There are a variety of ASX dividend shares available to Australians to invest in, with some of them looking very attractive.
I'm not particularly impressed by the large ASX bank shares or ASX mining shares. They are huge businesses that are struggling to meaningfully grow earnings. Their dividend yields aren't particularly appealing at the current valuations either.
These days, banks appear to need to choose between growing their market share or delivering strong profit margins. I think that's a key reason why we saw profits decline for Westpac Banking Corp (ASX: WBC), despite the bank growing the size of its loan book.
I have conviction in the below two businesses for the following reasons.
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Centuria Capital Group (ASX: CNI)
Centuria is a fund manager that specialises in properties and investment bonds.
It's recovering from the pain of high interest rates – in FY25, operating net profit increased 6.4% to $100.8 million. The business is targeting more than $1 billion of FY26 real estate acquisitions and it has already announced one.
With the property markets turning positive after a number of rate cuts this year, this could be a strong tailwind for funds under management (FUM) for the foreseeable future. Property valuations could increase and it may also lead to investors wanting to allocate more money to Centuria.
It's expecting to pay a distribution of 10.4 cents per security in FY26, translating into a forward distribution yield of 4.4%.
I like Centuria's efforts to continue diversifying its FUM into different areas such as agriculture, healthcare and real estate finance.
Fund managers have a lot of operating leverage, so this could be a great time to invest while its profit and FUM are seeing a turnaround in momentum.
Coles Group Ltd (ASX: COL)
Coles may be seen as a defensive business, but I think more investors should categorise it as a compelling ASX dividend share.
Not many ASX blue-chips have increased their annual dividend every year since 2019, but Coles has achieved exactly that, combined with consistent sales growth.
In FY25, the business achieved $1.08 billion of net profit, or $1.18 billion of underlying net profit. That was a strong result, in my opinion.
I'm expecting the undervalued ASX dividend share to deliver further profit and dividend growth in FY26 because of two key factors. Firstly, sales growth continues to be strong as the company's offering resonates more with customers. In the first quarter of FY26, supermarket sales increased 4.8%, or 7% growth excluding tobacco.
Second, the company's investments in its supply chain should start paying off in FY26 with the facilities now fully operational. I'm particularly thinking of the automated distribution centres. I believe this will help improve efficiency, stock flow, fulfilment of online orders, and profit margins.
It currently has a trailing grossed-up dividend yield of 4.5%, including franking credits. But, I'm expecting the payout to be larger in the new financial year.
I think it looks undervalued following a decline of more than 8% since August, despite its strong sales performance at the start of the new financial year.
