Australia's official cash rate, set by the Reserve Bank of Australia (RBA), is now significantly lower than it was at the start of the year. I think this makes ASX dividend shares with good dividend yields particularly attractive.
I wouldn't buy something solely because of a large dividend yield, but it certainly makes it seem more appealing to investors who want income.
Both of the businesses I'm about to highlight have appealing outlooks for earnings and dividend growth over the longer term. Let's examine those ideas.
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Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) focused on owning farmland that can provide a mixture of income and longer-term growth.
Its farms are spread across farming sectors, such as cattle, almonds, macadamias, and vineyards.
Agriculture is an important sector for the Australian economy, and I like how we can gain access to it through this ASX dividend share rather than being exposed to the industry's cyclical nature. I also appreciate the relative consistency that the REIT can provide in terms of rental profits.
Rural Funds is benefiting from ongoing rental income growth, with most farms having fixed annual increases or rises linked to inflation, plus market reviews.
Despite the headwinds of higher interest rates, it has managed to provide stable distributions in the last couple of years. Lower rates could boost the value of the farms and also help rental profits.
At the time of writing, the business is expecting to pay an FY26 distribution of 11.7 cents per unit, which translates into a distribution yield of 6.1%.
Bailador Technology Investments Ltd (ASX: BTI)
This is an investment company focused on finding exciting technology businesses with significant revenue growth potential, international expansion potential, the ability to generate repeat revenue, and attractive unit economics.
When you combine those elements, you're talking about fast-growing businesses with good operating leverage, which I believe means they can deliver good, profitable growth over the long term.
It's invested in businesses such as Siteminder Ltd (ASX: SDR), DASH, Updoc, Access Telehealth, Expedition Software, Rosterfy, PropHero, and Hapana. While they're all tech businesses, I like the portfolio's representation of a broad range of industries.
In the FY25 result, the ASX dividend share reported that its portfolio's company revenue growth was 47% during the year, which I'd describe as an excellent rate of compounding. Around 87% of the revenue is recurring, and the gross profit margin was approximately 65%.
It aims to pay an annual dividend yield of 4% of the company's pre-tax net tangible assets (NTA). But, due to the fact it's trading at a large discount to the NTA, this means the yield on offer is much larger.
The ASX dividend share's FY25 final dividend translated into an annualised, grossed-up dividend yield of 8.1%, including franking credits. That's a very appealing level of income, in my view.
