A once-in-a-lifetime opportunity to snap up this 10.75% ASX dividend yield?

Huge ASX dividend yields are rare to find on the ASX, particularly ones that are able to maintain/grow that payout each year.

I think there are some businesses that can deliver yields of more than 9%, or even 10%, and sustain those payouts year after year.

Large dividend yields aren’t necessarily always the right pick for investors if they’re in a high tax bracket, because it can mean losing a fair bit of the return to tax each year. But, for investors who do want a large payout, I think the listed investment company (LIC) Hearts and Minds Investments Ltd (ASX: HM1) could be the right call for a few reasons.

Large and growing dividend

The business is on track to deliver a very high dividend yield in 2026, with further growth expected in the subsequent financial years.

In its recent FY26 half-year results, it declared an interim dividend of 9.5 cents per share. It said it’s “confident in the company’s ability to maintain its dividend policy, and its stated intention of increasing fully franked dividends by 0.5 cents every six months for the foreseeable future.”

That suggests the next dividends to be declared will be 10 cents and 10.5 cents, which amounts to an annual grossed-up ASX dividend yield of 10.75%, including franking credits.

At the time of writing, the ASX dividend share has a profit reserve of 83 cents per share, so there is ample room (in accounting terms) to continue increasing the payout for a few years.

Diversification

The ASX share is not just managed by one fund management outfit like many other LICs. Instead, its portfolio is constructed by multiple investment professionals.

Some of the portfolio is decided by a group of core portfolio managers who contribute ideas. Other portfolio picks come from an annual investment conference, where various investment professionals pitch a stock they believe could be a good investment for the next year.

Therefore, the overall portfolio isn’t following any particular strategy, theme, or industry; it results in a portfolio that’s quite diversified across industries and countries. I think it’s a good option to ensure that we’re not too exposed to one company or industry.  

These fund managers and investment professionals work for free so that the business can donate 1.5% of its net assets each year to medical research.

Solid returns

Past performance is not a guarantee of future returns, of course.

However, it’s the LIC’s investment returns that make the accounting profits, which then fund the ASX dividend yield.

At the end of January, Hearts & Minds reported that its investment returns over the prior three years had been an average of 12.4% per year. Recent volatility may have dampened its returns in recent weeks, though.

I think it looks good value, trading at an 18% discount (at the time of writing) to the pre-tax net tangible assets (NTA) per share value of $3.33, at 27 February 2026.

The post A once-in-a-lifetime opportunity to snap up this 10.75% ASX dividend yield? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Hearts And Minds Investments. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.