2 ASX blue-chip shares offering big dividend yields

The ASX blue-chip share space is a great place to look for ideas that can deliver strong passive income with good dividend yields.

Mature Australian businesses have usually built a strong reputation for generating profit, they have a big accounting profit reserve and a history of paying resilient dividends to investors.

When I look at ASX shares with market capitalisations of more than $6 billion, the two businesses below are ones that stick out as good providers of passive income.

Argo Investments Ltd (ASX: ARG)

Argo is a listed investment company (LIC) that provides investors with exposure to a portfolio of ASX blue-chip shares. LICs can give Aussies both diversification and a good dividend yield.

The biggest positions in the portfolio includes BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), Rio Tinto Ltd (ASX: RIO), Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) and Telstra Group Ltd (ASX: TLS).

As you can see, Argo gives investors a significant level of allocation to ASX blue-chip shares.

It has a pleasingly low cost, with a management expense ratio of just 0.14%, which is one of the cheapest in the LIC sector. Plenty of exchange-traded funds (ETFs) have a higher cost than that.

Since the GFC, the ASX blue-chip share has reduced the annual dividend a couple of times. In most other years, the annual dividend has been hiked. Its current grossed-up dividend yield is 6%, including franking credits.

It’s currently trading at a mid-teen double-digit discount to its net tangible assets (NTA).

Coles Group Ltd (ASX: COL)

Coles is another quality ASX blue-chip share Aussies can buy.

As Australia’s second-largest supermarket business, it has a strong market position to continue generating a pleasing level of passive income for shareholders.

Coles has increased its annual dividend each year since 2019, which is a pleasing level of dividend consistency compared to many other large businesses. The steady growth of revenue and net profit has allowed the business to be a consistent dividend provider for investors.

At the time of writing, Coles’ last two half-year dividends come to 73 cents per share. That’s a grossed-up dividend yield of 4.5%, including franking credits.

The business is steadily building its market position thanks to an expanding store network, rising e-commerce sales and improving profit margins.

In my view, Coles has a promising long-term future – it’s a very important business for the Australian economy and could expand into pet retail and vets if the possible Greencross transaction goes ahead.

Overall, there’s a lot to like about these ASX blue-chip shares, though they’re not the only great businesses to consider.

The post 2 ASX blue-chip shares offering big dividend yields appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended BHP Group, Macquarie Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.