2 ASX blue-chip shares offering big dividend yields

There are a number of reasons why ASX blue-chip shares usually make strong investments each year. Stability, strong earnings generation each year and (usually) a good dividend yield together can be very appealing.

I wouldn’t focus purely on the dividend income. I think it’s a good idea for investors to ensure that the target business has a good outlook for earnings growth too, otherwise the dividends may not be reliable, with the share price lacking that organic tailwind.

The two ASX blue-chip shares I’m going to highlight both have strong dividend yields.

Telstra Group Ltd (ASX: TLS)

The Australian telecommunications giant is one of the most impressive names for payouts because of how generous it is with its dividend payout ratio. In recent times, it has paid out close to all of its net profit generation each year, though it has held onto a higher proportion of its cash earnings.

The company has invested significant sums into its spectrum assets and 5G network to ensure that it has the most appealing network for customers. More subscribers mean the business can spread its costs across more users.

We saw this effect in the FY25 result, with mobile revenue climbing 3% and operating profit (EBITDA) climbing 5%.

I’m expecting the company’s EBITDA and net profit margin to slowly rise over the rest of the decade. I’m particularly optimistic this can happen if Telstra can win more broadband customers onto its wireless (5G-powered) offering, which would enable a higher margin from that household (rather the margin going to the NBN).

I think it’s quite likely the ASX blue-chip share will hike its FY26 annual dividend to at least 20 cents per share, which could mean a grossed-up dividend yield of 5.8%, including franking credits. If it paid a dividend of 21 cents per share, it’d be a grossed-up dividend yield of 6%, including franking credits.

Charter Hall Long WALE REIT (ASX: CLW)

The other business I want to highlight for its yield is a real estate investment trust (REIT) that owns a diversified portfolio of properties which are, on average, long-term rental leases.

Charter Hall Long WALE REIT has a weighted average lease expiry (WALE) of around nine years, meaning its rental earnings are locked in for the long-term.

The business owns properties in a number of areas including service stations, hotels and pubs, telecommunication exchanges, data centres, distribution centres and more. I like that this lowers the risk of being too exposed to one subsector.

This REIT has lots of blue-chip tenants, which is one of the reasons why it’s able to provide investors with pleasing defensive earnings. Its rental income (on a per-property basis) is growing thanks to regular rental increases that are either fixed or linked to inflation, providing a tailwind or rental profits and the distribution.

Charter Hall Long WALE REIT is expecting to grow its FY26 distribution to 25.5 cents per security, translating into a forward distribution yield of 6.3% thanks to its 100% distribution payout ratio.

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.