The Australian stock market has a number of attractive ASX dividend shares to buy that offer both a good dividend yield and good payout growth.
At a time when interest rates are high, I think that passive income investments need to have a high yield to be attractive compared to the safe return we can get from a bank account.
Plus, the fact that inflation remains a present issue in the Australian economy tells me it's important that we choose income-paying investments that are growing their payouts at a good rate.
With the above in mind, it's my view that the two stocks below are particularly attractive right now.
Image source: Getty Images
Centuria Industrial REIT (ASX: CIP)
I think this real estate investment trust (REIT) is one of the best picks in the property sector. It's one of the few REITs expected to grow its payout in FY27 amid the headwind of higher interest rates.
When interest rates rise, it pushes up the cost of debt. Understandably, many REITs have a sizeable amount of debt on their balance sheets to fund their property investments. After five interest rate rises in 2026 by the RBA, debt is a lot more expensive.
But, Centuria Industrial REIT has strong rental growth tailwinds that are helping support its rental earnings despite higher interest rates.
In the FY26 result, announced in August, the business gave net rental profit (funds from operations (FFO)) guidance of between 18.8 cents to 19.2 cents per security, representing potential growth of up to 5.5%, year-over-year.
Centuria Industrial REIT's industrial properties, largely in major metropolitan, benefit from multiple drivers including low vacancy rates, lessening supply of new industrial properties, ongoing e-commerce adoption, increasing demand for refrigerated facilities for food and medicine and growing city populations.
In FY26 the business grew its FFO per unit by 4% and it looks likely to deliver more growth in FY27, based on the guidance. In its FY27 first quarter update, released on 15 October 2026, the business said its portfolio is approximately 17% under-rented, on average, providing a significant runway for future earnings growth beyond FY27.
The ASX dividend share expects to grow its annual distribution by 3% in FY27 to 17.3 cents per unit. At the time of writing, that's a forward distribution yield of 5.8%.
Future Generation Australia Ltd (ASX: FGX)
The other business I want to highlight is Future Generation Australia, a listed investment company (LIC) that looks to provide youth charities with donations representing 1% of its net assets each year.
Typically, the job of a normal LIC is to invest on behalf of shareholders in other shares. Future Generation Australia invests in more than a dozen funds of different fund managers focused on ASX shares (of various sizes, including smaller ones), so shareholders are getting significant diversification by owning the LIC's shares.
Pleasingly, all those fund managers work for free for Future Generation Australia to enable the charitable donations made each year. The LIC has donated $54.9 million since inception in September 2014.
The LIC's 2026 financial year follows the calendar year, so we are still in FY26. The business has provided guidance that it will grow its FY26 payout by 5.6% to 7.6 cents per share – that translates to a potential grossed-up dividend yield of 7.9%, including franking credits, at the time of writing. I expect the FY27 payout to be at least 7.6 cents per share again.
$400 per month of passive income
Between the above two ASX dividend shares, they have an average grossed-up dividend yield of 6.85%, including franking credits.
To generate $400 per month, or $4,800 per year in annual terms, it would take an investment of around $70,100. I'd be very happy to make that investment today, while ensuring that my dividends over the long-term aren't just coming from two stocks.
