The ASX share market is a great place to find investments that can pay significant dividend yields to investors. It’s my preferred place for unlocking passive income.
Aside from the huge yield, it’s also possible to find investments that can deliver growing payouts. They are not just a term deposit with a larger yield. Hopefully, the ASX shares can deliver capital growth too.
Below are two of my favourite picks for a dividend yield that’s above 8%.
Hearts and Minds Investments Ltd (ASX: HM1)
This business is a listed investment company (LIC) that operates very differently from most other LICs.
Its portfolio is partly decided by a core group of permanent fund managers and the rest of the portfolio is made up of ‘best pick’ choices from investment professionals who pitch their idea at an annual investment conference.
All of the investment decisions are given for free by these investment professionals so that Hearts and Minds can donate 1.5% of its net assets for medical research.
The investment performance of the LIC’s portfolio is being used to pay a stable and growing payout. It intends to increase its dividend by 0.5 cents per share every six months for the foreseeable future.
That suggests the next 12 months of dividends could come to a grossed-up dividend yield of 10%, including franking credits, at the time of writing.
I also like that the business can provide investors with a pleasing level of diversification because of the types of shares it invests in from across the world.
Future Generation Global Ltd (ASX: FGG)
Future Generation Global is another LIC with a noble cause. It donates 1% of its net assets each year to youth mental health charities.
Its investments are the funds of various fund managers who work for free to enable the philanthropy. This ASX share gives investors significant diversification because it’s invested in thousands of underlying businesses â not many investments on the ASX can do that.
Future Generation Global has a number of positives, not just the donations but also the large dividend payments.
The ASX share has steadily grown its regular annual dividend per share each year since 2019. The annual 2025 dividend comes to 11 cents, including the 3 cent per share special dividend, which translates into a grossed-up dividend yield of 9.5%, including franking credits, at the time of writing.
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Motley Fool contributor Tristan Harrison has positions in Future Generation Global and 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.