There are many investing strategies that can bring you strong returns – one of which is dividend investing.
A dividend is a portion of a company's profits paid to shareholders, and investors may target dividend-paying shares because they provide passive income.
This can bring returns even if a stock price falls.
On the flip side, if a dividend stock also increases in value, you've brought yourself the magical combination of passive income and capital growth.
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Dividends are shrinking
According to S&P Global, Australia has historically been one of the highest-yielding equity markets in the world.
However, this has shifted in the last few years.
As of December 31, 2024, the trailing 12-month dividend yield of the S&P/ASX 300 Index (ASX: XKO) was approximately 3.5%.
While this still outpaced Europe, Canada and the US, it's significantly lower than its long-term average of approximately 4.5%.
So what does this mean for dividend investors?
Broadly speaking, it's harder to capture high yields, and high paying yields are increasingly coming from a smaller pool of companies.
With that in mind, here are two dividend shares that paid out some of the best yields in 2025.
APA Group (ASX: APA)
APA Group is Australia's largest energy infrastructure company.
In 2025, it paid out an annual dividend of 57 cents per share.
This has been on a yearly uptick for more than 20 years.
Based on its current share price, this equates to a dividend yield of roughly 6.3%, well above the average trailing yield of the ASX 300.
If an investor held $10,000 worth of shares in APA Group, they would have earned more than $800 in passive income based on last year's opening share price of $7.03.
Not only did it reward investors with strong dividends, it also rose more than 28% last year.
Woodside Energy Group Ltd (ASX: WDS)
Woodside is the largest operator of oil and gas production in Australia and is Australia's largest independent dedicated oil and gas company.
Last year, it paid roughly $1.66 per share in total dividends for the year.
Based on its current share price, that equates to a dividend yield of approximately 7%.
At the start of last year, shares were trading at roughly $25.00 per share.
An investor who held $10,000 in Woodside shares at that price for the last year would have enjoyed $700 in passive income.
Woodside also may appeal to dividend investors as it maintains its status as one of Australia's largest companies.
This means investors hold a quality company with a proven track record, as well as one that pays strong yearly dividends.
