During this era of higher interest rates, I think it is a great time to invest in ASX dividend shares with attractive dividend yields.
Share prices face headwinds when interest rates go up because rates act like gravity – when rates go up it pulls down on the valuation. But, I like that as a buyer of shares because it means shares are cheaper and dividend yields are larger.
I'd rather invest when yields are higher, rather than when they are lower.
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Future Generation Global Ltd (ASX: FGG)
I believe that the listed investment company (LIC) structure is a very effective way to invest for passive income, diversification and stability.
LICs invest in a portfolio of shares or other assets, depending on their investment strategy.
Future Generation Global is not like a normal LIC though. Typically, it's one funds management business that looks after the portfolio. Future Generation Global is invested in a portfolio of funds from 15 different managers, Antipodes, Vinva, Plato, WCM, Life Cycle, Langdon, Paradice and a few others.
This strategy gives investors a huge amount of diversification – there are more than 3,700 underlying shares across different sectors inside the ASX dividend share's portfolio. There are not many investments on the ASX that give as much diversification as that.
Future Generation Global's portfolio managers have chosen to be underweight America and overweight Europe. I like this aspect of Future Generation Global because it provides a type of exposure that differs from some of the ASX's most popular exchange-traded funds (ETFs).
Its solid dividend is funded by the pleasing investment returns. Future Generation Global has increased its annual dividend per share each year since FY19, giving investors several years of dividend growth already.
For 2026, it plans to hike its annual dividend per share by 5% to 8.4 cents. That translates into a grossed-up dividend yield of 7.1%, including franking credits, at the time of writing.
Dexus Industria REIT (ASX: DXI)
The other ASX dividend share I want to highlight is this real estate investment trust (REIT) which is invested in high-quality industrial warehouses across the country. It aims to provide sustainable income and capital growth prospects for shareholders over the long-term.
In its FY26 half-year result, the business outlined why it has such a promising outlook:
While the industrial sector has continued to normalise, underlying supply-demand fundamentals are solid. Vacancy remains low across core industrial markets, with high land and construction costs putting pressure on pipelines. In the medium to long term, the sector will continue to be supported by a growing population and limited available supply.
The fund manager Jason Weate also highlighted how it's maximising its rental income from the portfolio:
Our high performing portfolio continues to generate secure income and our active management approach has helped increase occupancy above 99% during the half. With the benefit of our strong balance sheet, we remain focused on higher-returning opportunities, with momentum across our value accretive development pipeline and increased exposure to the Sydney industrial market through recent acquisitions.
The business paid an annual distribution per unit of 16.6 cents, which translates into a distribution yield of 6.8%. I expect its distributions can grow in the coming years thanks to solid rental income – HY26 like-for-like income growth was 7.4%, with rental escalations, strong re-leasing spreads and higher average occupancy.
These aren't the only two ASX dividend shares I'd buy today for passive income, though.
