As I've documented here before, maximising dividend income is not an outcome I pursue with my ASX share portfolio.
Of course, I love the passive income that dividend shares pay me just as much as anyone. However, it's my view that maximising overall returns is more important at my stage of life than getting the biggest dividend paycheques possible from my investing. Remember, the two are usually mutually exclusive.
However, I do own a few ASX shares that are only in my portfolio for the dividend income that they pay me. Here are two of them, and why I still keep them around.
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2 ASX shares I own for franked dividend income
Telstra Group Ltd (ASX: TLS)
First up is the ASX 200 telco Telstra, which was one of the first ASX shares I ever bought and has been a constant presence in my portfolio for years. Like many mature dividend income shares, Telstra is a mature company without a massive growth runway in front of it. However, it does remain the largest and most dominant telco in Australia, thanks to a strong brand and its near-universally acknowledged mobile network superiority over its competitors.
Telstra has been making waves recently, clocking a new 52-week (and eight-year) high just this morning of $4.92. However, I was lucky enough to buy Telstra back when it was under $3 a share. As such, rather than the 3.77% dividend yield it trades on today, my yield-on-cost today is something closer to 7% (or 9.8% grossed-up with Telstra's full franking).
With Telstra continuing to raise its annual dividends in recent years, I am happy just to see that income keep coming through the door, rather than splitting my profits with the taxman if I wanted to sell out. After all, Telstra isn't going anywhere, and I think it will continue to dominate the communications sector in Australia for the foreseeable future.
National Australia Bank Ltd (ASX: NAB)
It's a similar story with my investment in ASX 200 banking stock NAB. Along with Telstra, NAB was one of the first ASX shares I ever bought. Like Telstra, I was able to buy NAB shares at a price well below where the bank trades today. Unlike Telstra, though, NAB hasn't been able to reclaim its past glories when it comes to paying dividends. Its 2024 total of $1.69 in dividends per share was well below the $1.98 investors enjoyed back in 2018.
Even so, I'm still collecting a yield of around 6% on my cost (that's 8.64% grossed-up with NAB's full franking). Again, I'm happy to sit and collect that dividend income each year from this bank. In my view, NAB will also continue to prosper in the decades ahead alongside the growth of the Australian economy. As such, I see more benefit in collecting these dividends every six months and spending them on other ASX shares than incurring another bill from the Tax Office if I sold out.
