Although both the ASX share market and interest rates are at historical highs, the hunt for high-yield ASX dividend shares continues for income investors on the stock market.
High interest rates mean that 'safe' investments like government bonds and term deposits are offering competitive yields for income seekers. Even so, many investors simply cannot ignore the higher potential returns and tax benefits of investing in ASX shares for dividend income.
With popular income shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) trading at expensive valuations, the income potential of these traditional sources of dividends has diminished. To illustrate, buying CBA shares last week would have only got you a dividend yield of less than 3%.
However, that doesn't mean that there aren't any high-yield stocks left on the share market. Today, let's discuss three ASX dividend shares that, in my opinion, still offer competitive yields to investors.
3 ASX dividend shares offering high yields today
Vanguard Australian Shares High Yield ETF (ASX: VHY)
First up is an exchange-traded fund (ETF) from Vanguard. I think income-focused ETFs are a great place to search for yield in today's stock market environment. This particular fund from Vanguard specialises in providing investors with a portfolio of shares that all offer high but sustainable dividend payments.
Some of VHY's current top holdings include dividend heavy hitters like BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), Woodside Energy Group Ltd (ASX: WDS) and Transurban Group (ASX: TCL).
This income ETF pays out a dividend distribution every quarter, which some investors might find particularly appealing. At recent prices, VHY was trading on a trailing dividend distribution yield of around 5.2%.
Telstra Group Ltd (ASX: TLS)
Next up, we have a famous ASX dividend stock in Telstra. Unlike many blue-chip shares, Telstra has not spent 2024 reaching new heights. In fact, its share price has had a bit of a rough trot this year. But that comes with a silver lining in the form of this company's dividend yield.
I regard Telstra as one of the safer dividend payers on the ASX, thanks to its defensive earning base and long track record of providing solid income.
Thanks to a boosted dividend in 2024, Telstra was recently trading on a dividend yield of just over 4.5%, which also typically comes with full franking credits attached.
MFF Capital Investments Ltd (ASX: MFF)
Finally, let's talk about a little-known listed investment company (LIC) in MFF. As a LIC, MFF functions similarly to a managed fund or ETF in that it owns and operates a portfolio of underlying investments on behalf of its shareholders.
This particular company specialises in investing in American companies that its management sees as compelling long-term investments. Some long-term top holdings include Mastercard, Visa, American Express and Google-owner Alphabet.
MFF has generated some impressive returns over the past year or two, but I find the company's dividend track record impressive. It has delivered an annual dividend increase every year since 2018. In 2021, MFF doled out 6.5 cents per share in dividend income, but this increased to a fully franked 13 cents in 2024. The company has told investors to expect another increase next year as well.
At recent prices, MFF was trading on a dividend yield of about 3%.
