Dividend income may seem increasingly attractive these days following the Australian Federal budget tax changes. Dividend yields above 8% could be particularly attractive.
Some investors may want a lot of passive income, with capital growth now seeming less appealing than it used to be.
I'm going to talk about two names with particularly high dividend yields that could be compelling long-term buys.
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WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment companies (LICs) that targets ASX blue-chip shares. It is one of the leading LICs on the ASX, in my view.
The Wilson Asset Management investment team actively look for undervalued businesses at the larger end of the ASX's market capitalisation list.
Some of the businesses it has actively invested in include Stockland Corporation Ltd (ASX: SGP), Rio Tinto Ltd (ASX: RIO), James Hardie Industries plc (ASX: JHX), Mirvac Group (ASX: MGR) and South32 Ltd (ASX: S32).
The portfolio has performed solidly over the long-term – since inception in May 2016 it has returned an average of 12.2% per year to August 2026, before fees and expenses and taxes. That return has been almost 3% better per annum than the S&P/ASX 200 Accumulation Index (ASX: XJOA).
By generating good investment returns, a LIC like WAM Leaders can pay dividends in both good years and tough years.
WAM Leaders has increased its annual payout per share each year since FY17, meaning it has delivered around a decade of ongoing dividend growth for shareholders.
Its FY26 payout was 9.6 cents per share, which translates into a grossed-up dividend yield of 10.4%, including franking credits, at the time of writing.
Future Generation Australia Ltd (ASX: FGX)
Future Generation Australia is another LIC. I think that structure is very effective for being able to pay regular dividends to investors from investment returns generated over the long-term.
While many fund managers charge sizeable investment fees (and performance fees), there are no management costs in relation to this particular LIC.
Future Generation Australia is invested in the funds of more than a dozen fund managers who all work for free so that the LIC can donate 1% of its net assets each year to youth-focused charities.
By having such a diversified portfolio, giving exposure to hundreds of underlying ASX shares, I think Future Generation Australia can be a great addition to Aussies who don't want such a focus on ASX mining shares and ASX bank shares. The S&P/ASX 200 Index (ASX: XJO) is dominated by banking and miners, whereas the Future Generation Australia portfolio is significantly invested in smaller ASX shares (with more growth potential).
The ASX share has increased its annual dividend per share each year since 2015 – that's more than a decade of consistent payout growth. It plans to pay an annual dividend per share of 7.6 cents for 2026, which translates into a grossed-up dividend yield of 8.04%, including franking credits, at the time of writing.
I think these are two of the most compelling ASX share ideas for passive income.
