BHP Group Ltd (ASX: BHP) shares may have a reputation for large dividend payouts, but it's not one of the first ASX dividend shares I'd buy today.
For starters, the ASX mining share has seen its valuation increase by more than 20% over the last six months, which is great for existing shareholders but not for potential investors seeking a large dividend yield.
When the share price of a business increases 10%, it pushes down the dividend yield by around 10%. For example, if the dividend yield was 5% and the share price rises 10%, new investors would only get a 4.5% dividend yield.
I rate the two ASX dividend share below as much more appealing ideas for passive income.
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Universal Store Holdings Ltd (ASX: UNI)
Like BHP, Universal Store is exposed to a cyclical sector. Universal Store operates in the retail space, with multiple premium youth fashion brands. Its two most compelling businesses are Universal Store and Perfect Stranger. It aims to sell on-trend apparel products to 16 to 35-year-old fashion-focused customers.
Despite being in retail, the company's dividend has not been volatile – it has steadily grown since it started paying one in 2021. Owners of BHP shares have seen multiple annual dividend cuts in that time.
In FY25, Universal Store grew its annual payout by 8% to 38.5 cents per share, which translates into a current grossed-up dividend yield of almost 7%, including franking credits.
The prospect of dividend growth in FY26 looks promising, in my view.
In the AGM update in October, overall direct-to-customer sales were up 13.7% year-over-year, with Universal Store total sales up 11.4% and Perfect Stranger sales up 30.5%.
The company said it's on track to roll out between 11 to 17 new stores in FY26, representing a rise of approximately 10%, which is a good tailwind for further earnings growth.
I think it's likely the ASX dividend share will pay an annual dividend of at least 40 cents per share in FY26, which could translate into a grossed-up dividend yield of 7.1%.
WCM Quality Global Growth Fund (ASX: WCMQ)
Most index-tracking exchange-traded funds (ETFs) have a relatively low dividend yield because the businesses they're invested in have a low dividend yield.
But, some ETFs can become an attractive option for passive income if they target a specific dividend yield for investors.
WCM Quality Global Growth Fund is aiming for a minimum annualised cash yield of at least 5% each year, which I'd describe as a very good yield when combined with the overall offering.
The WCM investment team aim for a portfolio of between 20 to 40 stocks that they'd describe as quality global companies that have corporate cultures that promote a strengthening of their economic moats over time.
With that strategy, WCM has delivered an average return per year of almost 16% over the last decade. That leaves room for a good dividend yield, rising dividend and capital growth too from the ASX dividend share. Of course, past performance is not a guarantee of future returns.
Some of the positions in the current portfolio include AppLovin, Taiwan Semiconductor, Siemens Energy and Amazon.
