There aren't that many ASX dividend shares that pay large dividends and could keep growing in the long term.
I really like looking at ASX resource shares for potential income because of how low their price-to-earnings (p/e) ratios normally are. However, I'd only want to go for particular ASX resource shares when the commodity price is low. And there's certainly no guarantee that the dividend wouldn't halve in the following year.
But, while there may be some uncertainty in the market at the moment, the following ASX dividend shares are expected to pay big dividends in FY23 and beyond. I'd happily invest $5,000 in each of the following businesses for dividend income.
Shaver Shop Group Ltd (ASX: SSG)
This business is a growing retailer of grooming and other high-performance beauty products.
Let's look at the expected dividend yield. Broker Ord Minnett suggests that Shaver Shop could pay a grossed-up dividend yield of 14% in FY23 and 14.6% in FY24.
Retailers typically trade on low multiples of their earnings, meaning the dividend yield can be pretty high.
Shaver Shop says that the Australia and New Zealand beauty market could grow from around $10 billion to approximately $12 billion by 2026. This could be a useful tailwind for earnings over the next few years.
Charter Hall Long WALE REIT (ASX: CLW)
This real estate investment trust (REIT) owns a diversified portfolio of properties. They are all signed onto long-term leases, providing good visibility for rental income and profitability.
It has tenants like Endeavour Group Ltd (ASX: EDV), Australian government entities, Telstra Group Ltd (ASX: TLS), BP (LON: BP), Inghams Group Ltd (ASX: ING) and Coles Group Ltd (ASX: COL).
The business is expecting to pay a distribution per unit of 28 cents per share in FY23. This translates into a forward distribution yield of 6.2%.
Aside from the changes in interest rates, I think this is a fairly defensive ASX dividend share option.
Pacific Current Group Ltd (ASX: PAC)
Pacific Current describes itself as a business that partners with "the best asset managers across the world who bring differentiated market perspectives and investment approaches" and builds an economic partnership with them.
Some of the names in the portfolio include GQG Partners Inc (ASX: GQG), Victory Park Capital, Carlisle Management, Astarte Capital Partners, and Banner Oak.
A rebound of investment markets could be a very useful tailwind for the underlying funds under management (FUM), earnings and the dividend. Despite all the volatility, aggregate FUM grew 1.1% in the three months to September 2022. Excluding GQG, aggregate FUM grew in the quarter by 3.4% for US-dollar-denominated fund managers and 7% for the Aussie-dollar-denominated fund manager.
Ord Minnett is expecting the ASX dividend share to pay a grossed-up dividend yield of 7.4% in FY23 and 8.25% in FY24.
Nick Scali Limited (ASX: NCK)
Nick Scali is one of the largest retailers of furniture across Australia and New Zealand. While that may not be the most defensive industry, people are still buying large volumes. Indeed, a recent trading update showed year-over-year growth.
While the ASX dividend share may not see a lot of growth in the next 12 months, the company is planning to open more stores, grow its highly profitable online sales and benefit from scale advantages (particularly with the Plush acquisition).
According to the broker Citi, Nick Scali could pay a grossed-up dividend yield of 11.6% in FY23 and 9.5% in FY24.
Foolish takeaway
These four businesses have an average dividend yield of 9.8% for FY23. So, with $20,000. That would create annual dividend income of $1,960.
I think Shaver Shop and Pacific Current could be two of the underrated ASX dividend shares at the moment.
