5 ASX Dividend Stocks That Look More Attractive Under the New CGT Rules

ASX Dividend Stocks That Look More Attractive Under the New CGT Rules

The May 2026 Federal Budget proposed a major change for investors: scrapping the 50% capital gains tax (CGT) discount from 1 July 2027. If it becomes law, gains on fast-growing shares will be taxed harder. We believe that shifts the balance. When growth gains lose their tax break, franked dividend income becomes comparatively more attractive. So which ASX dividend stocks stand to benefit?

Why the New CGT Rules Shift the Maths Toward Dividends

Today, if you hold shares for more than a year, only half your capital gain is taxed. The proposed rules replace that discount with “cost base indexation”, where your purchase price rises with inflation, so only the gain above inflation is taxed, subject to a new 30% minimum tax floor on those real gains. That may sound technical, but the point is simple: high-growth stocks that outrun inflation will likely face a bigger tax bill. Franked dividends are different. A fully franked dividend already carries a credit for the 30% company tax paid, cutting the tax you owe on that income, and the budget doesn’t change that. So, as after-tax returns on growth shares fall, franked income holds firm.

What Makes a Dividend Stock Worth Owning

A high headline yield means little if the payout isn’t safe. We look for a sustainable payout ratio, high or full franking, defensive earnings and a strong balance sheet. A very high yield from a struggling company is usually a warning sign, not a gift.

5 ASX Dividend Stocks That Stand to Benefit

Here are five names we think look well placed, spanning different income styles:

National Australia Bank (ASX:NAB). NAB pays fully franked dividends on a trailing yield near 4.5%. Banks generate steady lending income, and full franking means the tax offset is at its maximum, making this a core holding for dependable franked income. 

Telstra (ASX:TLS). Australia’s largest telco yields around 3.6% and has raised its dividend every year since 2021. Earnings are defensive, as people pay phone bills in any economy. One caveat: recent dividends were about 90% franked, not fully franked.

BHP (ASX:BHP). BHP’s cash yield is modest at around 3.4%, but dividends are fully franked and earnings span iron ore, copper and more. That diversification makes its income steadier than a single-commodity miner.

Charter Hall Long WALE REIT (ASX:CLW). This trust owns properties on long leases to tenants like government bodies and supermarkets, supporting a forecast distribution yield above 7%. Note that REIT distributions generally do not carry franking credits because they pass through property rental income, meaning they don’t offer the specific corporate tax offsets investors are seeking under the new rules.

IVE Group (ASX:IGL). Our small-cap pick, IVE, is Australia’s largest marketing services company, valued at nearly A$400 m. It trades on a low P/E of about 8 with a fully franked yield close to 7%, though its earnings are more cyclical than the larger names.

The Risks Income Investors Shouldn’t Ignore

A few warnings. The CGT changes are proposed, not law, and the details may shift before 2027. Dividends are never guaranteed, as companies cut them when profits fall. A very high yield can be a “yield trap” signalling an expected cut. And dividend stocks often weaken when interest rates rise, as safer cash returns compete. Most importantly, don’t invest in tax alone, because a tax break is no reason to own a weak business.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Stocks Down Under has not been compensated for this coverage. The proposed CGT changes are not yet law; details may change. Investors should conduct their own research and consult a licensed financial advisor before making investment decisions. The author may hold positions in stocks mentioned.