ASX blue-chip shares could be among the best options for passive income, given their generous dividend yields and regular payout increases.
Franking credits help reduce the taxation burden for investors, perhaps even creating a tax refund on a tax return. Blue-chips can be very resilient because of their strong market positions and impressive profit margins.
Below are two of my favourite ideas for dividends.
Image source: The Motley Fool
Coles Group Ltd (ASX: COL)
I think few businesses are as defensive as Coles because of how it sells food – an obvious essential for Australian life.
Coles is the second-largest supermarket business in Australia, with excellent scale advantages compared to many of its other competitors.
Impressively, Coles has increased its annual dividend per share every year in its listed life as a separate entity. The payout has grown each year since FY19. Very few ASX blue-chip shares have delivered that level of consistent growth.
The company benefits from Australia's growing population, a focus on providing products customers want (including own-brand products), and the efficiencies unlocked by its new advanced distribution centres and customer fulfilment centres.
According to Commsec projections, the business is forecast to pay an annual dividend of 82 cents per share in FY27. That translates into a forward grossed-up dividend yield of 4.9%, including franking credits, at the time of writing.
Excitingly, the FY28 payout could grow even further to 95.3 cents per share. That would be a grossed-up dividend yield of 5.7%, including franking credits, at the time of writing.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) that gives investors exposure to a portfolio of ASX blue-chip shares.
At the end of July 2026, some of its largest holdings include Wesfarmers Ltd (ASX: WES), Woodside Energy Group Ltd (ASX: WDS), Westpac Banking Corp (ASX: WBC), Scentre Group (ASX: SCG), South32 Ltd (ASX: S32), Rio Tinto Ltd (ASX: RIO), National Australia Bank Ltd (ASX: NAB), Macquarie Group Ltd (ASX: MQG), Goodman Group (ASX: GMG), Coles, BlueScope Steel Limited (ASX: BSL), BHP Group Ltd (ASX: BHP), Amcor (ASX: AMC) and Aristocrat Leisure Ltd (ASX: ALL).
Those positions can change thanks to the LIC's active investment strategy, allowing the investment team to move in and out of shares when valuations change.
According to WAM Leaders, its ASX blue-chip share portfolio has delivered an average return per year of 12.1% per year since May 2016. That's almost 3% better per year than its ASX share market benchmark.
Those impressive returns have allowed the LIC to grow its annual dividend every year since FY17, which is an excellent record. Its FY26 annual payout is 9.6 cents per share, translating into a grossed-up dividend yield of 10.2%, including franking credits.
These aren't the only stocks I'd buy for passive income, but they're two appealing contenders to start with.
