Looking to bank some market-beating passive income with S&P/ASX 200 Index (ASX: XJO) dividend stocks?
You're not alone!
Now, the average dividend yield from ASX 200 stocks varies from year to year. And dividend yields on the ASX are expected to come in on the lower end of the bell curve in 2025. So, we'll set 4.0% as the market average we're out to beat with the two passive income stocks we'll look at below.
Before we do, though, please note that the yields you generally see quoted are trailing yields. Future yields can be higher or lower depending on a range of company-specific and macroeconomic factors.
Also, remember that while we'll look at two ASX 200 dividend stocks, a properly diversified portfolio will contain a larger number of companies (10 is a decent ballpark).
Ideally, these will operate in different sectors and geographic locations. This will lower the overall risk of your passive income stream taking a large, unexpected hit if a single company or sector hits a tough patch.
With that said…
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High-yielding ASX 200 shares for passive income
First up, we have ASX 200 bank stock ANZ Group Holdings Ltd (ASX: ANZ).
ANZ has long been popular with passive income investors for its lengthy track record of twice-yearly dividend payments. In 2020, ANZ even paid two dividends, albeit significantly reduced, despite the pandemic-fuelled market turmoil.
Aside from the past two dividends, which were franked at 56% and 65%, respectively, ANZ's dividends have come fully franked going back more than a decade. That's something to look for, as it could offer some handy tax benefits.
ANZ shares are currently trading for $29.99 apiece. That's up 15.3% in 2024 but down 6% since the market close on 20 September.
Alongside the other ASX 200 banks, ANZ shares have come under some pressure following China's new stimulus measures. That's sent iron ore and copper prices flying higher, luring investors into mining shares and out of the financial sector.
But that could make now an opportune time to buy ANZ shares for passive income.
Over the past 12 months, the big four Aussie banks have paid $1.77 a share in partly franked dividends. At the current share price, this ASX 200 dividend stock trades on a market-beating yield of 5.9%.
Which brings us to our second high-yielding company: ASX 200 mining stock Fortescue Ltd (ASX: FMG).
In contrast to ANZ, Fortescue shares have gained 12.8% since 20 September, following the new commodity-boosting Chinese stimulus announcements. Shares are currently trading for $19.90 each.
But with the Fortescue share price still down some 32% in 2024, I think this represents a long-term passive income bargain.
Over the past 12 months, Fortescue has paid out two fully franked dividends totalling $1.97 a share.
At the current Fortescue share price, this passive income stock has a market-beating dividend yield of 9.8%.
