2 ASX dividend stocks I'm thinking about buying in February

I'm considering these shares for passive income.

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ASX dividend stocks can be a great choice for building a source of passive income, and a significant portion of my portfolio is aimed at dividend-paying businesses.

By owning ASX dividend shares, I can receive a (hopefully growing) flow of dividends from my holdings. Picking the right investments at the right price could also lead to capital growth, so ASX dividend stocks could be a contender for appealing total returns.

One of the benefits of investing in sold-off businesses is that the dividend yield has been pushed up. For example, if the share price of a business with a 5% dividend yield drops 10%, then the yield becomes 5.5%.

With that in mind, below are two of the ideas I'm thinking about investing in.

Premier Investments Ltd (ASX: PMV)

Premier Investments recently sold its apparel brands business to Myer Holdings Ltd (ASX: MYR) and I think the transaction has increased the quality of the overall business.

The retailer still owns Peter Alexander, Smiggle and its shareholding of Breville Group Ltd (ASX: BRG). Premier Investments also recently divested its holding of Myer shares.

In my view, the retained businesses all have compelling long-term potential because they're expanding overseas, which lengthens their growth runways.

The ASX dividend stock is a smaller business now, so its profit generation ability is probably lower, at least in the short term.

The company was an appealing ASX dividend share before the split-up, and I think it will remain so, with greater growth potential. Based on the broker UBS' estimates for FY25, Premier Investments could pay a grossed-up dividend yield of 5.75%, including franking credits.

Centuria Capital Group (ASX: CNI)

This ASX dividend stock is a fund manager focused on providing listed and unlisted real estate investments.

Centuria manages two of the larger real estate investment trusts (REITs) on the ASX: Centuria Industrial REIT (ASX: CIP) and Centuria Office REIT (ASX: COF).

It continues to face the headwind of high interest rates, which have impacted Centuria through more expensive debt on its balance sheet. Higher rates have also been a headwind for existing funds under management (FUM) and likely reduced how willing clients have been to allocate new money to Centuria.

However, it seems an interest rate cut could be getting close in Australia, which could significantly boost Centuria in a number of different ways. This could help boost operating earnings and distribution in the next few years, along with its investment and tenancy partnership with ResetData.

It expects to pay a distribution of 10.4 cents per security in FY25, which translates into a distribution yield of 5.8%.

The Centuria share price is down approximately 50% from September 2021.

Motley Fool contributor Tristan Harrison has positions in Centuria Industrial REIT. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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