The interest rate on term deposits has risen this year, thanks to the higher RBA interest rate. But I still rate ASX dividend shares as better investments for people who want to generate passive income.
There are two factors that make me want to choose businesses over term deposits. They can offer a higher yield, and they can deliver growth. Both the payout and share price can grow over time.
I'm calling the below ASX dividend shares compelling ideas to buy today.
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Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that owns farmland across Australia in different states and climate conditions.
The REIT owns a few different types of farms, including almonds, cattle, vineyards, macadamias and cropping. I like the diversification here because it reduces the risk of being overly exposed to one type of farm and gives it more industry areas to look for opportunities.
Rural Funds has a solid distribution yield, currently paying 11.73 cents per unit annually. That translates into a forward distribution yield of 5.9%.
Higher interest rates are a headwind for Rural Funds in the short term, but the business has steadily growing rental income thanks to fixed annual increases for some farms and inflation-linked increases at others.
It looks like a bargain to me because of the discount between the unit (share) price on the ASX and the latest net asset value (NAV). The adjusted NAV was $3.10 as of 31 December 2025, so it's currently trading at a discount of around 36% to that figure, which is a very attractive discount in my books.
WCM Global Growth Ltd (ASX: WQG)
The other ASX dividend share I want to highlight that's more attractive than a term deposit is this listed investment company (LIC), which invests in a portfolio of quality global shares.
The idea is that the investment team look for businesses with expanding economic moats (or improving competitive advantages). Companies that become steadily stronger are more likely to deliver pleasing profit growth and shareholder returns, in my opinion.
Another feature that the WCM investment team looks for is a corporate culture that helps improve the economic moat. WCM has specific aspects it looks for, as well as questions for management, that help determine whether the corporate culture is positive.
The LIC's portfolio has delivered a net return (after fees) of 15.4% since inception in June 2017, helping it fund both a growing dividend and capital growth of the share price.
It is increasing its quarterly dividend every quarter, which is pleasing consistency for shareholders.
The next four quarterly dividends to be officially declared are expected to amount to 9.59 cents per share, which translates into a grossed-up dividend yield of 7.3%, including franking credits.
This ASX dividend share is also trading at a small discount to its net tangible assets (NTA), so I think it's a good time to invest.
