If I were looking for passive income on the ASX, I wouldn't just focus on the headline dividend yield. I want reliability, visibility, and a business model that can support distributions year after year.
That's why APA Group (ASX: APA) comes up on my radar.
At a share price of $9.06 and FY26 distribution guidance of 58 cents per security, APA is offering a forward yield of approximately 6.4%. In today's market, that is certainly attention-grabbing. But I think the real question is whether that passive income stream looks sustainable.
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A business built for predictable cash flow
APA owns and operates critical energy infrastructure assets across Australia, including gas transmission pipelines, storage, and electricity generation and transmission assets.
What I like about this model is that much of its revenue is contracted and often linked to inflation. In its latest half-year update, APA delivered underlying EBITDA growth of 7.6% to $1,092 million and lifted EBITDA margins to 77.3%, reflecting both tariff escalation and cost discipline.
High margins and predictable cash flows are exactly what I want backing a 6%+ yield.
The company also reaffirmed its FY26 distribution guidance of 58 cents per security, which gives investors a clear line of sight on passive income over the next year.
Growth without recklessness
One of my concerns with high-yield stocks is that sometimes they are mature businesses with little growth left. APA doesn't look that way to me.
Management recently increased its FY26–FY28 organic growth pipeline from $2.1 billion to around $3 billion. That's a meaningful uplift and suggests the company sees real opportunities in its core infrastructure markets.
Importantly, APA also highlighted that its balance sheet remains strong, with additional funding capacity following an S&P threshold modification that increased capacity by more than $1 billion.
To me, that combination of a solid balance sheet and visible project pipeline reduces the risk that the dividend is being stretched.
Positioned for Australia's energy transition
Another reason I find APA interesting is its strategic role in Australia's evolving energy system.
It continues to expand its East Coast Gas Grid and invest in electricity transmission and storage. Regardless of where you sit on the energy debate, it is clear that gas and electricity infrastructure will remain critical to Australia's economy for decades.
APA's assets are not speculative. They are embedded in the national energy network.
That gives me confidence that the cash flows supporting its 6.4% yield are underpinned by long-life, hard-to-replicate infrastructure.
Is it one of the best ASX shares for passive income?
No dividend is guaranteed. APA itself notes that guidance is subject to asset performance, macroeconomic factors, and regulatory changes. Investors also need to be comfortable with exposure to interest rate movements and energy policy risk.
But when I weigh up the contracted revenue base, high EBITDA margins, reaffirmed distribution guidance, and visible growth pipeline, I think the risk-reward looks attractive at $9.06.
