There are various blue-chip ASX dividend shares for investors to think about, such as Commonwealth of Bank (ASX: CBA). However, I think there are better candidates to consider. Here are two other options, but would Rio Tinto Limited (ASX: RIO) or Macquarie Group Ltd (ASX: MQG) shares be a better choice?
Rio Tinto is one of the largest ASX mining shares. It's one of the biggest miners in the world. It mines various minerals including iron, copper, and more.
Meantime, Macquarie is one of the largest ASX financial shares. It's an investment bank that runs a bank in Australia, has a global investment bank, an asset management division, and a commodities and global markets (CGM) segment.
Which ASX dividend share pays the biggest yield?
Rio Tinto is making solid earnings at the moment thanks to a pleasing iron ore price of around US$120 per tonne.
The Commsec forecast for earnings per share (EPS) from Rio Tinto is predicted to be $10.95 in FY23. The profit generated would allow Rio Tinto to pay an annual dividend per share of $7.44, which would represent a grossed-up dividend yield of 8.8%.
Macquarie is projected to pay an annual dividend per share of $6.78 in FY23 according to Commsec, after generating $12.91 of EPS. This would be a grossed-up dividend yield of 4.3%. The investment bank is still generating very strong profits despite the economic volatility over the last year or so.
In the short-term, Rio Tinto's yield is projected to be the higher of these two ASX dividend shares.
By FY25, Macquarie could grow its annual dividend per share to $7.20 and it might generate $13.20 of EPS. Macquarie is predicted to grow in the medium term. The FY25 grossed-up dividend yield could be 4.6%.
But, for Rio Tinto, the forecast is that EPS will decline to $9.79 and the dividend per share could drop to $6.35. This would be a grossed-up dividend yield of 6.5%.
In the longer term, the yields of the businesses could get much closer.
Which passive income option is better for growth?
I think Macquarie has proven that it's better at delivering consistent growth over time.
For Rio Tinto, the share price, profit, and dividend are heavily influenced by the resource price. Another element to remember is that Rio Tinto's mines aren't going to last forever. It does need to invest a lot to start new projects.
Macquarie has been re-investing in its business for the long term, which is useful considering it's expanding globally in a variety of financial sectors.
Over the past five years, the Macquarie share price has risen 70% and the Rio Tinto share price has gone up 50%. I think capital growth is an important part of being a good ASX dividend share.
While Macquarie may have a lower starting dividend yield, I think it's more likely to deliver stronger total returns and eventually, the ongoing growth of Macquarie's dividend could deliver a stronger yield. Macquarie would be the one I'd buy, though Rio Tinto could be appealing next time resource prices sink.
