The right ASX dividend shares can provide very rewarding cash flow for investors wanting passive income. Wouldn't it be great to get a dividend yield of more than 7% from some investments?
Some of the best bank savings accounts offer an interest rate of around 5%. So, receiving a dividend yield of greater than 7% could be music to the ears of income-seekers.
However, large dividends are not guaranteed. I'd only want to invest in ASX dividend shares that are expected to deliver passive income growth to investors for the foreseeable future. Below are two companies that could fit the bill.
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Adairs Ltd (ASX: ADH)
Adairs is an ASX retail share that sells homeware and furniture through three brands: Adairs, Mocka, and Focus on Furniture.
The last six months saw the Adairs share price rise more than 40% as the company's outlook improved. At the 2024 annual general meeting (AGM) in late October, the retailer revealed sales grew 4.8% in the first 16 weeks of FY25 compared to the same period in FY24.
The ASX dividend share benefited from successfully deploying a new warehouse management system and the 're-platforming' of its New Zealand Mocka website.
Another exciting development was that its group gross profit margin increased by 50 basis points (0.50%) year over year despite adverse foreign currency changes and higher import container rates. The combination of higher sales and a stronger gross profit may give the net profit a strong boost in FY25.
The company aims to extract further operational efficiencies in its national distribution centre, drive like-for-like sales and increase profitability. It's targeting the opening of six new Adairs stores and two Focus on Furniture stores in FY25.
Broker UBS predicts the Adairs dividend per share could rise to 15 cents in FY25, translating into a grossed-up dividend yield of 7.9% from the ASX dividend share, including franking credits.
GQG Partners Inc (ASX: GQG)
GQG is a funds management business based in the US (and listed on the ASX) that offers funds based on four main strategies: US, international, global, and emerging market shares.
As the chart below shows, the GQG share price dropped 25% between 11 November 2024 and today amid worries about GQG's investments in Adani.
However, the GQG funds under management (FUM) update for November 2024 showed an increase of US$0.1 billion in FUM over the month. It also revealed gross inflows of US$1.1 billion between 1 December and 6 December 2024, demonstrating the resilience of client money inflows despite the Adani difficulties.
Fund managers usually have an organic FUM tailwind because of the long-term capital growth of share markets. GQG just needs to do its best to ensure its inflows are larger than outflows.
The ASX dividend share is committed to paying 90% of its distributable earnings as a dividend to shareholders, leading to a pleasing dividend yield. Combine this with the hefty GQG share price decline, and you'll see why prospective investors are being offered a large yield.
According to the forecast on Commsec, at the current GQG share price, it's projected to pay a dividend yield of 10.4% in FY25.
