One of my favourite types of investments to look at are ASX dividend shares that can provide excellent passive income.
There are many names on the ASX that are providing dividends, but they’re nowhere near as well-known as some stocks like Commonwealth Bank of Australia (ASX: CBA).
In my view, I’d choose the below ASX passive income shares over CBA shares every time.
Australian United Investment Company Ltd (ASX: AUI)
CBA is a high-quality bank, but it’s a singular business. Owning shares in a listed investment company (LIC) means getting exposure to a compelling portfolio. Each LIC has a portfolio built around its investment strategy.
AUI is one of the most underrated LICs around, in my view. Most of its portfolio focuses on ASX blue-chip shares, though a portion of its assets is also invested in Vanguard funds that provide exposure to international shares, adding useful diversification and alternative returns.
Currently, its biggest holdings are CBA, BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), ANZ Group Holdings Ltd (ASX: ANZ), CSL Ltd (ASX: CSL), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), Transurban Group (ASX: TCL) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
For the last 30 years, the LIC has either grown or maintained its regular dividend, which is an excellent record of payout consistency by the ASX passive income share.
Excluding special dividends, its current grossed-up dividend yield is 4.4%, including franking credits, at the time of writing.
It has paid a special dividend each year for the past three years of 8 cents per share. If that’s included, then the grossed-up dividend yield rises to 5.4%, including franking credits.
Future Generation Global Ltd (ASX: FGG)
The other ASX passive income share I want to highlight is another LIC, except this one has a much larger focus on global shares, while AUI is focused on ASX shares.
Future Generation Global doesn’t charge management fees or performance fees. Instead, it invests in the portfolios of various global-focused fund managers, who all work for free to enable the LIC to donate 1% of its net assets each to youth mental health charities. How good is that?
Some of the fund managers involved include Antipodes, Plato, WCM, Muncro, Vinva, Cooper Investors, Paradice, Morphic, Fairlight and Langdon.
For such a diverse array of managers and investment strategies, I think the portfolio has performed adequately, with an average return of 13% per year over the last three years.
The ASX passive income share has increased its annual payout every year for the past seven years in a row, which is an impressive streak. It expects to grow its annual payout to 8.4 cents per share in FY26, translating into a forward grossed-up dividend yield of 7.3%, including franking credits.
I like the combination of supporting younger people, international share diversification and good dividends.
$500 per month of passive income
Achieving an average income of $500 per month targets $6,000 annually.
Between the two stocks above, their average dividend yield is 6.35%. If we were to invest evenly between them, it’d take an investment of $94,500 to generate that income. I’d be very happy to make that investment.
The post 2 ASX passive income share ideas I’d use to generate $500 a month in 2027 appeared first on The Motley Fool Australia.
Should you invest $1,000 in Australian United Investment Company right now?
Before you buy Australian United Investment Company shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Australian United Investment Company wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 1 August 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- How much is needed in superannuation to target a $95,000 annual passive income?
- How much do I need to retire on $75,000 a year at 45?
- The ASX share I just bought for my child
- 2 ASX blue-chip shares offering big dividend yields
- How much do I need to retire on $80,000 a year at 50?
Motley Fool contributor Tristan Harrison has positions in Future Generation Global and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Transurban Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Transurban Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended BHP Group, CSL, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
