Commonwealth Bank of Australia (ASX: CBA) shares have been a popular pick for passive income over the years, but there could be better ideas out there for dividends these days.
With CBA's huge size and slower growth prospects, its dividend may not grow as much as it used to. The tax changes to negative gearing and capital gains may slow credit growth. Plus, it's harder to grow a business at a good pace when it's already so large.
However, despite the above headwinds, the CBA share price still trades at a relatively high price-to-earnings (P/E) ratio – which reduces the dividend yield.
For example, according to Commsec's projections, the ASX dividend share is expected to pay an annual dividend per share of $5.10. That translates into a grossed-up dividend yield of 4.2%, including franking credits. The payout is then only expected to rise 1% in FY27.
I think the two ASX dividend share names below are more compelling for long-term passive income, while still providing exposure to 'blue-chip' strength.
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Medibank Private Ltd (ASX: MPL)
Medibank Private is the largest private health insurance business with the Medibank and ahm brands.
In terms of dividends, since it first started paying in 2015, it has increased its payout every year except 2020, which was impacted by COVID. That's a great track record of dividend growth.
But, the ASX dividend share is expected to have a much larger dividend yield than what's on offer from CBA shares.
Medibank is estimated to pay an annual dividend per share of 19.6 cents for FY26. That translates into a grossed-up dividend yield (including franking credits) of 5.5% – significantly more than CBA.
On top of a stronger starting yield, the payout is forecast to increase at a stronger rate in FY27, further expanding the yield gap. The dividend is projected to increase by 12.2% in FY27 to 22 cents per share. That works out to be a potential grossed-up dividend yield of 6.1%, including franking credits.
With tailwinds like an ageing population and expansion (via acquisition) into providing healthcare services – not just health insurance – it could continue to grow its earnings (and passive income) at a solid pace for the foreseeable future.
Charter Hall Long WALE REIT (ASX: CLW)
Another ASX dividend share that can provide investors with blue-chip exposure is this real estate investment trust (REIT).
It's a large business itself, with a property portfolio worth around $6 billion. On top of that, 99% of its properties are leased to blue-chip tenants such as Australian government entities, BP, Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Endeavour Group Ltd (ASX: EDV).
The business is invested in a variety of areas including data centres, social infrastructure, office, industrial and logistics, and consumer-facing buildings (such as service stations and hotels/pubs).
I like how the business has rental growth built into its contracts, with either fixed increases or rises linked to inflation.
The business trades at a large discount to its underlying value, as measured by the net tangible assets (NTA) of $4.68 at 31 December 2025. This big discount means it can offer a large dividend yield.
It grew its FY26 distribution by 2% to 25.5 cents, which translates into a distribution yield of 6.8%. I expect a similar payout in FY27, so the passive income yield could be very large compared to what CBA shares offer.
