Overinvested in NAB? Here are two alternative ASX dividend shares

These ASX shares could be top picks for income to diversify away from bank income.

ASX bank shares are a popular choice for many investors because of their large market positions and sizeable dividends. Some people may own National Australia Bank Ltd (ASX: NAB) shares but want to diversify their passive income sources with different ASX dividend shares.

While NAB differs from other big banks, including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ), they are all still very similar businesses.

The ASX offers plenty of opportunities that can provide significantly different exposure, which is good for diversification. Spreading the love could also be a good idea because NAB's loan arrears are rising.

The two ASX dividend shares below have a solid dividend record and can still provide a comparable dividend yield when looking at the average yield of the two businesses.

Two smiling work colleagues discuss an investment at their office.

Image source: Getty Images

Brickworks Limited (ASX: BKW)

Brickworks is one of the older companies on the ASX with an impressive record – it has grown or maintained its dividend every year for almost 50 years. That's a strong history of stability.

While the company is best known as a building products manufacturer — including being the biggest brickmaker in Australia — other assets have delivered a stable supply of passive income.

Brickworks has an investment division that invests in various (largely) uncorrelated industries, including resources, telecommunications, property, financial services, credit/bonds, agriculture, swimming schools, banking, and so on. This division has provided long-term capital growth and growing cash flow.

The ASX dividend share also has an impressive property segment. Brickworks is steadily unlocking value by selling excess land into a joint venture industrial property trust with partner Goodman Group (ASX: GMG).

The partnership then builds huge advanced warehouses on that land, which is located on the edge of major Australian cities, including Sydney. Once completed, those warehouses increase the value of the land and create an appealing stream of rental profits.

At the current Brickworks share price, it has a grossed-up dividend yield of 3.5%.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop is a leading retailer of male and female grooming products, including electric shavers, clippers, trimmers and wet shave items. The company also sells products across oral care, hair care, massage, air treatment and beauty categories.

The ASX dividend share has grown its annual dividend per share every year since 2017, though that record isn't guaranteed to continue, particularly in this challenging retail environment.

Shaver Shop is slowly but steadily expanding its store network across Australia and New Zealand and increasing its online sales.

Impressively, in the FY24 first-half result, the business reported its gross profit margin improved by 10 basis points to 44.4% while still remaining "highly competitive". It's leveraging product lines and ranges that are exclusive to Shaver Shop. This gross profit improvement can help mitigate a lot of the operating expense inflation.

The company advised it was in a "strong position" to maintain dividends and pursue growth. It's looking to add a small number of stores in FY25, which can boost its scale.

Shaver Shop has a trailing grossed-up dividend yield of 12.2%.

Foolish takeaway

If you invested $2,000 in these two ASX dividend shares, the average grossed-up dividend yield would be 7.8%, which is better than NAB's current grossed-up dividend yield of 6.6%.

Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Goodman Group. The Motley Fool Australia has positions in and has recommended Brickworks. The Motley Fool Australia has recommended Goodman Group and Shaver Shop Group. 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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