ASX dividend shares can be a great source of passive income, particularly ones with dividend yields of at least 8%.
It's great that we can just enjoy the payments flowing into our bank accounts without doing any additional work for them.
However, I'd be careful about which high-yield ASX dividend shares I choose. It's important to choose businesses with prospects for growth; otherwise, dividends could go downwards over the long term.
Hence, I believe the two stocks below could be compelling picks for huge yields in the longer term.
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Centuria Office REIT (ASX: COF)
This is a real estate investment trust (REIT) that owns a portfolio of office buildings across Australia. It's the country's largest ASX-listed pure-play office REIT. Its portfolio of "high-quality office assets" is located in submarkets throughout Australia.
The business has a portfolio occupancy of 92.2% and a 4.2 year weighted average lease expiry (WALE). While those aren't the best stats in the sector, I think they're quite solid considering it's in the seemingly challenged office sector. The business continues to sign new leases, which is a good sign.
In FY25, the business is expecting to generate funds from operations (FFO) of 11.8 cents per unit and pay a distribution per unit of 10.1 cents. That translates into a forward distribution yield of 8.5%.
The business is working on a number of strategies, including the conversion of traditional office space to data infrastructure for its new tenant, ResetData. That strategy diversifies its income streams while "providing an attractive yield on cost and mitigates some existing vacancy."
There are growing signs of improving trends for the ASX dividend share, which could help its property values and boost rental profits in the longer term. Jesse Curtis, Centuria head of funds management, said:
Despite ongoing bifurcation across office markets, there is growing evidence of shifting sentiment, underpinned by further momentum in office-centric workforces led by government departments and large corporations.
Adding to this are key economic drivers including population growth spurring white-collar employment and future office supply contracting as economic rents outstrip prevailing market rents. The gap between replacement cost and valuations is now significant with COF's implied value per square metre approximately a third of the estimated replacement cost.
Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is an Australian and New Zealand specialty retailer of male and female personal grooming products. The company wants to be the market leader in hair removal.
The company has 124 Shaver Shop stores across Australia and New Zealand. It aims to provide a wide range of quality brands at competitive prices. Its specialisation allows the business to negotiate exclusive products with suppliers.
It retails various other products, including oral care, hair care, massage, air treatment, and beauty.
Despite the difficult economic conditions, the business' financials have largely held up. In the FY25 first half-year result, total sales declined 1% to $125.8 million, and net profit after tax (NPAT) declined 3.5% to $12 million.
But, the business made enough profit to grow its dividend per share by 2.1% to 4.8 cents. That means the last two declared dividends amount to a grossed-up dividend yield of 11%, including franking credits.
The company could grow profit in several ways in the future, including sales growth (of 0.3% in the second half to 20 February 2025), opening new stores, refitting/relocating existing stores, working with additional brands, and launching its own private brand (called Transform-U).
