BHP Group Ltd (ASX: BHP) shares have been an impressive passive income pick over the last century, but I wouldn't call them a wonderful buy today as an ASX dividend share.
The ASX mining share has gone on an impressive run in the last few months, as the chart below shows. It's up around 20% since the November 2025 low.
The higher a share price goes, the lower it pushes the dividend yield. I also think it's wise to be wary of buying a commodity business when the resource price has gone on a strong run.
I don't think it's the best time to buy BHP shares; I'd rather buy the ones below.
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Wesfarmers Ltd (ASX: WES)
If I were to pick one of the biggest ASX companies for dividends, I'd choose Wesfarmers over BHP. Neither of them is cheap, but I think Wesfarmers has a much higher likelihood of growing earnings sustainably after FY26.
Wesfarmers is the owner of a number of Australia's leading retail businesses, like Bunnings, Kmart, Officeworks, and Priceline. It's not the most defensive business on the ASX, but Wesfarmers is impressive with a return on equity (ROE) of more than 30%, showing it's very profitable for the level of shareholder money that it keeps and hasn't paid out as a dividend.
Kmart Group and Bunnings Group are the two key leaders of generating profit for the business, which is great because they both achieve returns on capital (ROC) of around 70%. There are not many businesses on the ASX that can compare to that.
Wesfarmers continues to find new places to invest for long-term earnings growth, making it a very compelling business. Initiatives include healthcare expansion, selling Anko products internationally, product expansion in Bunnings, and lithium mining.
As a bonus, the business has a goal of growing its dividend over time in line with earnings growth. The forecast on CommSec suggests a grossed-up dividend yield of 3.7%, including franking credits.
L1 Long Short Fund Ltd (ASX: LSF)
A listed investment company (LIC) structure is very helpful for delivering stable and rising dividends because of how companies can declare the size of dividends (if any) they want to pay. Exchange-traded funds (ETFs) have to pass through the dividends they receive (which are usually quite low).
If a LIC is good at making investment profits, it can build a profit reserve while still delivering passive income for shareholders.
One of the most effective LICs at delivering returns over the past has been the L1 Long Short Fund. Being able to make returns on some shares that go up and also make returns on some stocks going down (short selling) is a pleasing combination.
In the seven years to December 2025, the ASX dividend share's portfolio has delivered a net return of an average of 20.7% per year over the prior seven years. Past performance is definitely not a guarantee of future returns with a return of that size.
The business has steadily grown its dividend payout each year since 2021. It recently switched to quarterly dividend payments, making it more attractive for regular cash flow.
Its current annualised payout of 14 cents per share translates into a grossed-up dividend yield of 4.7%, including franking credits. That would be a year-over-year increase of around 10% of the payout.
