With interest rates coming down fast in 2025, it might be a good idea to think about buying or adding some ASX dividend shares to your investing portfolio for passive income.
Successive interest rate cuts in 2025 mean that alternatives to dividend shares, such as term deposits or government bonds, aren't as attractive as they were last year. Dividend shares, particularly those that also pay full franking credits, are a great alternative for passive income investors seeking to get the best yield for their buck.
So, with that in mind, here are 10 high-conviction ASX dividend shares that offer investors a compelling alternative to cash investments today.
First up, we have Westpac Banking Corp (ASX: WBC). As a big four bank stock, Westpac is famous for its fat, fully franked dividends. It has funded some of the ASX's most generous dividends for decades, and I don't see any reason why this won't continue for the foreseeable future. Today, Westpac shares are trading on a dividend yield of 4.85%.
Another big four bank in ANZ Group Holdings Ltd (ASX: ANZ) might also be worth a look. Like Westpac, ANZ is also an ASX passive income veteran with an admirable dividend track record. Its dividends might not come with the full franking credits that Westpac's do. However, ANZ makes up for that with a higher yield of 5.71% today.
Turning away from the banks now, Telstra Group Ltd (ASX: TLS) is next. This telco is another dividend favourite on the ASX, having funded generous and fully franked shareholder payouts ever since its privatisation in the 1990s and early 2000s. Telstra's stable, recession-resistant earnings base lends additional stability to its income chops. Telstra shares are offering up a dividend yield of 3.89% at the latest pricing.
Wesfarmers Ltd (ASX: WES) is not exactly a household name. However, the bevvy of businesses that it owns and operates mostly are. These include Kmart, Target, OfficeWorks, and the crown jewel, Bunnings. In addition to these leading retailers, Wesfarmers also operates a range of other businesses. These span from lithium processing to fertiliser and chemical manufacturing. You'd be hard pressed to find another blue-chip stock that offers this kind of earnings diversity. Wesfarmers is also a passive dividend income heavyweight. Its shares closed on a dividend yield of 2.45% yesterday.
Now, to a business that used to be part of the Wesfarmers stable – Coles Group Ltd (ASX: COL). Coles offers passive income investors many of the same defensive attributes that Telstra shares do. We all need to constantly visit Coles or its competitors to buy food, drinks, and household essentials, after all. This lends great resilience to Coles' dividends. The company has paid out a consistently rising (and fully franked) dividend since its 2018 spinoff. Today, it offers a yield of 3.18%.
The ASX's largest share, mining giant BHP Group Ltd (ASX: BHP), is another passive income stock that investors looking to replace a term deposit can turn to today. Being at the mercy of global commodity prices, diversified miner BHP can't offer the same kind of dividend stability as other blue-chip ASX shares can. However, BHP's low-cost operations mean that, when commodity prices are high, it can make it rain for investors. As it currently stands, BHP shares are trading on a trailing dividend yield of 4.96%, which typically comes replete with full franking credits.
Another commodities stock is next up, with oil and gas share Woodside Energy Group Ltd (ASX: WDS). This energy giant should be analysed through the same lens as BHP, as its profits and dividends are also subject to unpredictable oil and gas prices. However, Woodside has also showered investors with passive dividend income when prices have been high in the past. In my view, it is likely to do so again in the future. Woodside shares currently sport a fully-franked trailing dividend yield of 8.66%.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL) is another top ASX dividend stock. Soul Patts currently boasts the best dividend streak on the ASX, having raised its fully franked annual payouts every single year since 2000. This company has been able to hit this streak thanks to a diversified portfolio of underlying investments, which Soul Patts evidently manages with aplomb. Yesterday, Soul Patts shares closed with a yield of 2.65%.
Our penultimate passive income stock is Transurban Group (ASX: TCL). Transurban is known for its near-monopolistic hold on the nation's most widely used toll roads. The company owns almost every tolled road in Sydney, Melbourne, and Brisbane, amongst others. It is able to use its regulated, inflation-linked tolls to offer exceptional dividend stability to its investors. Transurban's dividends may not come with franking credits attached. Even so, with a yield of 4.51% at the last price, it still has plenty of passive income potential to offer investors today.
Our final dividend share is Lottery Corp Ltd (ASX: TLC). Lottery Corp has licenses to operate lotteries and Keno in most states and territories, many of which expire in decades' time. Given the historic and ongoing popularity of these pursuits, I view Lottery Corp as a reliable income stock you can hold in a portfolio indefinitely. This passive income stock last traded on a fully-franked dividend yield of 3.46%.
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