Income investors once turned to high-yield stocks as the income from traditional sources dwindled. But what should holders of those high yield stocks now do as bond yields creep back up again? As yields on the two asset classes converge, equities become relatively less attractive, and analysts have to use higher discount rates, which also hits stock valuations. Stuart Welch and Omkar Joshi review Transurban, Sydney Airport, CBA, Telstra and IAG, in this exclusive from Livewire Markets.

Key points

• Transurban: Dilution to shareholders if the WestConnex bid succeeds, or new competition crimping growth prospects if it fails: Is it a lose-lose proposition for investors?
• CBA: Is operating in a tough market which is cooling and faces regulatory issues. However with a reasonable yield, is there a short-term opportunity from here?
• Sydney Airport: Good exposure to the Asian middle-class thematic, and the company has good revenue initiatives. How much is priced in though?
• Telstra: Might look like a bargain on a single digit PE… but is the ‘E’ in the ratio going to materialise?
• IAG: A solid exposure to the domestic insurance industry, but is the valuation getting up there now?