ASX dividend shares can be a great source of passive income. During this time period of lowering interest rates, I think it's a great time to look at businesses with pleasing dividend yields and solid growth prospects.
I wouldn't buy something just because of the dividend yield, I'd want to have confidence that the dividend can continue growing in the coming years.
Every time the RBA cuts rates, which it may do today, it makes ASX dividend shares even more appealing. So, let's look at two of the most interesting passive income stocks right now.
Propel Funeral Partners Ltd (ASX: PFP)
This business is one of the largest funeral providers in Australia. Therefore, it should have both defensive earnings and exposure to long-term tailwinds.
Due to Australia's growing and ageing population, Propel expects the number of annual deaths in Australia to increase at a compound annual growth rate (CAGR) of 2.6% between 2025 to 2030, and then rise at a CAGR of 2.9% between 2031 to 2040.
With the price per funeral generally rising alongside inflation and the company using acquisitions to expand geographically, it seems like the Propel share price could be attractive after falling more than 20% in 2025 to date.
The ASX dividend share has grown its dividend each year since FY21. It should also be noted that the FY20 dividend was only reduced because of the one-off of social distancing/lockdowns due to COVID-19.
The last two declared dividends come to a grossed-up dividend yield of 4.6%, including franking credits. I believe the dividend could be materially larger in five years.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is an investment business that's focuses on private technology companies that can generate recurring revenue, have large addressable markets and are expanding overseas.
Pleasingly, the ASX dividend share has a very high dividend yield. It aims to pay a dividend yield of 4% of the pre-tax net tangible assets (NTA). But, due to the fact that it's trading at a 35% discount to the pro-forma May 2025 pre-tax NTA, it's priced to pay a fully franked dividend yield of 6.2% and a grossed-up dividend yield of 8.8%, including franking credits.
Why am I confident the dividend can increase? The company's portfolio companies are growing revenue and their underlying value at a strong rate, which is helping improve the prospects for the size of Bailador's dividends.
In an update released on 26 June 2025, Bailador announced that the value of its Updoc holding had increased 24%, the Access Telehealth value increased 20.8% and the Hapana value rose 50%.
If the underlying value of portfolio continues to increase, the ASX dividend share's payout can grow too.
