Overinvested in Westpac shares? Here are two alternative ASX dividend stocks

Investors wanting to diversify their dividend portfolio should look at these stocks.

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Westpac Banking Corp (ASX: WBC) is a popular ASX dividend stock because of its large dividends and major market presence in the banking sector.

In fact, I'd guess some investors have heavily weighted their portfolios to include Westpac and other ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB). It could be a good idea to diversify.

I think investing in banks is largely a bet on Australian property. If Aussies have most of their wealth tied up in owning one or more properties, then investing in ASX bank shares as well doesn't add much diversification to the underlying risks.

If investors want some dividend diversification, I'd suggest the below two stocks as options.

GQG Partners Inc (ASX: GQG)

GQG is one of the largest listed fund managers on the ASX. It is headquartered in the United States but expanding to places like Australia and Canada.

The business is able to achieve a high dividend yield because it's committed to a dividend payout ratio of 90% of distributable earnings.

It's focused on growing funds under management (FUM) through strong investment performance and attracting more funds. The strong returns are helping GQG appeal to investors and get them to allocate more money to the fund manager.  

GQG reported that its FUM had grown to US$150.1 million as at 31 May 2024 and that it had experienced net inflows of US$9.1 billion in the calendar year to date.

The ASX dividend stock's payout has been climbing since it started paying a dividend in 2022. According to Commsec, it's projected to pay a dividend yield of 8.5% in FY26.

Universal Store Holdings Ltd (ASX: UNI)

I think Universal Store is one of the more impressive ASX retail shares because it has continued to grow its dividend despite challenging conditions.

It is utilising its brands well to grow its sales and profit. The company is best known for its Universal Store stores which sell premium youth clothes. Universal Store also has a business called CTC, which trades under the THRILLS and Worship brands. It's also rolling out Perfect Stranger as a standalone format.

In the FY24 first-half result, Perfect Stranger sales increased by approximately 60% to $6.6 million, helping the company's total sales rise by 8.5% to $158 million. The statutory net profit after tax (NPAT) rose 16.7% to $20.7 million, showing the company's scalability.

The ASX dividend stock's payout has grown each year since it first started paying a dividend in 2021.

According to the estimate on Commsec, Universal Store is expected to pay a grossed-up dividend yield of 7.3% in FY24 and 9.25% in FY26.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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