There are two main ways for investors to generate returns – dividends and capital growth. Share prices can be volatile, but dividends from ASX dividend shares are more predictable and can provide 'real' returns to bank accounts as we own them.
I don't think every high-yielding business is an attractive buy, perhaps because that specific dividend may not be sustainable.
But, the below two businesses have demonstrated excellent consistency with their dividends, whilst also offering very high dividend yields.
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Shaver Shop Group Ltd (ASX: SSG)
Over the last few years, Shaver Shop has consistently provided investors with a large dividend yield thanks to a low price/earnings (P/E) ratio and a generous dividend payout ratio.
This retailer of shaving products has increased its annual dividend each year since FY17, except in FY24, when it maintained the payout.
If Shaver Shop at least maintains its payout in FY26, that would translate into a grossed-up dividend yield of 10.5%, including franking credits, at the time of writing.
There are not many shares out there that have a dividend yield of more than 10% and have been reliable payers over the past decade.
I think the prospects for the dividend are good. Shaver Shop has a large store network of more than 120 locations across Australia and New Zealand. It has a number of growth avenues including more stores, more exclusive products from high-quality brands, expansion of its private brand called Transform-U (which can come with higher gross profit margins) and expanding its product range of non-shaving items.
I believe this ASX dividend share's payout can continue to be reliable.
Hearts and Minds Investments Ltd (ASX: HM1)
The other idea I want to highlight is the listed investment company (LIC) Hearts and Minds.
This ASX dividend share's board of directors is currently increasing its half-year dividend by 0.5 cents every six months. That means the business expects to pay 20.5 cents per share over the next 12 months, which translates into a grossed-up dividend yield of 9.9%, including franking credits.
The LIC's investment strategy is quite different to many other LICs. There are no management fees or performance fees involved. Instead, it donates to medical research. Some of the entities it currently supports include SpinalCure, Bionics Institute, Peter Mac Cancer Centre, Victor Chang Cardiac Research Institute and several others.
A majority of the portfolio is decided by a group of core, continuing fund managers. They typically focus on high-quality, global shares.
A minority of the ASX dividend share's portfolio is decided by investment professionals at an annual investment conference where they each pitch their best stock idea, which also tend to be international names.
Overall, Hearts and Minds is looking to build a 'best ideas' portfolio that could perform over the long-term. Over the past three years, its portfolio has returned an average of 13.8% per year.
I think both of these ASX dividend shares have a lot to offer investors.
