Owning ANZ Group Holdings Ltd (ASX: ANZ) shares normally comes with a pleasing flow of passive income. However, the ASX bank share isn't the only option for dividends.
The ASX is quite heavily weighted towards ASX mining shares and banks, so getting exposure to different industries and geographies could be a good move for Aussies focused on the domestic economy.
With many banks competing for the same borrowers and savers, profit margins have been pushed down. The high RBA interest rate is leading to some borrowers getting into arrears, which could challenge profitability and may hurt ANZ's profit and dividend growth.
Considering these difficulties, I think it could be a good idea to diversify if an investor's portfolio is too heavily focused on an ASX bank share like ANZ.
Telstra Group Ltd (ASX: TLS)
In my eyes, Telstra is the leading telecommunications business in Australia, with the most subscribers, the best collection of spectrum assets and the widest network coverage.
The business has been steadily growing its annual dividend per share over the last few years. In FY24, it grew its dividend by 6% to 18 cents per share, which is a grossed-up (including franking credits) dividend yield of 6.6%.
I like the idea of owning Telstra shares for passive income because of its stronger market position (compared to ANZ's loan market position), its ability to increase prices for customers without losing market share, its operating leverage, and its defensive dividend.
If I had to choose an ASX blue-chip share from Telstra and ANZ shares, I'd choose Telstra.
SPDR S&P Global Dividend ETF (ASX: WDIV)
What's better than owning one dividend stock? How about owning a whole portfolio of attractive dividend payers?
As the name suggests, this exchange-traded fund (ETF) is about investing in various stocks from across the world with good dividends.
The businesses within this fund have increased their dividend every year for at least the last ten years. They also need to have a relatively high dividend yield. When you combine those two elements, it's a powerful combination for investors focused on passive income.
The biggest positions in the portfolio are currently Altria, Highwoods, Solvay, and Capital Power. The portfolio has 94 holdings, which is a pleasing level of diversification.
According to State Street Global Advisors, the portfolio of businesses is collectively expected to grow earnings per share (EPS) by 6.4% over the next three to five years.
The WDIV ETF currently has a dividend yield of 5.1%, and since its inception in November 2023, it has delivered an average fund distribution return per year of 5.2%.
I'm not expecting much capital growth from this fund, but it does offer very different exposure to ANZ shares.
