I think that ASX shares are the best choice for high dividend yields. That's due to a combination of a generous dividend payout ratio and franking credits.
There are some great ASX shares out there that pay high dividend yields, but I'd only want to buy stocks I'm confident can provide reliable (and even growing) payouts.
Of course, dividends aren't guaranteed. But, I'm optimistic about the future payments from these businesses and I believe the payouts will be even larger in the years ahead.
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is a small and compelling ASX share, in my view. It's one of the leading retailers of male and female personal grooming products.
It had 126 Shaver Shop stores at the last count and sells items like electric shavers, clippers, trimmers and wet shave items. It also sells additional product ranges like oral care, hair care, massage, air treatment and beauty categories.
You may not expect a business like this to have a resilient dividend record going back several years, but it does. Its dividend increased each year between FY17 and FY23, it maintained it in FY24 and hiked the payout again slightly in FY25. I think its earnings are more defensive than some other retail sectors.
Impressively, the last two dividends declared by the business amount to a grossed-up dividend yield of 10.5%, including franking credits, at the time of writing.
If the business continues to offer exclusive products from brands, expands its own brand (called Transform-U), and opens more stores, I think the ASX share has a very promising future.
WAM Microcap Ltd (ASX: WMI)
The other high-yielding ASX share I want to highlight is this listed investment company (LIC), which focuses on exciting, small businesses.
I think small ASX shares can be undervalued, and they're usually earlier on with their growth journey, meaning they could outperform their larger counterparts.
I believe it's the above dynamic that has helped the WAM Microcap deliver an average return per year of 14.4% since inception in June 2017, before fees, expenses and taxes.
LICs pay for their dividends from investment profits and profit reserves. This allowed the business to grow its annual ordinary dividend each year between FY18 and FY23, maintain it in FY24, then increase it again in FY25 and FY26.
The high-yielding ASX share expects to pay an annual dividend per share of 10.7 cents in the 2026 financial year. This projection translates into a forward grossed-up dividend yield of 10.4%, including franking credits, at the time of writing.
These aren't the only ASX shares I'd buy for dividends, but they have two of the highest yields.
