The ASX blue-chip share space is a great place to look for ideas that can deliver strong passive income with good dividend yields.
Mature Australian businesses have usually built a strong reputation for generating profit, they have a big accounting profit reserve and a history of paying resilient dividends to investors.
When I look at ASX shares with market capitalisations of more than $6 billion, the two businesses below are ones that stick out as good providers of passive income.
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Argo Investments Ltd (ASX: ARG)
Argo is a listed investment company (LIC) that provides investors with exposure to a portfolio of ASX blue-chip shares. LICs can give Aussies both diversification and a good dividend yield.
The biggest positions in the portfolio includes BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), Rio Tinto Ltd (ASX: RIO), Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) and Telstra Group Ltd (ASX: TLS).
As you can see, Argo gives investors a significant level of allocation to ASX blue-chip shares.
It has a pleasingly low cost, with a management expense ratio of just 0.14%, which is one of the cheapest in the LIC sector. Plenty of exchange-traded funds (ETFs) have a higher cost than that.
Since the GFC, the ASX blue-chip share has reduced the annual dividend a couple of times. In most other years, the annual dividend has been hiked. Its current grossed-up dividend yield is 6%, including franking credits.
It's currently trading at a mid-teen double-digit discount to its net tangible assets (NTA).
Coles Group Ltd (ASX: COL)
Coles is another quality ASX blue-chip share Aussies can buy.
As Australia's second-largest supermarket business, it has a strong market position to continue generating a pleasing level of passive income for shareholders.
Coles has increased its annual dividend each year since 2019, which is a pleasing level of dividend consistency compared to many other large businesses. The steady growth of revenue and net profit has allowed the business to be a consistent dividend provider for investors.
At the time of writing, Coles' last two half-year dividends come to 73 cents per share. That's a grossed-up dividend yield of 4.5%, including franking credits.
The business is steadily building its market position thanks to an expanding store network, rising e-commerce sales and improving profit margins.
In my view, Coles has a promising long-term future – it's a very important business for the Australian economy and could expand into pet retail and vets if the possible Greencross transaction goes ahead.
Overall, there's a lot to like about these ASX blue-chip shares, though they're not the only great businesses to consider.
