The ASX blue-chip share space is a good hunting ground to find ideas that offer significant passive income and long-term growth. Franking credits can be a very pleasing, yield-boosting bonus.
If I were investing for dividends, I'd be careful about choosing businesses that are exposed to cycles and could consequently suffer profit falls, leading to potential dividend reductions. That's why I'm cautious on investing in ASX bank shares and ASX mining shares at the wrong point in the cycle.
In my view, the following two names are two of the best options for passive income from ASX blue-chip shares with solid dividend yields.
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Telstra Group Ltd (ASX: TLS)
Telstra is Australia's leading telecommunications business with a market-leading network. It has the biggest network coverage, the most subscribers and strong profit margins.
As the country becomes increasingly digital and reliant on technology, I think Telstra is becoming increasingly defensive. It has a large wholesale customer base, as its mobile network powers a number of other telcos, including ALDI Mobile, Exetel, Tangerine and Superloop Ltd (ASX: SLC).
In terms of the dividend, the ASX blue-chip share has increased its annual payout each year since FY22 as the financial strength of its network plays out. The company's average revenue per user (ARPU) is steadily rising amid regular price increases, which is a helpful boost for operating leverage.
According to the projection on Commsec, the business is forecast to pay an annual dividend per share of 21 cents in FY26 – a possible rise of 10.5%, year over year. That translates into a forward grossed-up dividend yield of close to 6%, including franking credits, at the time of writing.
Australian Foundation Investment Co Ltd (ASX: AFI)
While this listed investment company (LIC) isn't in the S&P/ASX 200 Index (ASX: XJO) itself, its portfolio is full of ASX blue-chip shares.
Some of its biggest portfolio includes names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG), Westpac Banking Corp (ASX: WBC), Transurban Group (ASX: TCL), Wesfarmers Ltd (ASX: WES), National Australia Bank Ltd (ASX: NAB) and Telstra.
The above names account for 46.9% of the portfolio, so it gives excellent exposure to Australia's biggest companies.
AFIC said that it aims to provide shareholders with "attractive investment returns through access to a growing stream of fully franked dividends and enhancement of capital invested over the medium to long term".
Excluding special dividends, the last two half-year ordinary dividends from the ASX blue-chip share amounts to 26.5 cents per share. At the time of writing, that means AFIC has a grossed-up dividend yield of 5.9%, including franking credits.
The business hasn't given investors any regular dividend cuts this decade, so it has been very reliable for investors.
In terms of how appealing it is, its pre-tax net tangible assets (NTA) was $7.90 as of 12 June 2026. That means it's trading at a 19% discount to its latest weekly NTA update. That's a great discount, in my opinion.
These aren't the only ASX shares I'd happily buy for income, though.
