3 top ASX income ideas beyond CBA and the big four banks

Let's see why these shares could be top picks for income investors looking outside the banking sector.

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Bank shares like Commonwealth Bank of Australia (ASX: CBA) have long been a go-to option for income on the ASX. Their scale, profitability, and dividend history make them a natural starting point.

But they are looking expensive after strong runs over the past 12 months.

The good news is that they are not the only option. There are other parts of the market that can provide income, often with different drivers and risk profiles.

Here are three ASX income ideas outside the banking sector.

A man in a suit smiles at the yellow piggy bank he holds in his hand.

Image source: Getty Images

APA Group (ASX: APA)

The first ASX income share to look at is APA Group.

APA owns and operates energy infrastructure, including gas pipelines and storage assets. These assets generate revenue through long-term contracts, which can provide a steady and predictable income stream.

Because its earnings are tied to infrastructure usage rather than commodity prices, the business tends to be less volatile than many energy producers.

This structure supports consistent cash flow, which underpins its distributions to investors.

With contracted revenue and a focus on essential infrastructure, APA offers exposure to income that is driven by long-term agreements rather than short-term market conditions.

Transurban Group (ASX: TCL)

Another ASX income share worth considering ahead of the big four banks is Transurban.

It operates toll roads across Australia and North America. Its revenue is linked to traffic volumes and toll pricing, creating a different type of income stream.

As populations grow and urbanisation continues, demand for transport infrastructure tends to increase. This can support long-term growth in traffic across its network.

The company also benefits from inflation-linked pricing in many of its concessions, which can help protect revenue over time.

With a portfolio of long-life assets and predictable cash flows, Transurban provides income exposure tied to infrastructure usage and population growth.

Telstra Group Ltd (ASX: TLS)

A third ASX income share that offers income outside the banks is Telstra.

It operates Australia's largest telecommunications network, providing mobile, broadband, and enterprise services.

Following the successes of its T22 and T25 strategies, and its ongoing Connected Future 30 strategy, Telstra appears to be in a strong position to continue growing its earnings at a steady rate over the medium term.

This bodes well for dividend growth over the coming years, which could make it a good pick for income investors.

With defensive earnings from essential services and a strong position in a rational market, Telstra is arguably a great alternative to the big four banks.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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