There are some ASX dividend shares with such a large dividend yield that they could deliver market-beating returns just with the passive income.

If we say that the share market’s long-term average annual return has been roughly 9% to 10%, then a double-digit dividend yield could be very compelling.

But, I wouldn’t just invest in any business with a high dividend yield. I’d want to ensure I had a high level of confidence that the payouts would continue to flow even if there was wider economic uncertainty.

With that in mind, I think the two stocks below fit the bill.

Hearts and Minds Investments Ltd (ASX: HM1)

This business is a listed investment company (LIC) that aims to provide investment returns and also provide financial contributions equivalent to 1.5% of its net assets per year to leading Australian medical research organisations to fund the development of new medicines and treatments, driving a new generation of medical research in Australia.

The portfolio is picked by a variety of investment professionals who all work for free to make picks for the portfolio. A majority of the portfolio is chosen by a permanent group of fund managers, while a minority of the picks are chosen at an annual investment conference.

It’s a portfolio of best picks, which aim to produce good returns. Over the three years to June 2026, its portfolio produced an average return per year of 13.8%, which is a strong enough return to deliver very good returns.

The business is steadily increasing its payout by 0.5 cents every six months. That suggests the next two dividends to be paid could come to 20.5 cents for the year ahead. That would be a grossed-up dividend yield of 9.6%, including franking credits, at the time of writing.

WAM Microcap Ltd (ASX: WMI)

WAM Microcap is another LIC, it targets small-caps on the ASX. This is an effective strategy because of how small-caps may have a lot of growth ahead of them while also being undervalued for that growth.

The business owns dozens of the most attractive small ASX shares out of the hundreds it could choose from.

By generating such good returns over the long-term, the business is able to fund pleasing dividend payouts. Its portfolio has returned an average of 13.1% per year since June 2017 (excluding fees, other expenses and taxes).

Excluding special dividends, its annual payout has increased every year since it started paying dividends in 2018, aside from FY24 when it maintained the payout.

Its annual dividend per share of 10.7 cents for FY26, which translates into a grossed-up dividend yield of 10.6%, including franking credits, at the time of writing.  

The post 2 ASX shares with dividend yields above 9.5% appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Hearts And Minds Investments and Wam Microcap. 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.

Superannuation is one of the best tools investors can use to build wealth due to its lower tax rate. Australians can also use superannuation to invest in certain assets for high passive income.

We don’t necessarily need to access the passive income immediately for it to be a good investment. Australians may appreciate owning investments with stable earnings that deliver consistent payouts year to year.

Given that superannuation has a lower tax rate than individual tax rates for full-time earners, there’s less of a headwind for the after-tax passive income returns compared to investments made outside of super.

There are many different passive income investments available to people who utilise self-managed superannuation funds (SMSFs). Other super funds can allow investors to invest in assets such as S&P/ASX 300 Index (ASX: XKO) shares – many businesses in that index are appealing options for income.

How to generate $2,500 of monthly passive income from superannuation

Each household has a different financial situation. There isn’t a one-size-fits-all approach that I can outline that would say what everyone’s net income would be. With that in mind, I’ll just talk about gross income, which is before taxes and expenses.

Generating $2,500 of monthly passive income translates into $30,000 per year.

The amount you need to invest to reach that income goal depends on the dividend yield, or interest rate, of the investments.

I’ll give you an example. If someone had $1 million invested with a 3% dividend yield, it would generate $30,000 of annual income.

If the dividend yield were higher, an investor wouldn’t need as much invested in superannuation to create that same level of annual or monthly passive income.

For example, if an investor’s portfolio had a 4% dividend yield, an investor would require $750,000.

A 5% dividend yield would mean investors require a $600,000 portfolio.

If the dividend yield was 6% then the portfolio value required would only be $500,000.

Where I’d invest for a high dividend yield

If I were looking for a high level of monthly passive income, I’d focus on businesses with a good dividend yield but also have delivered reliability.

Some of the names I’d consider would be MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), Future Generation Global Ltd (ASX: FGG), Future Generation Australia Ltd (ASX: FGX), Centuria Industrial REIT (ASX: CIP), Charter Hall Long WALE REIT (ASX: CLW), Hearts and Minds Investments Ltd (ASX: HM1), Rural Funds Group (ASX: RFF) and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

But, I also wouldn’t ignore investments with somewhat lower yields that have a track record of regular dividend growth as well as appealing capital growth.

The post How much is needed in superannuation to target a $2,500 monthly passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, Hearts And Minds Investments, Mff Capital Investments, Rural Funds Group, and Wcm Global Growth. 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 Mff Capital Investments and Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

These three ASX shares have taken a beating over the past year, but their market leadership and long-term growth potential could make them worth a closer look.

WiseTech Global Ltd (ASX: WTC), Pro Medicus Ltd (ASX: PME) and NextDC Ltd (ASX: NXT) are down 60%, 39% and 5%, respectively, at the time of writing.

While Buffett typically favours predictable, cash-generative businesses with durable competitive advantages, these three companies offer some of those qualities, albeit with varying degrees of risk.

WiseTech Global: logistics software at a crossroads

WiseTech’s CargoWise platform powers critical operations across the global freight and logistics industry. Its deep integration into customers’ workflows creates switching costs and a network effect that can be difficult for competitors to replicate.

However, the ASX tech share has endured a messy period, with governance concerns and controversies surrounding founder leadership damaging investor confidence.

Now, WiseTech is making a dramatic transformation, including cutting roughly one-third of its workforce as it integrates AI into its core offerings. That’s a significant execution risk, but it could ultimately create a leaner and more efficient business.

TradingView data shows most analysts rate WiseTech shares a buy or strong buy, with an average price target of $60.63, implying around 33% upside.

It’s more speculative than Buffett’s typical compounders, but the company’s platform remains a potentially valuable asset.

Pro Medicus: a powerful healthcare moat

This $20 billion ASX share provides medical imaging software, with its Visage platform helping hospitals and healthcare systems view and analyse medical images.

What makes it difficult to copy is the combination of sophisticated technology, deep integration into hospital workflows and the significant switching costs involved in replacing critical clinical software.

Importantly, Pro Medicus estimates it has captured only around 11% of the US market, leaving a substantial runway for expansion.

During FY26, the company signed 10 new contracts worth at least $407 million and renewed all six existing contracts, worth $141 million over five years. Customers are also increasingly adopting its cardiology offering.

Nine of 15 TradingView analysts rate the shares a buy or strong buy. The average price target of $212.65 implies roughly 12% upside, while Bell Potter retains a buy rating and $226 target.

NextDC: betting on the AI boom

NextDC operates data centres, increasingly vital infrastructure for the digital economy. As AI, cloud computing, streaming and other data-intensive applications expand, demand for secure data centre capacity should keep rising.

This ASX share is expanding its footprint, including its first AI-ready facility in Kuala Lumpur and facilities designed specifically for AI workloads, such as its S6 Sydney data centre.

The opportunity has attracted strong broker support. Nine of 10 TradingView analysts rate NextDC shares a buy or strong buy.

The average price target is $21.60, implying around 59% upside, while UBS maintains a buy rating with a $22.55 target.

Foolish takeaway

None of these ASX shares is a pure textbook Warren Buffett investment. But all three possess qualities Buffett appreciates: market leadership, competitive advantages and potentially significant long-term cash-generation opportunities.

For investors prepared to accept the risks, these beaten-down ASX shares could offer significant upside if their growth stories remain intact.

The post Warren Buffett’s playbook: 3 cheap ASX shares that could soar up to 60% appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has positions in WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.