Defensive ASX dividend shares can be a great option for passive income because of their ability to deliver consistent profits and reliable payouts.
That doesn't necessarily mean they're going to increase their payouts every single year, but I think each of the names I'm going to highlight can grow their payout in FY26 and the longer-term.
If I had $3,000 to invest, I'd happily put $1,000 into each of the following names.
Centuria Industrial REIT (ASX: CIP)
This business is a real estate investment trust (REIT) which owns a portfolio of appealing industrial properties across Australia. These buildings are located in compelling metropolitan areas where the vacancy rate is very low.
There are strong tailwinds for industrial property demand including ongoing e-commerce adoption and data centres, as well as population growth.
The REIT's fund manager Grant Nichols recently said:
CIP continues to achieve strong outcomes across its portfolio relating to leasing, capital transactions and value add initiatives. The ability to deliver these results is credited to CIP's portfolio being concentrated in Australia's urban infill markets where tenant demand is strongest, vacancy is low and supply is constrained. These urban infill assets provides multiple future opportunities for alternative, higher-use developments such as data centres and residential schemes.
I think this bodes well for future rental income growth in the coming years.
The ASX dividend share expects to pay a distribution per unit of 16.8 cents in FY26, which translates into a distribution yield of 5% at the time of writing.
Coles Group Ltd (ASX: COL)
The supermarket business offers a defensive set of earnings considering the essential nature of what it sells. Currently, the company is delivering strong sales growth in the mid-single-digits (and higher single digit sales growth excluding tobacco sales), outperforming Woolworths Group Ltd (ASX: WOW).
Pleasingly for income-focused investors, the business has increased its payout each year in the last six months.
According to the projection on Commsec, Coles is forecast to pay an annual dividend per share of 78.8 in FY26. That's a potential grossed-up dividend yield of 5.2%, including franking credits.
With a rising population, an expanding network of supermarkets, new advanced warehouses and an expanding range of own brand products, Coles shares look like a good long-term investment.
Australian Foundation Investment Co Ltd (ASX: AFI)
AFIC is a listed investment company (LIC). It's the biggest and one of the oldest around.
I like the diversification that this LIC can provide because of the dozens of businesses that it owns in the portfolio.
Some of its largest holdings include BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Ltd (ASX: CSL), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and Transurban Group (ASX: TCL).
Shareholders of this business haven't seen any ordinary dividend cuts this century – it has provided significant stability for income-focused investors.
The ASX dividend share is currently trading at a discount of around 10%, making it look to me like an appealing time to buy.
It has a trailing ordinary grossed-up dividend yield of 5.3%, including franking credits, at the time of writing.
