Some ASX shares offer investors such a large dividend yield that the return could be 10% or more.
I don't think an investor should look at a possible investment just for the passive income. But, if an investor can see a little capital growth along with huge dividend income, that could be an appealing combination of returns for some Aussies.
The two businesses I'm going to highlight have huge dividend yields and I expect can provide stable/growing payouts
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop describes itself as an Australian and New Zealand specialty retailer of male and female personal grooming products. It aspires to be the market leader in hair removal.
Its main products are electric shavers, clippers, trimmers and wet shave items. Its products include oral care, hair care, massage, air treatment and beauty categories.
The company currently has 126 Shaver Shop stores across Australia and New Zealand. At those shops, it offers customers a range of quality brands at competitive prices. Its market position has allowed the business to negotiate exclusive products with suppliers.
Pleasingly, the company has grown its annual dividend almost every year since FY17. The only year it didn't hike the dividend was FY24 when the payout was maintained at 10.2 cents per share.
It currently has an annualised dividend of 10.3 cents per share, which translates into a grossed-up dividend yield of approximately 10% at the time of writing.
Hearts and Minds Investments Ltd (ASX: HM1)
The other ASX share I want to highlight is the listed investment company (LIC) Hearts & Minds.
LICs are a great choice for passive income because they can translate investment returns into dividends while also providing diversification.
There are no management fees or performance fees involved. Instead, all of the fund managers provide investment picks for free so that Hearts and Minds can donate that money to medical research.
The LIC invests in a range of international shares. Some picks are provided by a permanent group of core fund managers, while the rest are decided by investment professionals who present their picks at an annual investment conference.
By investing in an array of compelling international stocks, Hearts and Minds can deliver appealing investment returns. The board of the LIC expects to increase its half-year dividend every six months, which means its next year of dividends could amount to a grossed-up dividend yield of approximately 10%, including franking credits, at the time of writing.
In my view, both of these ASX shares have a compelling outlook for dividend income, though they're not the only stocks I'd look at for passive income.
