In my mind, the most attractive ASX dividend shares are those that can provide a good level of passive income and long-term capital growth.
There's no guarantee the share market won't experience some bumps. But, over time, if a good company can grow its profits, that could encourage the market to pay more for those shares in future years. The rising profit can also fund larger dividend payments.
A high dividend yield isn't always a good sign, but I believe the below two ASX dividend shares can be good choices.
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Telstra Group Ltd (ASX: TLS)
Telstra is the country's leading telecommunications business with a strong market position. Its mobile network has the widest national coverage, reaching more population with its spectrum assets.
Telstra's mobile division is driving business performance. In FY24, handheld users grew 4.1%m while total mobile income increased 5% thanks to an increase in the average revenue per user (ARPU). This helped mobile operating profit (EBITDA) increase 9% to $5 billion.
The ASX dividend share continues to invest in its mobile network, which helps deliver the best customer service and maintain or grow its market position in Australia.
Telstra has been growing its annual dividend each year since 2022. Dividend growth is not guaranteed to continue, but the company is forecast to pay an annual dividend per share of 19 cents in FY26, according to Commsec. That would translate into a grossed-up dividend yield of 6.9%.
It's paying out most of its earnings to achieve this high dividend yield, but if the earnings can keep rising then I think it's a sustainable dividend payout ratio.
GQG Partners Inc (ASX: GQG)
GQG is a rapidly growing fund manager headquartered in the United States. It is also expanding into the United Kingdom, Canada, and Australia.
I think it's quite simple for fund managers to grow. They just need to deliver good capital growth/total investment returns with their funds, which will boost the funds under management (FUM) organically.
Attracting new money to manage from households and institutions can also help a fund manager grow FUM.
GQG's performance fees are low — its revenue comes from management fees, which are linked to the size of the FUM.
In the FY24 first-half result, GQG's average FUM rose 46.5% to US$139.5 billion, and net profit grew 56.4% to US$201.2 million. By the end of September 2024, its FUM had risen to US$161.6 billion.
I believe its investment strategies will help it continue to deliver returns for investors and attract new FUM.
Pleasingly, the ASX dividend share targets a high dividend payout ratio of 90%, creating a large dividend yield for shareholders.
The estimate on Commsec suggests it could pay an annual dividend per share of 21.6 cents in 2025, which translates into an appealing forward dividend yield of 8%.
