Large dividend yields are one of the most appealing aspects of investing in ASX blue-chip shares.
Holding shares of companies means being able to gain ownership of a small part of the profit they make, which can be handed to shareholders via dividends.
There are two main elements that decide how large a dividend will be. First, there's the price/earnings (P/E) ratio – what multiple of earnings the business trades at. Second, there's the dividend payout ratio, meaning how much of the profit is paid as a dividend.
ASX blue-chip shares aren't usually priced by the market with high growth expectations. Additionally, they can be quite generous with the dividend payout ratio because they have less need to hold onto a significant portion of the cash generated because there are fewer places for the business to invest – they're already huge businesses.
Let's look at two businesses with pleasing dividend yields.
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Telstra Group Ltd (ASX: TLS)
Telstra is Australia's leading telecommunications business, with the most subscribers and the widest network coverage.
In FY25, the business provided investors with a dividend payout ratio of close to 100%, which creates a pleasingly high dividend yield. The business is investing the cash it needs to with its networks, and then almost all profit is being sent to shareholders.
With how the business is growing its subscriber base, it doesn't necessarily need to retain profit to continue growing its earnings and the dividend. Australia is becoming increasingly digital, which I believe will help Telstra's earnings for the foreseeable future.
In FY26, the forecast on Commsec suggests the business could pay an annual dividend per share of 20 cents. That would be a grossed-up dividend yield of 5.6%, including franking credits. That's considerably more than what term deposits are paying these days.
Rio Tinto Ltd (ASX: RIO)
Rio Tinto is one of the biggest ASX mining shares, with a commodity portfolio across a number of resources including iron ore, copper, aluminium, lithium and more.
The net profit can bounce around as the supply and demand changes for the commodities, but the outlook seems positive with its growing exposure to copper and the imminent completion of the African iron ore project Simandou.
Miners usually trade on a low P/E ratio, meaning they can provide a solid dividend yield, particularly when resource prices are strong.
Broker UBS forecasts that the ASX mining share could pay an annual dividend per share of US$4.86 in the 2026 financial year. At the current Rio Tinto share price, that translates into a grossed-up dividend yield of 8.1%, including franking credits.
I think both ASX blue-chip shares could be appealing long-term buys, but I'd prefer Telstra shares because of the consistency it can provide.
