Your top-tipped ASX income stocks for 2025

We’ve just come through a golden age for income – great interest rates for fixed income investors, and some juicy dividends on ASX stocks. Rates have already started to fall around the world, and Australia's RBA is likely to follow suit next year, with most commentators suggesting in the first quarter of 2025.

This means that income investors need to pay close attention to where their yield comes from and whether it can keep up with their needs in the coming year. That said, ignoring any black swan events, there’s little to indicate rates will decline that much over 2025 - it’s likely to be a gradual normalisation as opposed to a freefall. 

While a diversified portfolio should have a balance of uncorrelated assets, it’s interesting to ask yourself whether a stock's dividends can beat the average term deposit.

A quick skim of the market shows most 12-month term deposits are currently offering under 5% (Heartland Bank is the top offer at 5.10%, compared to offers around 4% at the bottom end).

When it comes to the top-tipped income stock picks, 50% of the companies clearly beat a term deposit over the past year – noting that dividends are not guaranteed, and a lower yield is not necessarily a bad thing, provided there’s consistency and sustainability to it.

The 2025 Outlook Series Survey

Traditionally, we have asked you to nominate your top picks and then categorised them ourselves. This year, we decided to go deeper and ask you for your picks for growth and income. Of the latter, the results were dominated by large-cap financials from the 4,814 readers who participated.

In this wire, you’ll find your 10 top-tipped income stocks on the ASX and a deeper dive into some of the key metrics.

Please note: We are sharing information from the Livewire and Market Index readerships by publishing this list. We hope it inspires ideas for your investment research. This information is not, nor is it intended to be, a set of recommendations. Please do your own research and seek advice from a professional.

Please note that a more comprehensive list of the top tipped income stocks is available for download at the bottom of the wire. 

Key observations - The Big 3?

For much of 2024, we’ve heard brokers, fundies and research houses tell us financials, particularly the Big 4 Banks, were expensive. Commonwealth Bank ranks as a Strong Sell based on Market Index’s Broker Consensus Tool.

I like to imagine our readers see these statements and think, “You are taking my bank shares over my cold, dead body”.

Honestly, you can see where many of them are coming from – if you aren’t racing out to buy the shares at inflated prices and have been sitting on them for years just for the dividends, it feels like a vastly different proposition.

CBA has consistently paid a dividend since listing in 1991, while Westpac has consistently paid an annual dividend since 1817 (when it was known as the Bank of New South Wales).

Readers might be surprised that ANZ is not on the list, given that the rest of the Big 4 are there – it just missed the top 10, but it still sits in the top 20.

Resources make the cut

Historically, miners haven’t been great dividend payers - they are cyclical stocks at the end of the day. But this all changed in recent years with BHP and Fortescue offering bumper payments to shareholders. BHP paid its fourth highest dividend ever this year (noting this was a slight cut on the previous year).

The energy transition and need for consistent supply was also a theme in the picks – readers nominated Woodside Energy and APA Group, both of which have trended positively with the experts recently.

Telstra also maintained its name as a dividend pick, though in recent years, there’s been some hope that it can begin to access growth opportunities and capitalise better off its dominant communications position in the Australian market.

Interestingly, neither of Australia’s supermarket duopoly made the list, despite Coles offering a dividend yield of 3.62% and Woolworths a yield of 4.74% in 2024. They didn’t even come up in the top 20. Perhaps concerns over ACCC court cases are seeing investors steer clear.

The bulk of the picks are fully franked – an essential element for income investors - particularly in retirement.

Key metrics

Please note that this data was sourced from Market Index, 22 December 2024.

• The average market capitalisation across the 10 top-tipped stocks was $100.724 billion
• The average dividend yield was 5.5%, with the highest on offer from Fortescue, at 10.72%.
• The average 1-year share price performance was 6.1%, with Westpac the top performer at 41.24%.
• The average ROE was 16.07%.
• The average EPS (adjusted) was $2.84
• Financials comprised 40% of the picks, followed by Resources (20%), with Energy, Communications, Consumer Cyclicals, and Utilities, each representing 10%.

The highest dividend yield in 2024

1. Fortescue (ASX: FMG)
   Dividend yield: 10.72%
2. Woodside Energy (ASX: WDS)
   Dividend yield: 8.08%
3. APA Group (ASX: APA)
   Dividend yield: 7.72%

Dividend yield can vary, Woodside Energy’s dividend yield actually fell slightly in 2024 compared to 2023, while Fortescue and APA Group both gained.

The highest earnings per share in 2024

This metric is a measure of profitability and potential returns, simply it’s a measure of how much a company makes per share.

1. Macquarie Group (ASX: MQG)
   EPS (Adjusted): $9.11
2. Commonwealth Bank (ASX: CBA)
   EPS (Adjusted): $5.58
3. Fortescue Metals (ASX: FMG)
   EPS (Adjusted): $2.78

The companies that beat a term deposit for yield

If you give a generous estimation of 4.95% as the average 12-month deposit interest rate, 50% of the top-tipped list offered higher dividend yields over the past year. All of these stocks offered fully franked dividends, with the exception of APA Group, which offered 13% franking.

1. Fortescue (ASX: FMG)
   Dividend yield: 10.72%
2. Woodside Energy (ASX: WDS)
   Dividend yield 8.08%
3. APA Group (ASX: APA)
   Dividend yield: 7.72%
4. BHP Group (ASX: BHP)
   Dividend yield: 5.56%
5. Westpac Banking Corporation (ASX: WBC)
   Dividend yield 5.15%

Forecast on the future: 1-year forward yield

The following 1-year forward consensus estimated yield data is sourced from FactSet. It's a helpful read on what income you may see from the stocks in 2025 and is listed in descending estimated yield order.

1. Woodside Energy: 9.1%
2. APA Group: 8.1%
3. Fortescue: 6.4%
4. BHP Group: 5.0%
5. Westpac Banking Corporation: 5.0%
6. Telstra: 4.7%
7. National Australia Bank: 4.6%
8. Commonwealth Bank: 3.0%
9. Macquarie Group: 2.9%
10. Wesfarmers: 2.8%

It's worth noting that 50% of these forecasts are still above a typical term deposit - and assuming rates are cut at least once or twice next year, you may find that list becomes 70% of the companies you tipped outperforming a term deposit based on forecasts.

Did your call make the top 10, or were you surprised by the list?

Let us know in the comments below.

You can also download a more comprehensive list of the top-tipped income stocks below. The list features all the growth stocks that received 10 or more votes from readers.