reader-favourites list, separating the sustainable stories from those whose thesis haven't aged as well as investors might have hoped. They also share one income idea each to freshen up the list for the second half of the year. 

This interview was filmed Wednesday 22nd July 2026.

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Edited transcript

Anna Dadic: Hello, and welcome to Livewire's Buy Hold Sell. My name is Anna Dadic. Late last year, we asked Livewire readers to nominate their favourite income stocks for the year ahead. I'm joined today by Hugh Dive from Atlas Funds Management and Jason Teh from Vertium Asset Management. Together, we're doing a mid-year check-in on four of the big names on that list — asking whether the income thesis has held up, or whether there have been any nasty surprises. I've also asked our guests to bring along an income stock pick of their own. But before we dive in, a quick heads-up: Livewire Live is back this September. If you'd like to find out more, check out the link in the description box below.

Woodside Energy (ASX: WDS) 

Anna Dadic: Okay, let's get straight into it with Woodside Energy. It was the second most popular stock amongst Livewire readers. Jason, I'm going to start with you — is Woodside a buy, hold, or sell?

Jason Teh: (SELL) It's a sell. Woodside does have a whopping yield of 7%, and it's fully franked — so it's fantastic. But you should never bank on a yield from a resource stock. Yields can come and go depending on where the commodity price is. The reason it's so high right now is because — if you've been glued to the TV watching what's happening with Iran — the oil price is elevated, which is obviously pushing up Woodside's profits and dividends.

The reason it's a sell: if you haven't acted since March of this year, you sell on geopolitical noise. When there is peak geopolitical news — back in March, for example — that was a good time to sell Woodside. Now, with the Iran situation flaring up again, if you didn't sell in March, you might have another chance to do so now.

But if you put that aside — what is the long-term outlook for energy, oil and LNG? I have a more bearish view on the energy space. Think about what happened to the oil price when the US launched military operations in Iran. When 10% of the world's oil that passes through the Strait of Hormuz was shut off, you would've thought the price would've gone to $200. It didn't. That's a clear signal. It did spike, but it's a clear signal that the world has enough capacity to absorb the shock.

Compare that to 2022, when Russia invaded Ukraine — the oil price spiked then too, but the current spike didn't reach that level. On top of that, Woodside has 60% of its revenues linked to oil-linked contracts, so the oil price does influence its profits. The other 40% is linked to LNG pricing — and LNG pricing is in a bear market. It spiked in 2022, but look at where LNG prices are today. Nowhere close. From 2022 to now, the US LNG industry has expanded a lot. Over the next five years, it's going to double. LNG volumes will stay in surplus, which will put a lid on prices. You wouldn't expect bumper profits from Woodside to support a very large dividend. Right now you're getting a 7% yield — I say take it and run.

Anna Dadic: Hugh, that yield is hard to ignore. What's your call?

Hugh Dive: (BUY) Strong buy. I totally disagree with Jason. I'm perhaps a bit more pessimistic about the prospects for peace in the Middle East — I don't think Iran's going to turn into Belgium anytime soon. There's not exactly cinnamon and good vibes coming out of that region. Part of the reason the oil price didn't spike to $200 is that there were massive drawdowns in Chinese and US petroleum reserves — but that's a one-off. A lot of those cargoes have also left the Gulf of Hormuz and they're not coming back. It's a bit like a bathtub that's emptying.

I think it's going to be stronger for longer for Woodside. What this conflict has shown is the strategic value of those assets on the North West Shelf — nowhere near their key competitors in Qatar. We're seeing Japanese utilities come in and pay cold, hard cash to buy stakes in these assets because of their strategic value.

Looking further ahead on LNG — they've bought into a Louisiana LNG facility, which looked like a contentious move two years ago but is looking pretty good now. They've also smartly sold down to Stonepeak. We've got Scarborough LNG coming on later this year. I think things are pretty good for Woodside. The share price hasn't really reflected the underlying oil price, so I think it's still a strong buy. They're going to have a very good couple of years. And remember — a couple of weeks ago there were discussions about Exxon looking to acquire Woodside. That'll never get past FIRB, but I think it's Australia's highest-quality energy company. You need it in your portfolio as a buffer against geopolitical risk.

