Overinvested in ANZ shares? Here are two alternative ASX passive income options

These investments could add pleasing dividend diversification.

| More on:
Man holding out $50 and $100 notes in his hands, symbolising ex dividend.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Owning ANZ Group Holdings Ltd (ASX: ANZ) shares normally comes with a pleasing flow of passive income. However, the ASX bank share isn't the only option for dividends.

The ASX is quite heavily weighted towards ASX mining shares and banks, so getting exposure to different industries and geographies could be a good move for Aussies focused on the domestic economy.

With many banks competing for the same borrowers and savers, profit margins have been pushed down. The high RBA interest rate is leading to some borrowers getting into arrears, which could challenge profitability and may hurt ANZ's profit and dividend growth.

Considering these difficulties, I think it could be a good idea to diversify if an investor's portfolio is too heavily focused on an ASX bank share like ANZ.

Telstra Group Ltd (ASX: TLS)

In my eyes, Telstra is the leading telecommunications business in Australia, with the most subscribers, the best collection of spectrum assets and the widest network coverage.

The business has been steadily growing its annual dividend per share over the last few years. In FY24, it grew its dividend by 6% to 18 cents per share, which is a grossed-up (including franking credits) dividend yield of 6.6%.

I like the idea of owning Telstra shares for passive income because of its stronger market position (compared to ANZ's loan market position), its ability to increase prices for customers without losing market share, its operating leverage, and its defensive dividend.

If I had to choose an ASX blue-chip share from Telstra and ANZ shares, I'd choose Telstra.

SPDR S&P Global Dividend ETF (ASX: WDIV)

What's better than owning one dividend stock? How about owning a whole portfolio of attractive dividend payers?

As the name suggests, this exchange-traded fund (ETF) is about investing in various stocks from across the world with good dividends.

The businesses within this fund have increased their dividend every year for at least the last ten years. They also need to have a relatively high dividend yield. When you combine those two elements, it's a powerful combination for investors focused on passive income.

The biggest positions in the portfolio are currently AltriaHighwoodsSolvay, and Capital Power. The portfolio has 94 holdings, which is a pleasing level of diversification.

According to State Street Global Advisors, the portfolio of businesses is collectively expected to grow earnings per share (EPS) by 6.4% over the next three to five years.

The WDIV ETF currently has a dividend yield of 5.1%, and since its inception in November 2023, it has delivered an average fund distribution return per year of 5.2%.

I'm not expecting much capital growth from this fund, but it does offer very different exposure to ANZ shares.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

An older executive man dressed in suit trousers and a white shirt sits against a wall smiling with cash rains down over him representing dividend shares like BHP, FMG and Newcrest paying dividends in retirement
How to invest

How you can earn $10,000 a year in passive income from a $10k ASX 200 investment today!

Looking to boost your retirement with an extra $10,000 a year in passive income. Read on...

Read more »

A smiling woman holds a Facebook like sign above her head.
Dividend Investing

Bell Potter names the best ASX dividend shares to buy in June

Bell Potter thinks these are among the best shares for income investors to buy right now.

Read more »

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
Dividend Investing

With a 5% dividend yield, why I think this leading ASX share is a buy

I think this business offers pleasing income with potential capital gains too.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

3 top ASX dividend shares for income investors to buy

Analysts have good things to say about these income options.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

Why this is one of my top ASX dividend shares to buy in June

This ASX dividend share provides everything I’m looking for.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Forget Westpac and buy these ASX dividend shares

Let's see what analysts are saying about these income options.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Brokers say Harvey Norman and these ASX dividend stocks are buys

Let's see what brokers are recommending as buys for income investors.

Read more »