ASX dividend shares are a straightforward way to generate a great passive income.
But the tricky part is knowing where to look.
There are lots of high-quality, reliable ASX shares that pay dividends at yields of around 4% to 6%.
But if you're looking for a higher-yielding option, it's important to search a little more carefully.
That's because, generally, the higher the dividend yield, the more risk associated with that stock.
Here are 2 ASX dividend shares I'd buy that pay a dividend yield over 8%.
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Pepper Money Ltd (ASX: PPM)
Pepper Money is a non-bank lender that provides finance for homes, cars, personal loans, professional equipment, and commercial purposes.
The company operates in three reportable segments: mortgage, asset finance, and loan and other servicing. The company was established in 2000 and listed on the ASX in 2021, making it relatively new compared to many other ASX dividend shares.
Non-bank lenders are often considered attractive for dividends and passive income because their business model generates high-yield, recurring cash flows from mortgage and loan repayments.
The stock is less affected by tangible assets and price speculation versus other companies, such as those in mining and materials sectors.
The company pays two fully-franked shareholder dividends a year in April and October, dating back to April 2022. The company paid a 7.2-cent interim dividend to shareholders earlier this month. At the time of writing, this implies a forward dividend yield of around 8.8%.
Atlas Arteria Group (ASX: ALX)
Atlas Arteria owns, operates, and develops five toll roads in France, Germany, and the United States.
The company's main asset is an estimated 31% stake in Autoroutes Paris-Rhin-Rhone, or APRR, which owns concessions to toll more than 2,300 kilometres of motorways in eastern France. The company also wholly owns the Dulles Greenway toll road in the US state of Virginia.
I like toll road operators for their dividends because they're classically defensive.
That means that because they provide an essential service, they benefit from a steady, year-round demand regardless of how the broader economy is performing.
The bonus of Atlas Arteria is that not only does it provide essential infrastructure, but it often operates under long-term contracts, which means the company is able to generate a strong and stable income. And that translates to a reliable, consistent payout for shareholders.
The ASX dividend shares consistently pay shareholders 40 cents per unit, unfranked, every year – a 20-cent payment in April, and another 20-cent dividend in October. At the time of writing, this translates to a dividend yield of around 10.6%.
