The ASX share market is a diverse mix of businesses, with a great number of them able to produce good profit to pay dividends. ASX dividend shares can help make enough retirement income to replace job earnings.
An important part of being able to swap a job for retirement income is building up enough wealth to generate good investment income.
Depending how much of their profit they pay out each year, some ASX dividend shares can provide impressive dividend yields.
While term deposits offer guaranteed returns, they don't produce organic growth unless the interest is reinvested. The current interest rate rises are a great boost, though each is a one-off boost.
Why ASX dividend shares can deliver
Businesses can pay a dividend from some of the profit and reinvest the rest for more growth in the future.
I have written some articles about some names that have a long dividend record, though they don't have as high a yield as the ones I'm about to mention.
Dividend reliability is one factor to consider. However, the dividend yield can make a big difference. If someone had a $1.5 million portfolio with a 4% dividend yield, they'd receive $60,000 in annual dividend income. A $1.5 million portfolio with a 5% yield can make $75,000 of annual dividend income.
So, with that in mind, let's look at some quality ASX dividend shares with big yields.
Charter Hall Long WALE REIT (ASX: CLW)
This business is a real estate investment trust (REIT) that owns a diversified portfolio of properties across a number of areas including industrial and logistics, retail, agri-logistics, long-lease retail, service stations, office and so on.
Its portfolio's weighted average lease expiry (WALE) is around 12 years, providing "long-term income security". Almost all (99%) of its tenants are blue chip, such as Australian government entities, and it has rental growth built in, with around half of leases linked to inflation.
It's expecting to pay an annual distribution of 28 cents per unit in FY23, resulting in a forward yield of 6.2%.
Premier Investments Limited (ASX: PMV)
Premier Investments is a leading retailer business, which owns various apparel stores such as Just Jeans, Jay Jays and Dotti. It also owns Smiggle, a globally-growing school accessories business that sells items with branded images from, for example, Marvel or Minecraft. Online sales are proving to be particularly profitable for the company.
The ASX dividend share also has sizeable stakes in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).
Premier Investments has a solid dividend record and is expected, according to CommSec numbers, to pay an annual dividend of $1.01. This would mean a forward grossed-up dividend yield of 5.9%.
Coles Group Ltd (ASX: COL)
Coles is one of the leading supermarket businesses in Australia. Not only does it operate the national Coles Supermarket network of stores, but it also generates earnings from Coles Express and its liquor segment. Some of the liquor store brands within its portfolio are: First Choice Liquor, Liquorland and Vintage Cellars.
Since it listed a few years ago, it has slowly but steadily grown its dividend to investors. It is investing in technology and automated warehouses to make the business more efficient and profitable. According to CommSec, it could pay a grossed-up dividend yield of 5.5%.
Rural Funds Group (ASX: RFF)
This ASX dividend share owns a portfolio of farms. It doesn't operate them, instead it leases them out to blue chip tenants on long-term leases. The farm types it owns include cattle, almonds, macadamias, vineyards, sugar and cotton.
Rural Funds aims to grow its distribution by 4% per annum, which compounds at a solid rate over time.
It's expecting to dish out payments worth 12.2 cents per unit in FY23, which equates to a distribution yield of around 5%.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is one of the leading ASX dividend shares in my view. It owns category-leading retailers like Bunnings, Kmart and Officeworks.
It also has a number of lesser-known, interesting segments, such as WesCEF (chemicals, energy and fertilisers), that are becoming a growing piece of the pie and could drive profit in future years.
One of the key goals of Wesfarmers is to deliver shareholder returns. CommSec numbers suggest that it's going to pay a grossed-up dividend yield of 5.7%.
