BHP Group Ltd (ASX: BHP) has been one of the biggest dividend payers on the ASX over the last few years and the payments could continue to be rewarding for investors. But, passive income diversification could be a wise move with other ASX dividend stocks.
I like the the ASX mining share's efforts to diversify its earnings away from selling iron ore to China. Copper is a particularly appealing commodity over the long-term.
But, there's other businesses that pay appealing dividend yields that may not see as much volatility of their profit (and potentially the dividend).
So, with that in mind, let's look at two of those alternative ASX dividend stocks with large yields.
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Universal Store Holdings Ltd (ASX: UNI)
Universal Store is an ASX retail share that has increased its annual dividend each year since it started paying one in 2021. Not many ASX retail shares have managed that level of consistency.
This company owns a portfolio of premium youth fashion brands. Its main business is Universal Store, as well as Perfect Stranger and CTC (trading as the THRILLS and Worship brands). It has approximately 110 stores across Australia.
The business aims to deliver a selection of on-trend apparel products to a target 16-35 year-old fashion-focused customer.
At the current Universal Store share price, it has a trailing grossed-up dividend yield of 7.6%, including franking credits.
I think the ASX dividend stock can continue growing because of two key factors.
First, it can continue rolling stores, which is adding scale to the business (helping both revenue and profit margins). It's on track to open at least 12 stores in FY25.
Second, its Perfect Stranger business is growing rapidly. In the first half of FY25, Perfect Stranger sales reported like for like sales growth of 25.3%. If it can continue double digit sales growth, then Perfect Stranger could quickly be a significant contributor to the overall business.
APA Group (ASX: APA)
APA is one of the largest energy infrastructure businesses in Australia. It has a huge gas pipeline across Australia, connecting sources of supply to end markets. Impressively, APA transports half of Australia's gas usage. Other assets include gas-related infrastructure, renewable energy generation and electricity transmission.
It has increased its annual distribution every year since 2004, which is the second-longest growth streak on the ASX. While growth is pleasing, I should mention that it's not guaranteed to continue forever.
In FY25, the ASX dividend stock is expecting to grow its annual distribution by 1.8% to 57 cents per security, which translates into a forward distribution yield of 6.9%.
Not only is the business seeing a large majority of its revenue grow thanks to inflation-linked rises, but it's steadily adding to its energy asset portfolio to help grow its earnings and cash flow.
I think gas will play an important part of the mix in the coming decades and APA can diversify its energy portfolio further in the coming years, to whatever energy assets make sense, whether that's batteries, gas pipelines or electricity transmission.
