High-yield ASX shares can be a very effective way for investors focused on passive income to create significant cash flow.
The two companies below could pay huge dividend yields in FY25 through a combination of a high dividend payout ratio and a low price/earnings (P/E) ratio.
Plenty of ASX dividend shares out there pay a dividend yield of 5%. With a $15,000 investment, a 5% yield would unlock $750 of passive income. What if that cash could generate at least $1,500 of annual passive income?
There aren't many stocks I'd back to consistently pay a large dividend over the next couple of years. Higher yields can be riskier. With that in mind, below are two that I really like.
Shaver Shop Group Ltd (ASX: SSG)
This ASX retail share sells grooming products like electric shavers, clippers, trimmers and wet shave items. It also sells various other products including oral care, hair care, massage, air treatment and beauty categories. This business currently has around 125 stores in Australia and New Zealand.
I think Shaver Shop is the sort of retailer that can provide fairly consistent profits. Our bodies keep growing hair whether the economy is booming or not. I believe its stability is a useful factor for why Shaver Shop has managed to provide a pleasingly reliable dividend (so far – it's not guaranteed).
Shaver Shop grew its annual dividend per share each year between 2017 and 2023 and then maintained it at 10.2 cents per share in 2024.
At the current Shaver Shop share price, it has a trailing grossed-up dividend yield of 11%, including franking credits.
The current financial year hasn't been incredible so far for the high-yield ASX share. In a recent trading update for the first four months of FY25, Shaver Shop advised that total sales were down 1.3% but the gross profit margin had improved, so the gross profit in dollar terms was flat.
Management said that its strategy of securing more exclusive products with innovative premium brands, such as Skull Shaver and the launch of Transform U, would "support gross margin at Shaver Shop in the medium term". I also think this will help support the passive dividend income payments.
GQG Partners Inc (ASX: GQG)
GQG is a US-headquartered fund manager that has seen its funds under management (FUM) grow significantly over the last several years. It offers a number of investment strategies for clients including US shares, global shares, international shares and emerging market shares.
The business has decided on a dividend payout ratio of 90% of its distributable earnings, providing investors with a lot of the company's profit each year. Fund managers tend to trade on a relatively low earnings multiple, meaning GQG is certainly a high-yield ASX share.
GQG's main funds have outperformed their benchmarks over the long term, and if this continues in the future, I think the high-yield ASX share will continue to attract a pleasing level of client inflows. Regardless of the net flows, good fund performances would help drive the FUM higher organically.
The projection on Commsec suggests GQG could pay an annual dividend per share of 10.5% in FY25.
How much passive income would this create?
If an investor evenly split $15,000 between these two companies, we're talking about generating approximately $1,600 of annual passive income. Of course, those dividend payments aren't guaranteed, but it's an exciting possibility.
