Building a portfolio of ASX shares that will pay you a generous income stream is a hard task. After all, there are hundreds of dividend-paying shares on the ASX, and trying to pick the right ones can be overwhelming.
So to make the process easier for any prospective passive income seekers today, let's discuss seven ASX shares I'd buy for generous dividends.
7 ASX dividend shares I'd buy for passive income today
National Australia Bank Ltd (ASX: NAB)
It's hard to have a generous dividend share portfolio without including at least one ASX bank. NAB is my pick out of the banks right now. It is an extremely well-run business for one, having climbed from being the fourth-largest bank share a few years ago to the second-largest today.
But NAB also brings home the bacon when it comes to up-front cash flow. At present, NAB shares offer a fully franked, trailing dividend yield of 5.8%.
Telstra Group Ltd (ASX: TLS)
Telstra has been a dividend favourite of ASX investors for decades now and for good reason. This telco offers shareholders a defensive and substantial income stream, with the company keeping its payouts steady throughout the entire pandemic.
Just this week, Telstra announced another dividend as well. Investors will enjoy a final dividend of 8.5 cents per share next month. Telstra has upped its annual dividend to 17 cents per share, fully franked, for the 2023 financial year, up 3% from FY2022. That gives Telstra a trailing dividend yield of 4.23% today.
Lottery Corporation Ltd (ASX: TLC)
Lottery Corp is a relative newcomer to the ASX boards, having only been floated in May of last year. But I think this gaming stock has plenty of potential when it comes to ASX dividend income.
It operates an extremely defensive business model, with Lottery Corp holding exclusive lottery and Keno licenses in most Australian states and territories. This makes it an ideal candidate for a reliable passive income stock.
Lottery Corp has only paid out one dividend so far since its listing, the interim dividend from March of this year. That came in at a fully-franked 8 cents per share, so I would assign Lottery Corp a tentative annualised dividend yield of 3.12% today.
BHP Group Ltd (ASX: BHP)
BHP is by far the largest share on the ASX by market capitalisation. This diversified resources giant is one of the most dominant mining companies in the world, with significant operations in iron ore, coal, potash and copper.
I like the diversity among different commodities that BHP brings to the table. And the giant dividends that this company has paid out over the past few years make it difficult to ignore for a dividend portfolio today. At present, BHP shares offer a trailing dividend yield of 8.96%, which also comes with full franking credits attached.
Woodside Energy Group Ltd (ASX: WDS)
In a similar vein to BHP, I think energy share Woodside is also worth a look when it comes to ASX dividend income potential today. Woodside is now the ASX's largest oil and gas share, thanks to the deal done with BHP back in 2021.
Oil and gas prices continue to remain elevated, which should continue to support big dividends from Woodside shares. Woodside's current dividend yield makes it the best option from the ASX's energy sector right now in my view. Right now, Woodside shares have a trialling (and fully franked) dividend yield of 9.75% on the table.
Coles Group Ltd (ASX: COL)
Coles is a company that needs little introduction. It is comfortably the second-largest player in the Australian supermarket and grocery space, and has a mature and established network of stores around the country.
Thanks to its mature business model, Coles is already an established dividend payer. I've been particularly impressed by this company's ability to increase its annual dividends every single year since 2019. That includes throughout the COVID-19 pandemic, of course.
I also prefer Coles shares right now over arch-rival Woolworths Group Ltd (ASX: WOW), due to Coles' cheaper share price and higher dividend yield. At present, Coles shares are displaying a trailing dividend yield of 3.8%, which again comes with that full franking.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Last but certainly not least, we have ASX 200 investment house Soul Patts. Sure, Soul Patts' current (and fully franked) dividend yield of 2.47% is one of the lowest on this list. But Soul Patts' unrivalled streak of annual dividend pay rises, funded by a large and diversified portfolio of assets, more than makes up for this, in my view.
Soul Patts is and remains the only share on the ASX that has raised its annual dividend every single year since 2000. That's through the dot-com bust, the global financial crisis and the COVID pandemic.
That alone is enough to merit including this company on this list.
