Australian companies can be the source of significant passive income if investors selectively choose the right stocks. ASX blue-chip shares can fully frank their dividends due to Australia's taxation system, resulting in larger grossed-up dividend yields.
Aussie investors are uniquely positioned to benefit and companies typically like to unlock those franking credits for investors.
With this dynamic in the background, let's look at two Aussie stocks that are predicted to pay pleasing passive income in the near-term.
Medibank Private Ltd (ASX: MPL)
Medibank is Australia's largest private health insurance business, operating under its main Medibank brand and ahm, as well as providing a range of ancillary healthcare services.
The ASX blue-chip share continues to see growth of its resident policyholders and non-resident policy numbers. I think this is key for the ongoing growth of profit and the dividend. In the FY25 half-year result, net resident policyholders grew by 18,500 (or 0.9%) and net non-resident policy units increased 38,900 (or 12.6%).
Policyholder growth helped group revenue from external customers, which increased 6.1% to $4.27 billion in HY25. Group operating profit rose 12.7% to $360.1 million, and underlying profit before tax jumped 19.3% to $449.4 million.
Dividends are funded by profit generation, so the above numbers are pleasing for investors. In the FY25 half-year result, Medibank reported an 8.3% increase of the interim dividend to 7.8 cents per share and a dividend payout ratio (of underlying net profit) of 71.9%.
According to Commsec, the ASX blue-chip share is projected to pay an annual dividend per share of 20.4 cents in FY26. This translates into a grossed-up dividend yield of 5.8%, including franking credits.
The business is exposed to pleasing tailwinds, such as an ageing population, which can help drive demand for health insurance in the coming years.
Rio Tinto Ltd (ASX: RIO)
Rio Tinto is one of the largest ASX iron ore shares, giving it scale benefits compared to some of the smaller miners. Iron miners usually have a lower price/earnings (P/E) ratio than most other businesses, giving them a higher dividend yield.
Rio has a reputation as a large dividend payer, and this is expected to continue in the coming years. UBS expects Rio to pay an annual dividend per share of US$4.24 in FY26, which translates into a forward grossed-up dividend yield of 8.5%, including franking credits. The annual dividend per share is forecast to grow to US$4.90 in FY27, US$5.45 in FY28 and US$6.07 in FY29.
I like the fact that the ASX blue-chip share is looking to expand in other commodities to help grow and diversify its earnings. I think copper has an attractive future because of the expansion of electricity grids and various other electrification trends.
