Following the announced Federal tax changes earlier this year, the attractiveness of ASX passive income shares may have shifted in investors' minds.
In my view, listed investment companies (LICs) may be some of the best options to consider, as they can provide a combination of growing dividends, a large dividend yield and long-term capital growth.
Let's run through why I think the two stocks below are so appealing for dividends.
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PM Capital Global Opportunities Fund Ltd (ASX: PGF)
This LIC is managed by an impressive investment team, led by Paul Moore, Chief Investment Officer (CIO).
Having the global share market as a hunting ground is very helpful for generating returns, in my view, because there is a wide array of opportunities across sectors that the ASX can't necessarily provide exposure to at a meaningful scale. Additionally, global stocks in sectors like banking and mining tend to trade at a lower earnings multiple than the ASX equivalent.
The five sectors that the ASX passive income share has the biggest exposure to European banks, industrial metal commodities, healthcare, industrials and leisure and entertainment.
The investment strategy has performed exceptionally well, with the net return being an average of 17.1% per year since the LIC's inception in December 2013.
Those net returns have been more than enough for the LIC to pay a good and growing dividend.
Aside from FY23 when it maintained its annual payout, the business has increased its dividend every year since 2016. So, it has already provided a decade of reliable dividends, and I expect the good dividend track record to continue.
In FY26, it grew its annual dividend per share by 26% to 14.5 cents per share. It expects to hike its FY27 annual payout by at least 10% to 16 cents per share. That translates into a forward grossed-up dividend yield of 7.2%, including franking credits, at the time of writing.
Future Generation Australia Ltd (ASX: FGX)
The other ASX passive income share I want to highlight is another LIC.
Future Generation Australia is a very different type of LIC. None of the fund managers involved charge management fees or performance fees – they all work pro bono (for free) – so that the LIC can donate 1% of its net assets each year to youth charities.
The fund is invested in more than a dozen funds that invest in ASX shares. The underlying portfolio is invested in hundreds of ASX shares, providing more exposure to smaller, faster-growing shares than the S&P/ASX 200 Index (ASX: XJO) does.
It's able to provide excellent diversification and less volatility than the wider market, partly thanks to its cash weighting.
The LIC has increased its annual dividend every year since it began paying in 2015, an impressive, consistent record of payout growth.
It expects to pay an annual dividend of 7.6 cents per share for 2026, which translates to a forward grossed-up dividend yield of 8.5%, including franking credits, at the time of writing. I expect the 2027 dividend will be larger, but I'm using the guided payout for my calculations.
$200 passive income per month
If someone is targeting $200 per month of passive income, that translates into an annual goal of $2,400.
Between the two picks I named above, the average dividend yield is 7.85%. Assuming equal investments in each stock, this would require a total investment of around $30,600 to generate that much passive income.
