High-yield ASX dividend shares can be very useful for investors who want to earn more passive income from their holdings. I own a few in my portfolio for the elevated cash flow.
I'm going to discuss four individual businesses in my portfolio. Also note that I own a few listed investment companies (LICs) that have higher dividend yields, too. However, I'm not focusing on the LICs today.
I'll mention why I bought each one and whether I'd buy more now.
Image source: Getty Images
Fortescue Ltd (ASX: FMG)
I used to own many more Fortescue shares than I do now. I sold most of my holdings last year at a materially higher price than they are today. The iron ore price was weak when I bought most of those shares, and there was widespread concern about iron ore demand amid concerns about Chinese construction companies.
With the iron ore price still above US$100 per tonne, I wouldn't be surprised if Fortescue paid a grossed-up dividend yield of more than 10% in FY25, including franking credits.
However, if I were trying to beat the market, I wouldn't want to invest at today's price. I'd want more pessimism around iron ore miners before rebuilding my Fortescue share position. I'd consider buying if the Fortescue share price were at least 20% lower than where it is today. That may never happen, but I'd be comfortable with that.
Rural Funds Group (ASX: RFF)
Rural Funds owns a diversified farm portfolio that is leased to quality tenants. I bought it for the diversification it gives my portfolio and because it offers exposure to Australian agriculture without taking on the operating risk of running farms.
The company has paid a consistent distribution in the last few years, and the current distribution yield is around 7%. There are certainly some headwinds related to high interest rates, but it seems rates may soon drop a little in Australia, which I think would be very helpful for both rental profits and underlying farm valuations.
I'd be happy to invest more in this high-yield ASX dividend share for the long-term.
Duxton Water Ltd (ASX: D2O)
Duxton Water owns a portfolio of water rights in Australia and leases them to agricultural operators. I thought it was an interesting way to play the growth of agriculture in Australia, while owning an important commodity (water).
I tried to buy when climate conditions were wet (and I thought water prices were low) during La Nina and enjoy the dividends during both lean and boom times for water rights. Is it a good buy today? Perhaps. It seems to be trading at a double-digit percentage discount to its underlying portfolio value.
Duxton Water's gross-up dividend yield is 8%, including franking credits, if it continues with that level of dividend payment.
Now could be a good time to invest if the water portfolio's returns continue outperforming the requirements for sustaining the dividend.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador invests in relatively small, unlisted technology companies. These businesses typically have attractive unit economics, growing revenue, high levels of repeat revenue, and the potential to grow internationally.
I was excited by the growth potential of some of the companies in the Bailador portfolio and the potential businesses it could invest in the future.
I like how it aims to pay a dividend yield of 4% of the pre-tax net tangible assets (NTA), which is 5.7% grossed-up for franking credits. With how the company normally trades at a discount to its NTA, the yield is even bigger.
Bailador recently announced it expected its next half-year dividend to be 3.7 cents per share, which is an annualised grossed-up dividend yield of 8.5%, including franking credits.
I'd be happy to buy a bit more of the high-yield ASX dividend share today, considering it's trading at a 26% discount to the post-tax NTA of December 2024.
