Commonwealth Bank of Australia (ASX: CBA) shares have long been seen as a top pick for passive income in terms of the dividends that are provided to shareholders.
But, the ASX bank share is not particularly attractive to me at the current valuation. That's because of two key reasons – the relatively low dividend yield and the slow growth rate.
According to the (independent) forecast on Commsec, the business is projected to pay an annual dividend per share of $5.20 on FY26 and then $5.50 per share in FY27.
At the current CBA share price, that translates into a fully franked dividend yield of 3%.
In percentage terms, the business is only expected to grow its payout by 5.7% in FY27. That's not exactly a huge growth rate.
For me, there are other ASX dividend shares that make more sense.
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WCM Quality Global Growth Fund – Active ETF (ASX: WCMQ)
CBA essentially makes all of its profit from Australia and New Zealand, which is only a small corner of the global economy. There's not a significant growth runway for CBA because of how large the bank already is.
This exchange-traded fund (ETF) aims to give investors exposure to a global portfolio from across the world. The portfolio is invested in shares from the Americas, Europe, Asia and more. That's excellent diversification, in my book.
The WCMQ aims to find businesses that have strengthening competitive advantages which is helping them become increasingly profitable.
The WCM investment team also want to see that the businesses have a corporate culture that fosters an improving economic moat.
The strategy has helped the fund deliver a net return of 15.1% per year to February 2026 since inception in August 2018. Past performance is not a guarantee of future returns, of course.
The ASX dividend share targets a distribution yield of 5% on the net asset value (NAV), which I think is a solid starting point. The distribution payout in dollar terms can grow in line with the NAV growth.
I'm planning to invest in the WCMQ ETF later this month for a combination of passive income and hopefully capital growth.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts doesn't have a stronger dividend yield than CBA, but it does offer a couple of things that the ASX bank share can't match.
Firstly, the dividend growth record by the ASX dividend share is truly impressive.
CBA has only increased its dividend each year since 2021, following a dividend cut in the COVID-affected year of 2020. Soul Patts has increased its regular annual dividend per share every year since 1998. That's getting close to 30 years in a row of dividend growth!
The other reason to really like the ASX dividend share is that it has a diversified across multiple asset classes including listed businesses, private businesses, industrial property, other property and credit.
CBA is stuck being a bank, while Soul Patts already has a diversified portfolio and it has the flexibility to buy and sell assets as it sees fit to make good long-term returns.
