The Australian share market is a great place to generate passive income.
That's because there are countless ASX shares out there that pay dividends twice (or more times) a year.
And while the Australian share market traditionally trades with an average dividend yield of approximately 4%, income investors don't have to settle for that.
For example, the two ASX shares listed below are being tipped to offer very large yields and could pull in significant passive income from a combined $20,000 investment. Here's what you need to know:
APA Group (ASX: APA)
APA Group is a leading Australian energy infrastructure business that owns a $26 billion portfolio of gas, electricity, solar and wind assets. Macquarie currently has an outperform rating and $8.13 price target on its shares.
These assets have allowed the company to increase its dividend each year for almost two decades. The good news is that the broker expects the run to continue and is forecasting dividends of 57 cents per share in FY 2025 and then 57.5 cents per share in FY 2026. Based on the current APA Group share price of $6.88, this equates to 8.3% and 8.35% dividend yields, respectively.
This means that a $10,000 investment would generate passive income of approximately $830 in 2025.
Healthco Healthcare and Wellness REIT (ASX: HCW)
Healthco Healthcare and Wellness REIT is a real estate investment trust with a focus on healthcare and wellness assets. This includes hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties. Bell Potter is positive on the company and has a buy rating and $1.50 price target on its shares.
It believes that its shares are undervalued given its meaningful discount to NTA, positive earnings growth outlook, and generous yield. Speaking of which, the broker is forecasting dividends per share of 8.4 cents in FY 2025 and then 8.7 cents FY 2026. Based on the current Healthco Healthcare and Wellness REIT unit price of 94 cents, this will mean yields of 8.9% and 9.25%, respectively.
If Bell Potter's dividend estimates prove accurate, it would mean that a $10,000 investment would generate passive income of approximately $890 in 2025.
Big passive income
Combined, these two high-yield ASX dividend shares could generate income of $1,720 from a total investment of $20,000.
And let's not forget the potential capital gains on offer with the two brokers having price targets 18% and 59%, respectively, above where their shares currently trade.
