In a climate where capital appreciation and negative gearing have diminished in appeal, dividend-paying stocks on the ASX present a compelling investment opportunity.

With term deposit rates at elevated levels, an investment must offer a notably high dividend yield to capture investor interest.

While extremely high yields might seem attractive for passive income, they often come with less dependable payouts, making them a potentially suboptimal choice.

Therefore, by targeting slightly more moderate yields, investors can potentially secure a favorable dividend yield, prospects for payout growth, and the potential for long-term capital appreciation.

WCM Global Growth Ltd (ASX: WQG)

This entity is a listed investment company (LIC), a structure often considered ideal for generating passive income.

LICs invest in a portfolio of other companies' shares, providing investors with instant diversification through a single holding. As a corporate entity, its board of directors has discretion over the dividend's size and consistency, provided sufficient accounting profit reserves exist.

Successful LIC investment teams can deliver strong portfolio returns, a reliable and growing dividend stream, and an expanding profit reserve.

This pattern is evident at WCM Global Growth Ltd. Since its inception in June 2017, the portfolio has generated an average annual return after fees of 15.8%. It is crucial to remember that past performance does not guarantee future results.

The company's investment philosophy centers on the belief that corporate culture is the primary driver of a company's ability to build and sustain competitive advantages, or economic moats.

The company has consistently increased its quarterly dividend since FY23. Based on current guidance, the next four dividends are expected to total 9.59 cents per share. At the current share price, this translates to a grossed-up dividend yield of 7.2%, inclusive of franking credits.

MFF Capital Investments Ltd (ASX: MFF)

The second ASX dividend stock to consider is the investment firm MFF Capital Investments Ltd.

Although it operated as a pure LIC for most of its history, it now owns a small funds management business named Montaka. This acquisition provides MFF with access to a broader team of investment professionals and an additional revenue source.

However, it's important to recognize that the vast majority of the company's value remains tied to its high-quality investment portfolio, which is concentrated in globally competitive companies with long-term growth potential.

MFF Capital Investments Ltd has raised its regular annual dividend per share every year since FY18. For the past several years, its half-yearly dividend has increased by 1 cent per share every six months, a trend expected to continue. If this pattern holds for FY27, the stock currently offers a grossed-up dividend yield of 7.02%, including franking credits.

Naturally, these are not the only two ASX-listed shares worthy of investor attention.