Investors searching for passive income could do very well with high-yield ASX shares. In fact, one of the advantages of buying companies for dividends is that there is a second source of investment return other than capital gains – income.
And in a world of high inflation, high interest rates, and geopolitical instability – cash remains king in my view.
Here are two standout options to consider in the dividend debate: Bank of Queensland Ltd (ASX: BOQ) and Westpac Banking Corp (ASX: WBC). Let's take a look.
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Why Bank of Queensland is a high-yield ASX share
BOQ serves around 1.4 million customers and holds a 2.73% share of the Australian residential mortgage market.
Bank of Queensland is currently trading at $5.93 per share, boasting a trailing dividend yield of 6.41% from dividends of 38 cents per share in the last 12 months.
This yield is among the highest in the ASX banking sector, making it an attractive option for income-focused investors, in my opinion.
Despite varying economic environments over the years, BOQ has maintained stable, robust dividend payouts. A $10,000 investment in BOQ stock today would yield approximately $660 annually based on its trailing dividend rate (no franking credits considered). If the dividend yield drops however – so too would this yield.
For comparison, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) – an ETF tracking the Australian benchmark index – currently pays dividends at a trailing yield of 3.59%.
Westpac – another top high-yield ASX share
Westpac is another high-yield ASX share worth noting. At the time of publication, its trailing dividend yield is 5.5%.
Westpac, one of Australia's "big four" banks, has a strong track record of paying solid, fully-franked dividends, making it a reliable choice for dividend-seeking investors, in my view.
The bank has also demonstrated resilience in a number of economic cycles, maintaining strong net interest margins along with the broad sector, according to my colleague Bernd. This performance, coupled with ongoing share buybacks, is a vote of confidence in my estimation.
If Westpac continues to pay dividends at the same yield of around 5.5%, a $10,000 investment would return around $560 in passive income annually (not considering any franking credits).
Conclusion
Both Bank of Queensland and Westpac offer attractive high yields for ASX investors. BOQ's 6.41% trailing yield and Westpac's 5.5% trailing yield could make them compelling options for those seeking strong, consistent dividends, in my view.
As a precaution – even though the banks are tipped to continue paying strong dividends moving forward, past performance is no guarantee of future results.
