Large businesses, sometimes called ASX blue-chip shares, are capable of providing investors with stability and a good dividend yield.
The biggest companies have built their market position over many years. Their market share means they have advantageous scale advantages and can deliver stronger profit margins than competitors.
Additionally, those businesses are not expected to grow that much, considering how big they are, meaning they have a lower price/earnings (P/E) ratio. Let's look at two interesting contenders.
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Origin Energy Ltd (ASX: ORG)
Origin Energy isn't normally one of the ASX blue-chip shares that I write about for dividends, but it could be a strong pick right now given how large the dividend yield is and its future potential.
The ASX blue-chip share is a provider of electricity and gas to households and businesses as well as solar, LPG and broadband. Its asset base includes power generation, gas exploration and renewables.
Pleasingly, the company's payout has been increasing over the last five years and the dividends look promising for the coming period.
The broker UBS is predicting that the business could increase its annual payout to 61 cents in FY26, which would be a grossed-up dividend yield of 7.8%, including franking credits, at the time of writing. Pleasingly, the broker UBS is forecasting Origin could deliver a higher dividend per share in subsequent years, with a forecast of 62 cents per share in FY27, 64 cents per share in FY28 and 65 cents per share in FY30.
Finally, I want to highlight the company's stake of close to a quarter of the European businesses, Kraken Technologies and Octopus Energy. At the end of December, Origin said Kraken was rapidly closing in on its 100 million customer target, well ahead of plan. I think both businesses could grow rapidly, driving value for the ASX blue-chip share.
Telstra Group Ltd (ASX: TLS)
Telstra has proven itself as an appealing ASX blue-chip share over the last few years, as it provided a large and growing dividend.
Its market-leading mobile network is allowing it to generate strong profits. A rising average revenue per user (ARPU) and growing subscriber base is helping drive its mobile division's revenue higher. Operating leverage enables operating profit (EBITDA) to rise at a faster pace than revenue.
The business paid an annual dividend per share of 19 cents in FY25 and I'm expecting the business to increase its FY26 payout to 20 cents per share. That would be a grossed-up dividend yield of 5.8%, including franking credits, at the time of writing.
With Australia's growing population and increasing digitalisation, I think Telstra is an effective investment to consider for the long-term, as long as its subscriber base continues rising.
