Some ASX shares are known for having large dividend yields, which could appeal to Aussies focused on passive income.
There are more stocks than just the names like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Westpac Banking Corp (ASX: WBC) to consider.
Businesses smaller than the ones I just mentioned are also capable of producing large dividend yields and providing investors with diversification beyond ASX mining shares and ASX bank shares.
Both of the stocks listed below have seen their share prices decline in the last few years, so this could be an opportunistic time to consider them.
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APA Group (ASX: APA)
The APA share price has dropped by approximately 40% since August 2022, which is a significant decline for a relatively defensive business.
APA owns and invests in various energy-related assets, including a vast national gas pipeline network, gas energy generation, gas transmission, gas storage, and gas processing. It also has electricity transmission assets, solar farms, and wind farms.
Impressively, the business has grown its distribution every year since 2004, one of the longest-running consecutive growth streaks on the ASX. It's expecting to grow its distribution by 1.8% in FY25 to 57 cents per security. That translates into a distribution yield of 7.9% at the current APA share price.
The ASX dividend share regularly invests in new assets to help grow its energy portfolio and unlock new cash flow. I liked the business' move to buy Basslink, an energy interconnector that can transport energy between Tasmania and Victoria (and the rest of the mainland).
In my opinion, gas is likely to be an important part of the energy mix for the next few decades, so APA's assets should be important for a long time to come.
Metcash Ltd (ASX: MTS)
This business is also much cheaper than it used to be. The Metcash share price is down 34% from April 2022.
Metcash is a diversified business that has three segments: food, liquor and hardware.
With the food division, it supplies IGA supermarkets around Australia.
It supplies a wide range of independent liquor retailers, including Cellarbrations, The Bottle-O, IGA Liquor, Porters and Thirsty Camel.
The hardware division owns a variety of hardware businesses, including Total Tools, Alpine Truss, Bianco Construction Supplies, Home Hardware and Mitre 10.
Sadly, the hardware division is suffering from the high interest rate environment and the reduced level of construction/renovation activity. But I'm excited about the company's potential to benefit from an eventual rebound when interest rates fall and 'normal' hardware demand returns.
However, the ASX dividend share's food division continues to make solid profits during this period, which helps support profit generation.
Metcash is aiming to maintain a dividend payout ratio of 70% of underlying net profit after tax (NPAT), which results in a solid dividend yield.
According to Commsec, the business is projected to pay a dividend of 17 cents per share in FY25, which would translate into a grossed-up (including franking credits) dividend yield of 7.7%.
