ASX dividend shares could be a rewarding decision today because of the yields on offer and better valuations.
Some businesses are trading are far too cheaply, in my opinion, even if inflation and interest rates rise from here.
I’m going to outline a couple of names that have large yields and have long-term good total shareholder return (TSR) potential.
Rural Funds Group (ASX: RFF)
Rural Funds owns farmland around Australia and operates in a real estate investment trust (REIT) structure.
There are three reasons why I think now is a good time to invest.
Firstly, it has defensive and growing rental income. Those rental contracts have been signed for many years of leasing with high-quality tenants, giving investors a long-term view on its rent. On top of that, most of the rent has built-in indexation each year, with a sizeable chunk linked to inflation (which may get a boost this year).
Second, it offers investors a solid distribution yield. Any business we’re calling an ASX dividend share needs to offer a solid starting yield straight away. Rural Funds has guided an annual distribution of 11.73 per unit in FY26, which equates to a yield of 5.8%, which seems good to me.
Third, the business’ unit price is a long way below its net asset value (NAV). In other words, Rural Funds is significantly undervalued. At 31 December 2025, it had a NAV of $3.10, suggesting a 35% discount.
Future Generation Australia Ltd (ASX: FGX)
Future Generation Australia is not a typical listed investment company (LIC) in a number of ways.
Firstly, investors aren’t charged management fees or performance fees by the fund managers involved – they work for free, enabling Future Generation Australia to donate 1% of its net assets to charities that work to help Australian youth.
Secondly, the ASX dividend share isn’t managed by just one fund manager, it’s invested across 14 leading fund managers – that’s a lot of diversification.
Third, the portfolio is invested across a range of smaller and larger businesses – not just one or the other. That’s a lot of pleasing diversification too.
Fourth, it has a very solid record of dividend increases. It has consistently grown its annual dividend every year in the past decade. Its latest annual dividend per share was $0.072. This is a dividend yield of 8%, with the bonus of franking credits included.
Considering the Future Generation Australia share price has fallen 10% in the just the last month, this is an appealing time to get a better starting yield and a lower underlying valuation.
