Choosing the right ASX shares can be key to unlocking a large dividend yield that's much more appealing for passive income than money in the bank. Some businesses offer yields of more than 9%!
But I wouldn't buy any business for passive income just because it has a good yield. Dividends can be cut, so it's important to consider what will help the business continue that dividend streak.
I'd also want to see that the business has a history of not cutting the dividend. Past reliability is not a guarantee, but it's a useful indicator of what can happen during different economic conditions.
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WAM Microcap Ltd (ASX: WMI)
This is a listed investment company (LIC) that's operated by the team at Wilson Asset Management (WAM). It's focused on finding the best opportunities in the ASX small-cap share end of the market.
The ASX share's FY25 payout translates into a grossed-up dividend yield of just over 9% (at the time of writing), including franking credits, which was a slightly higher payout than the FY24 dividend.
It has been very consistent: it increased its regular annual payout each year between FY18 and FY23, maintained it in FY24, and then hiked it again in FY25. In other words, there have been no dividend cuts in its existence.
WAM Microcap has managed to fund its dividend thanks to the investment returns its portfolio has generated. At the end of December 2025, its portfolio had returned an average return per year of 16.7% since inception in June 2017, before fees, expenses, and taxes.
It already has a profit reserve of around five years of dividends at the current level, and I think it can continue funding slightly bigger payouts. The small end of the share market is compelling for finding investment opportunities due to its growth potential.
Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is one of Australia's underrated ASX dividend shares, in my opinion.
It retails a wide array of hair removal products in Australia and New Zealand, with both male and female products across its store network and website.
Shaver Shop increased its payout each year from 2017 to 2023, maintained the dividend in FY24, and then increased it slightly in FY25. Its FY25 grossed-up dividend yield is around 9.5% at the time of writing, including franking credits.
I think the business has quite defensive earnings – hair grows in all economic conditions. That makes for consistent demand for its products, in my view.
Shaver Shop is one of the leaders in hair removal retailing, which is why multiple shaving brands have agreed to exclusive products with the business. This helps the ASX share provide unique products and deliver a stronger gross profit margin.
Shaver Shop is also working hard at expanding its own brand called Transform-U, helping it fill in different products across its overall range, which means a stronger gross profit margin on those sales.
It can grow earnings as it expands its store network, sells more online, and expands its Transform-U range.