APA Group (ASX: APA) 

Anna Dadic: All right, let's stay in energy and move on to APA Group. It owns and operates Australia's largest gas pipeline network, and it's also one of the most rate-sensitive stocks on the ASX. Hugh, sticking with you — buy, hold, or sell?

Hugh Dive: (SELL) I think it's a sell. It's a reasonable yield — 5.6%, unfranked — but the debt load is alarming. They've got $14 billion of debt against a $12 billion market cap. They've got plans to build gas connectors from north to south, and I can't see how they can afford it. Gearing is at 400%. Interest cover is at 1.4 times. They did a capital raise earlier this year — not equity, just bonds — which added another half a billion dollars to the debt load. It's pretty precarious. And I can't see how they can finance their growth plans without a massively dilutionary equity raising.

Anna Dadic: Jason, will you also pull the plug?

Jason Teh: (HOLD) I wouldn't rate it as a sell — more of a hold, and that's really to do with valuation. I don't have that much concern about the balance sheet. Hugh raised the point about market cap to debt, but you only worry about those numbers if the company is desperate for capital and needs to raise equity. APA is not in that situation.

I look at capital structure slightly differently — I look at net debt to EBITDA, which is around six times. Now, I'm not saying it's undergeared — it's about right. Transurban also has a six times net debt to EBITDA ratio, and for recurring infrastructure-like, REIT-like assets, they can support more debt. In the public space, these companies tend to be undergeared. If they were in private hands, gearing could reach 12 times for some vehicles.

We've seen regulated utilities taken out by private capital — Brookfield took out Spark Infrastructure, for example. I'm sure they geared it up, because it was undergeared in the public space. From a balance sheet perspective, I don't think it's that much of an issue. The real question — from a buy, hold, sell perspective — is whether the stock will rerate, and that comes down to valuation. It is rate-sensitive, and I think where it sits today is about fair value. That's why it's a hold.

GQG Partners (ASX: GQG) 

Anna Dadic: All right, moving on to listed fund manager GQG Partners — one of the highest-yielding names on the ASX, with a double-digit yield. Jason, buy, hold, or sell?

Jason Teh: (HOLD) That's an extremely difficult one, and I have to say hold. It's trading on a PE of around 7, so it does look very cheap — and with a payout ratio under 100%, the 13% dividend yield is eye-catching. The reason it's a hold is that the fortunes of any funds management business are tied to performance. If performance improves, flows will pick up — and you'll only know in hindsight that buying at a PE of 7 was very cheap.

GQG has dismissed tech and AI over the last couple of years, and that's cost them in terms of performance. And that underperformance has caused outflows. That yield, by the way, is not sustainable — it's a bit like Woodside in that sense. If flows continue to fall, it will impact their EPS profile and the dividend will go backwards. They need to turn around their performance first — flows will follow, and then the stock will pick up. But because I don't have clarity on how investment markets are going to evolve, it's a hold.

Anna Dadic: Hugh, is this a reliable income stock?

Hugh Dive: (SELL) Definitely not. Building on Jason's comments — the trailing yield is meaningless. They've had $15 billion in outflows this year. I don't know whether they're going to get their anti-tech positioning right or not, but as we saw with Magellan, it's very hard to pick the bottom once a fund manager starts losing flows. When they start getting removed from model portfolios, it's very difficult to know where it stops. There's also significant key man risk — Rajiv Jain owns 70% of the company. If he gets run over by a speedboat in Florida, things could look very different.

Funds management businesses are even more volatile than energy companies, Jason. We saw that with Magellan — outflows can accelerate quickly, and there's an enormous amount of operating leverage. Great when it's going up, really bad when it's going down. I wouldn't include this as an income pick in your portfolio.

