Is this the ultimate sleep-at-night dividend portfolio?

It was superhero week recently at my children's daycare which prompted kids (and their parents) to think about what superpowers they would most like to have.

As we know, one person's style isn't necessarily another's. Sure, the fantastical ones like the ability to fly and X-ray vision have their merits, but what about the superpower of not having to get up in the middle of the night to go to the toilet? Also very appealing.

Perhaps more indicative of the stage of life I am at with very young children, but if I was going to attribute a super power to, say, my investing portfolio (you can see where I'm going with this), it would closely resemble what I daydream about for myself - sleeping soundly, not having to do too many chores, and having steady income that just keeps rolling in with minimal effort. 

With this in mind, I asked my colleague Carl Capolingua to pull the data on the ASX 300 stocks that had the least volatility over FY26, to see if we could pull together the ultimate sleep-at-night dividend portfolio.

We ran a screen for the ten stocks that gave investors the steadiest, least turbulent returns over the 2026 financial year.

Here’s where we landed.

How we measured risk

We started with the daily closing share price of every stock in the ASX 300 across the 2026 financial year.

For each stock we worked out its daily return - the percentage the price moved from one trading day to the next - and then added in the value of any dividends paid, "grossed up" to include the franking credits that Australian investors can claim back at a 30% company tax rate. 

This gives a daily total return that reflects what an investor actually earned each day from both price changes and income.

Because the aim was to find the calmest, least risky stocks, we focused only on the down days: for each stock we measured how large and how frequent its negative days were, combined them into a single figure called the "downside deviation," and scaled it up to an annual number so every stock could be compared on the same footing. A smaller number means the stock fell less often and by less - in other words, a smoother, less nerve-wracking ride.

How we picked the ten

We ran this calculation for all 297 stocks that had price data, requiring at least 180 trading days of history so that newly listed companies with only a few weeks of data couldn't distort the results.

We then simply ranked every stock from the lowest downside deviation to the highest and took the ten at the top of that list.

Keep in mind the focus of this screen was purely on the stocks with the lowest volatility, not outright returns. Some of these stocks underperformed the broader market over FY26, and yes, a low-cost index ETF would have done better than several of them!

The ten stocks are: 

What the numbers say - and what the experts think

Telcos, toll roads, pipelines and property trusts, came out on top.

The total returns range wildly. Qualitas Real Estate Income Fund (ASX: QRI) was a very stable choice for investors, but it returned the same as cash, which has zero downside volatility. Telstra was solid, but APA Group at 28.7% and Aurizon Holdings at 43.6% were standouts.

Once we included grossed-up dividend yield to the mix, they're all fairly reasonable sitting much more tightly between 4.6% - 8.2%. 

QRI's 7.6% downside vs 7.1% yield makes it look a bit better. It tops the volatility screen (downside deviation of just 7.6%), but the share price itself fell around 4% over the year.

Let's look at some more of the names on the list more closely.

Telstra (ASX: TLS)

Telstra was the second least volatile stock in the entire ASX 300 last year. 

I put the top ten list to Charles Casey, the co-portfolio manager for the Solaris Australian Equity Income Fund and asked him to choose which of the stocks on the list he would back for the year ahead.

Instead, he told me that they currently held none of the stocks on the list, and gave the bear case against two of them, starting with Telstra.

"Telstra's no longer the high dividend-yielding stock it's been presented as over the past two decades. Based on our forecasts it's now trading on a multiple of 23 times forward earnings, offering a dividend yield of only 4.3%." 

He also flags that the dividend is no longer fully franked, an important change to note for income-focused investors.

On a recent Buy Hold Sell episode, the guests were also unanimous on their Sell verdict. WAM’s Hailey Kim is watching whether direct-to-mobile satellite erodes the coverage moat that underpins Telstra's pricing power. Daniel Moore of IML also said: "Raising prices, cutting costs is not a long-term strategy."

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The data may be saying one thing, but interestingly, the pros are saying no.

APA Group (ASX: APA) 

Gas pipeline network APA Group delivered a 28.7% total return in FY26. At the end of FY26, Macquarie named it among its preferred defensive picks with a yield of 5.64%.

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In Buy Hold Sell's mid-year check-in of Livewire readers' most tipped income stocks, Atlas Funds Management's Hugh Dive gives a different take, calling APA a Sell: 

"$14 billion of debt against a $12 billion market cap. Gearing is at 400%."

Jason Teh of Vertium Asset Management, however, saw it differently. "For infrastructure-like assets, net debt to EBITDA of around six times is about right - Transurban carries similar gearing." 

He also noted that private capital routinely runs these assets at much higher leverage, sometimes up to 12 times. 

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Aurizon Holdings (ASX: AZJ) 

At 43.6% total return with a 7% yield, Aurizon was a standout performer. Macquarie listed it alongside APA Group as a top defensive income pick. 

Fund manager Reece Birtles of ClearBridge named it in May as a stock they own as part of a "fuel security" play, being companies that have "demonstrated resilience and pricing power in sectors that have arguably been underinvested in for the past 20 years" that are now benefiting materially as demand spikes amid geopolitical uncertainty. 

Atlas Arteria (ASX: ALX) 

Atlas Arteria is a global toll road developer and operator with roads in France, Germany and the US. It has been the subject of a long-running hostile takeover by rival IFM.

Fund manager Charles Casey of Solaris Investment Management had this to say about the stock:

"While offering a high historical dividend yield, we question the sustainability of the Atlas dividend looking forward. Atlas owns a high-quality portfolio of toll roads that are undervalued by the market, however, governance risks are emerging as IFM Investors asserts its influence on the register with it’s greater than 65% shareholding." 

Region Group (ASX: RGN) 

Finally, we have Region Group, the largest landlord of neighbourhood shopping centres; 100 assets, mostly anchored by supermarkets. 

Bell Potter analysts named it as one of its top picks in real estate for FY26 and beyond, giving it a Buy rating and $2.70 price target, making the case that Region Group's income streams are "highly resilient" with roughly 90% of gross rent coming from non-discretionary tenants. 

In June's Australia Property Update from Morgan Stanley, their coverage notes costs are now under control with new service contracts locking in just 3% annual increases for five years, well below the rate of award wage inflation. 

They also note supermarket tenants are renewing leases early and at higher rents, and that the new CEO has flagged plans to sell off weaker assets while the market for this type of property is strong.