S&P/ASX 200 Index (ASX: XJO) shares can be a great source of passive income. Term deposits offer guaranteed income, but the payout does not grow. Therefore, Term deposits can’t provide inflation protection for an income stream either.
An ASX 200 share can provide that golden trifecta of a good dividend yield, payout growth and capital growth.
There are a few ASX 200 shares that could be an excellent pick compared to a term deposit.
APA Group (ASX: APA)
APA Group is an important business for the Australian economy because of its large energy asset base.
Its key asset is the gas pipeline network that transports half of the nation’s gas usage. The business has recently announced a plan to expand its network to increase its gas capacity to transport more volume from the north of the country (supply) to the south (demand) which will comes with a cost of hundreds of millions of dollars, but could unlock stronger earnings.
The business also has gas storage, gas processing, gas-powered energy generation, wind farms, solar farms, batteries and electricity transmission.
APA’s asset base allows it to generate defensive earnings each year, with a large majority of revenue growth linked to inflation.
As the cash flow grows, the ASX 200 share is able to fund a higher distribution for investors.
APA has grown its annual distribution every year for the past two decades, which is the second-best growth streak on the ASX.
It’s expecting to grow its FY26 annual distribution by 1.75% to 58 cents per security. That translates into a potential distribution yield of 6.3%, noticeably better than a term deposit.
Centuria Industrial REIT (ASX: CIP)
The other business I want to highlight is this real estate investment trust (REIT), which focuses on industrial properties in important metropolitan areas.
It owns a few different types of industrial buildings: distribution centres, manufacturing and production, transport logistics, data centres and cold storage.
There are a number of positives that are providing income tailwinds including a growing population, increased e-commerce adoption, fresh food and pharmaceutical demand, increased data centre demand, onshoring of supply chains and limited supply of new industrial properties.
Those positive demands are helping drive the underlying rental income potential of the business. It reported that in the first half of FY26, it delivered 5.1% like for like net operating income (NOI) growth.
It’s expecting to deliver funds from operations (FFO â rental earnings) per security of between 18.2 cents to 18.5 cents in FY26. That would be growth of up to 6% year-over-year.
The ASX 200 share expects to deliver accelerating earnings growth in the medium-term as its rental contracts reset to market rates rather than being 20% ‘under-rented’ on average.
Its net tangible assets (NTA) per unit is $3.95, so it’s trading at a discount of around 20%, which is very appealing to me. It’s like being able to buy a property portfolio at 20% less than it’s actually worth.
On the distribution side of things, it’s expecting to increase its annual distribution by 3% to 16.8 cents per security in FY26. That translates into a forward distribution yield of 5.3%. That’s more appealing to me than a term deposit.
The post Forget term deposits! I’d buy these two ASX 200 shares instead appeared first on The Motley Fool Australia.
Should you invest $1,000 in Centuria Industrial REIT right now?
Before you buy Centuria Industrial REIT shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Centuria Industrial REIT wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 20 Feb 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- Zip, CSL and BHP among CommSec’s most-traded ASX shares
- ARB Corporation: Profit drops, but US growth accelerates
- Ingenia Communities affirms top-end guidance after first-half results
- Viva Energy Group FY25 earnings: Higher second-half profit and dividend declared
- Emerald Resources lifts profit 23% as gold projects drive growth
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.