High-yield ASX dividend shares may appeal a lot to retirees looking for passive income. In this article, I'm going to talk about two stocks that could deliver the goods.
I think there are plenty of good options beyond Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS) for retirees to consider.
First, let me remind readers that diversification is important – we shouldn't have a portfolio of just two businesses. I also want to say that dividends are not guaranteed, though I believe the below two businesses could be more resilient than many other options.
Metcash Ltd (ASX: MTS)
The company is the largest supplier of independent supermarkets in Australia, supplying over 1,600 stores including IGAs and Foodlands. It's the second largest player in the liquor space, it supplies around 90% of the independent liquor stores in Australia, including brands like IGA Liquor, Bottle-O, Cellarbrations, Thirsty Camel and Porters Liquor.
It also owns a number of hardware brands including Mitre 10, Home Timber & Hardware and Total Tools. The combined hardware network amounts to more than 700 stores across metro and regional areas.
I believe each of these segments has defensive attributes because of resilient demand, and Australia's growing population is a useful long-term tailwind.
The current annualised dividend of 22 cents per share amounts to a grossed-up passive income dividend yield of 8.3%, which could be great for retirees. The high-yield ASX dividend share aims for a dividend payout ratio of 70% of underlying net profit after tax (NPAT). I think the company can continue paying a grossed-up dividend yield of at least 8% for the foreseeable future.
GQG Partners Inc (ASX: GQG)
GQG is one of the biggest fund managers on the ASX. It generates most of its money from management fees rather than performance fees. If funds under management (FUM) grow, it can become even more profitable with stronger margins – GQG doesn't need to hire an extra analyst for each US$1 billion of additional FUM that it manages.
The long-term outperformance of GQG's main funds, and the investment style of GQG in general, makes me believe it can continue to perform well for shareholders and investors alike – good FUM performance should translate into organic FUM growth. It's also experiencing solid net inflows each year – in the first 10 months of 2023 it has seen net inflows of US$8.5 billion.
I believe this is the most attractive high-yield ASX dividend share right now for retirees wanting large passive income.
According to the estimate on Commsec, GQG is projected to pay a dividend yield of around 11% in FY24.