Jason Teh: There's one more thing I'd like to add — a structural overlay you have to consider for the funds management industry: the rise of ETFs. In the US, ETFs and passive investing represent about 60% of total funds under management, up from around 50% less than 10 years ago. That trend isn't stopping, and the market knows it. So even if performance does pick up, the impact on flows tends to be asymmetric — the negative flows impacting active managers tend to outweigh the positive, relative to what's happening in the ETF space.

Wesfarmers (ASX: WES) 

Anna Dadic: All right. Finally, a stock that's a little surprising on an income list, given it's probably the lowest-yielding name in the group — Wesfarmers. Hugh, buy, hold, or sell?

Hugh Dive: (HOLD) It's a good company, but a 2.6% yield — that's what I'm paying Westpac for Atlas's corporate transaction account. It's almost a free loan from me to Westpac. So I wouldn't really class it as an income stock. The key businesses are performing well — Bunnings, Officeworks, WesCEF, Kmart — but I can't see how the earnings grow dramatically enough to make this a genuine income stock. They're doing well, and the Mount Holland lithium mine is coming on — they announced just recently that they're expanding it — but the earnings can't grow enough to turn this into an income stock with a meaningful yield. If you're looking for income, this is not the place.

Anna Dadic: Jason, what's your call?

Jason Teh: (SELL) It's a sell on valuation. I'm with Hugh on this one.

Hugh Dive: It's gone from $72 to $92 in the last couple of weeks.

Jason Teh: That's right. A 2.6% yield tells you it's trading on about 30 times PE. Nothing wrong with the business — Kmart and Bunnings have very solid positions in the industry. They're not going backwards, they're growing nicely. But it's just too expensive, even for a high-quality business.

Guest picks

Anna Dadic: Time for the guest picks. Jason, what's your income idea?

Stockland (ASX: SGP) 

Jason Teh: I'd go with Stockland. It's been a bit of a dog, frankly. It's been sold off along with many other REITs amid interest rate fears. It's now trading at an 8% discount to NTA, with a 6% yield, and on a PE of 11 times — close to its 20-year low. A discount to NTA is always a good starting point when buying a REIT.

Stockland has historically always generated a return above its weighted average cost of capital (WACC). When you buy the business below NTA, the market is effectively saying it can't do that anymore — and there's a disconnect there. The question is whether that gets corrected.

What you're getting with Stockland is roughly 60% REIT earnings and 40% residential development. Right now, budget-related fears are weighing on residential volumes — but that's actually good for Stockland eventually. If the economy slows enough, rates will be cut, and that's when Stockland rerates. In fact, it will rerate before the earnings uplift comes through, which is why you need to buy a little early. Right now, you're getting paid 6% to wait at a discount to NTA. I think it's a strong buy.

Sonic Healthcare (ASX: SHL) 

Anna Dadic: Hugh, bring us home. What's your stock idea?

Hugh Dive: This might not be what people expect as a traditional income stock — but it's been sold down a lot. Sonic Healthcare. It's the world's largest pathology company: number one in Australia, number one in Germany, number one in Switzerland, number two in the UK, number three in the US. It's been sold off along with a lot of healthcare names, but it's a little different. It doesn't require heavy IT investment — it's a more mechanical process, capitalising on an older, sicker population and doctors who want to prescribe a battery of tests to avoid malpractice.

This company has very low expectations priced in. It's trading on a yield of around 5.5% with a PE of 13 times. Their acquisition in Germany looks to be going well, and they're targeting 5–7% earnings growth next year. They also have a 30-year history of growing their dividend — and unlike many income names, they've typically paid out only 50–70% of earnings, always keeping a buffer. So they have a 30-year history of increasing dividends going back to 1994. I think this is a very safe dividend pick — and a rather more exciting one than residential developments.

Anna Dadic: That's all we have time for today. Thank you to Hugh and Jason for joining us, and thanks for watching Buy Hold Sell.