Fundie vs AI - 10 ASX income generators

On Friday, we relaunched Fundie vs. AI, with Datt Capital's Emanuel Datt taking on ChatGPT for the growth sleeve of the stock-picking competition. 

Today, we're pitting Martin Currie Australia (to be rebranded ClearBridge in September) Chief Investment Officer, Reece Birtles, against ChatGPT for the income sleeve. 

For anyone not familiar with the series, you can catch up via the links below; 

Equities

Fundie vs AI: One year on, who is the winner?

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Equities

One of Australia's best stock pickers pits his skills against AI

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Here are the parameters for the competition: 

• Each competitor is to provide five stock picks within the given factor (income in this case) and provide a short summary of the bullish thesis.
• We will track the performance over the following financial year, with entry prices calculated from COB, 30 June 2025, to COB 30 June 2026.
• Unlike with growth stocks, where the focus is only on total return, the income sleeve will focus on both total return and yield. 
• As was the case in the original Fundie vs AI income stock picking competition, it is worth noting that AI does not factor in franking credits. In contrast, Martin Currie does in its income-focused strategies. This is an important consideration that will impact overall performance in the real world. 
• At the halfway point, both participants will be given the opportunity to remove one stock and update with a fresh pick, but they don't have to. They may simply leave their portfolio as is.
• The aim is to answer the question: Who is the better stock picker?
• We recognise that this is a fun thought experiment and that the human participants are sharing their stock picks in good faith.

Please note that neither the human nor AI-driven stock picks are recommendations. This thought experiment is for educational purposes only. Always do your own research and seek advice. Past performance is not a reliable indicator of future return. 

The competitors

• In the blue corner, we have ChatGPT-4o. OpenAI released GPT-4o ("o" for "omni") on May 13, 2024, introducing a significant advancement in AI capabilities. GPT-4o is a multimodal AI model, meaning it can process and generate content across multiple formats.
• In the red corner, we have Reece Birtles. Reece leads the Martin Currie Australia (MCA) Investment team as Chief Investment Officer. He has a deep passion for value style investing, behavioural finance and diversity of thought, developed during a career spanning more than 30 years as an equity investor. Reece is also the lead Portfolio Manager for MCA's Value Equity, Dynamic Value, Equity Income, Ethical Income and & Growth strategies.

Managed Fund

Martin Currie Equity Income Fund

Australian Shares

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The Stock picks - Chat GPT

1. Commonwealth Bank of Australia (ASX: CBA)

Current yield (source: Market Index): 2.52%

CBA boasts one of the strongest brands and balance sheets in Australian banking, with a dominant position in retail lending and ample capital to sustain reliable dividend payouts, even in a cooling economy.

2. Aurizon Holdings Ltd (ASX: AZJ)

Current yield: 5.53%

Aurizon operates essential rail freight infrastructure tied to bulk commodities like coal and agriculture, underpinned by long-term haulage contracts that generate predictable cash flows and support a solid dividend yield, even during commodity cycles.

3. APA Group (ASX: APA)

Current yield: 6.98%

APA owns and operates critical gas infrastructure across Australia, benefiting from long-term take-or-pay contracts that provide stable cash flows and support consistent income distributions.

4. Coles Group Ltd (ASX: COL)

Current yield: 3.31%

Coles’ entrenched position in essential retail, along with its cost discipline and inflation-passing ability, gives it a reliable earnings base to fund dividends through economic cycles.

5. Deterra Royalties Ltd (ASX: DRR)

Current yield: 6.21%

Deterra’s unique royalty model linked to BHP’s Mining Area C provides exposure to iron ore revenue without operational risk, translating into extremely high-margin, low-volatility income streams.

The Stock picks - REECE BIRTLEs

1. Medibank Private (ASX: MPL)

Current yield: 3.46%

A high-quality, dividend paying company that we expect to see growing faster than peers in the industry, given their investments in hospitals.

2. Nine Entertainment (ASX: NEC)

Current yield: 4.99%

We expect to see a strong franked dividend as a return of capital for the sale of Domain to Costar in the coming months. Domain was the lowest-return part of NEC's business, so it will now benefit from growth in Stan and potential rate cuts, helping the media business.

3. Telstra (ASX: TLS)

Current yield: 3.83%

We see it as likely to have improved returns to shareholders over next 5 years as cashflow has improved from cost out and growing demand for data. We expect to see both dividend growth and buybacks.

4. APA Group (ASX: APA)

Current yield: 6.98%

We are seeing a much clearer path for dividends and capital returns given positive regulatory decisions.

5. Downer EDI (ASX: DOW)

Current yield: 3.45%

We expect continued growth and improved returns to shareholders as margins expand and revenue growth accelerates following a successful turnaround under new management.

See you in six months

There you have it; the picks are in. Interestingly, both competitors picked APA Group. 

We will revisit the selections in six months and give the competitors the opportunity to remove one stock and add another. We will then see who the winner is, a further six months down the road - on July 1 2026.

Who do you think the winner will be, and what are your thoughts about abdicating investment responsibility to AI?

Whilst this is a fun thought experiment, that is a question that you will likely need to answer at some point in your investing journey, especially those in the younger cohort.

Share your thoughts in the comments section below.