The Australian Age Pension is one of the most generous in the world, but I'd rather rely on quality high-yield ASX dividend stocks.
I like the idea of owning businesses that are able to offer a pleasing level of passive income and payout growth over time.
APA Group (ASX: APA) is one of the ASX dividend stocks I'd happily rely on, but not the only one. I think it's important to have a diversified portfolio when it comes to dividends.
There are a few reasons why APA is an appealing option.
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Defensive earnings
If I'm relying on an ASX dividend stock to continue paying passive income across all economic conditions, I'd want to choose a business with resilient earnings, since that's what funds the passive income.
ASX bank shares and ASX mining shares can see their profits materially drop when an economic cycle or resource cycle goes through a low point, which we've seen this decade.
APA's business model is about owning energy assets, including a large gas pipeline network, gas processing and storage facilities, gas-powered energy generation, solar power, wind power, energy storage and electricity transmission.
Energy is always in demand and APA plays a key part in that for Australia's economy. APA actually transports half of Australia's gas usage. Additionally, most of its revenue is linked to inflation, so it's able to act somewhat as a long-term hedge against inflation.
High-yield ASX dividend stock
One of the more appealing aspects of APA is the pleasing level of passive income it provides straight away.
It expects to pay a distribution of 58 cents per security for FY26, which translates into a forward distribution yield of approximately 5.6%, at the time of writing. In my view, that's competitive with the very best savings accounts right now, with payout growth potential.
Rising payout
APA has an excellent record of consistent distribution growth. For me, this is one of the absolute key reasons I prefer the ASX dividend stock compared to the Age Pension.
The business has increased its annual payout every year since 2024 – more than two decades of continuous passive income growth.
I'm not expecting huge payout growth in the shorter-term, but APA's steady progression is a real positive for income-focused investors.
How many APA shares would it take to match the Age Pension?
Currently, the maximum Age Pension for a single person is approximately $31,200 annually.
To receive that much from APA, an investor would need 53,794 shares based on the FY26 payout, though I'm expecting the FY27 payout to be a bit larger, so fewer shares would be needed for the next financial year.
I'd suggest having more than just one high-yield ASX dividend stock in a portfolio, but APA would certainly be an effective inclusion, in my opinion.
