ASX dividend shares with high dividend yields can be absolute winners, but wise investors also know that some can be yield traps.
A yield trap describes a stock that may appear to offer a good yield, but the next payout could be cut, reducing the company's attractiveness.
For me, it's important to look ahead to what the future dividends could be rather than the past.
So, with that in mind, below are two ASX dividend shares that I'd buy for their current valuations and high yields.
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop currently has 125 stores across Australia and New Zealand. It aims to be the market leader in everything related to hair removal. That means it sells electric shavers, clippers, trimmers, and wet shave items. It also sells various products across oral care, hair care, massage, air treatment, and beauty categories.
Its scale and presence in the personal grooming segment means it can negotiate exclusive products with suppliers.
The company recently provided a trading update. Despite difficult trading conditions, Shaver Shop achieved a flat gross profit in the first four months of FY25, with slightly lower sales and an improvement in the gross profit margin.
Management believes that the strategy of securing more exclusive products with premium brands, such as Skull Shaver and the launch of Transform U, will help support gross profit margin expansion in the medium term.
In FY24, it paid an annual dividend per share, the same as in FY23. At the current Shaver Shop share price, it offers a grossed-up (including franking credits) dividend yield of 11%.
I think Shaver Shop has fairly defensive earnings for a retailer and could continue growing in the long term if it can increase its store count and online sales while benefiting from the growing population in Australia and New Zealand.
Woodside Energy Group Ltd (ASX: WDS)
Woodside is not usually an ASX dividend share I like to write about. ASX energy shares are not known for defensive earnings, and they can't typically grow earnings strongly year after year. Energy prices are unpredictable and prone to declines when demand falls.
However, I do believe that cyclical stocks like Woodside can be opportunities when they experience declines. The Woodside share price is down more than 23% this year and more than 37% since 15 September 2023.
In the 2024 third quarter update, Woodside noted that in 2024 to date, its average realised price was US$63 per barrel of oil equivalent (BOE), down 9% year over year. However, pleasingly, in the third quarter, its average realised price was US$65 per BOE, up 5% quarter over quarter and up 8% year over year.
If the energy price keeps slowly but surely rising, this would be a real positive for Woodside. The ASX dividend share is also investing in several projects, including Woodside Louisiana LNG, Scarborough, and the Trion projects, which can unlock further cash flow in the future.
According to the projection on Commsec, the Woodside grossed-up dividend yield could be 11.7% in FY25.
