ASX dividend shares can be some of the best investments for Aussies because of how much passive income they can provide.
I think stable and growing dividends are a core feature of an attractive ASX dividend share, as well as a pleasing dividend yield.
WCM Global Growth Ltd (ASX: WQG)
Listed investment companies (LICs) can be very attractive passive income options because of how they can turn a portion of the (accounting) investment gains into cash dividends for investors.
When a LIC performs well over time, it can provide shareholders with a pleasing dividend and a rising share price.
WCM Global Growth manages a portfolio focused on international shares with strong economic moats that are expected to strengthen as years go by, enabling stronger profits. I like the diversification it can provide.
Since the start of the LIC in June 2017, it has returned an average of 17% after management fees. This has helped it increase its half-year/quarterly dividend each year since 2019 and it expects ongoing growth.
The next four quarterly dividends to be declared are expected to come to a total of around $0.09 per share, translating into a dividend yield of 6.4%, including the franking credits.
Coles Group Ltd (ASX: COL)
Coles may be one of the most defensive businesses in Australia because of the essential nature of what it sales. Currently, it’s outperforming Woolworths Group Ltd (ASX: WOW) in terms of sales growth and provides a more compelling dividend.
Coles has increased its annual dividend each year since 2019 – every year since it split from Wesfarmers Ltd (ASX: WES).
The company offers customers a wide array of products, including a growing number of own-brand items, which is clearly resonating.
After spending hundreds of millions of dollars on automated distribution centres (ADCs) from Witron and customer fulfillment centres (CFCs) from Ocado, Coles is well-placed to deliver higher profit margins, better stock flow and good efficiencies.
I think Coles’ dividend is likely to continue rising in the coming years, but the FY25 payout works out to be a dividend yield of 4.4%, including the franking credits.
