ASX income stocks can be a great choice for investors searching for passive income. At a time when the Reserve Bank of Australia (RBA) is reducing the cash rate in Australia, this could the time to look for ideas that can boost our dividend levels.
A high dividend yield isn't everything, but it certainly helps provide solid returns for shareholders. If investors want cash flow, I'd want to look at businesses that are more likely to be able to offer resilient payments to investors.
The two businesses I'll talk about are providing large payments and could continue to provide good dividends.
Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is a retailer of male and female personal grooming products, it wants to be the market leader in all things related to hair removal. It has over 120 Shaver Shop stores across Australia and New Zealand. It aims to provide a wide range of "quality brands, at competitive prices, supported by excellent staff product knowledge."
Its knowledge and track record in the industry allows it to negotiate exclusive products with suppliers, which is a strong selling point for the business. It also sells various products across the categories of oral care, hair care, massage, air treatment and beauty categories.
The ASX income stock increased its annual dividend per share every year between 2017 to 2023. It maintained its payout in 2024 and then increased its FY25 interim payout by 2.1% to 4.8 cents.
Its last two dividend payments amount to a grossed-up dividend yield of 9.8%, including franking credits.
APA Group (ASX: APA)
APA is a large energy infrastructure business which plays a key part in Australia's economy. It owns a large gas pipeline network – it transports half of the country's gas usage.
The business also owns gas processing facilities, gas storage, gas-powered energy generation, solar farms, wind farms, electricity transmission and energy storage.
That portfolio of energy assets continues to grow, which is unlocking further cash flow generation for APA. It's growing both its gas-related and non-gas asset base, which I'd describe as a good diversification strategy.
Impressively, the ASX income stock has increased its payout every year for the last 20 years. That is a very rare achievement for the ASX.
I believe gas will continue to play an important part in Australia's energy mix for decades.
APA's FY25 annual distribution of 57 cents per security translates into a distribution yield of 6.6%.
I think the ASX income stock can deliver further payout growth in the coming years.
