UPDATE: Investors seeking passive income should look beyond BHP Group Ltd (ASX: BHP) shares, which have surged over 20% in the past six months. As of today, analysts urge immediate action to consider alternative ASX dividend shares that promise higher yields.
The recent valuation rise for BHP means new investors will likely miss out on substantial dividends. With every 10% increase in share price, the dividend yield decreases by approximately 10%. For example, a 5% yield drops to 4.5% when the price climbs 10%. This critical shift highlights the urgency for investors to pivot to more appealing options for income generation.
Among the top alternatives is Universal Store Holdings Ltd (ASX: UNI), a retail powerhouse specializing in youth fashion. Despite its cyclical sector exposure, Universal Store has demonstrated a stable dividend growth since initiating payouts in 2021, contrasting sharply with BHP’s frequent annual cuts. In FY25, Universal Store increased its payout by 8% to 38.5 cents per share, achieving an impressive grossed-up yield of nearly 7%.
Looking ahead, Universal Store’s prospects appear bright. In its recent AGM update, the company reported a 13.7% year-over-year increase in direct-to-customer sales, with total sales up by 11.4% and Perfect Stranger sales soaring by 30.5%. The company plans to open between 11 and 17 new stores in FY26, potentially increasing the annual dividend to at least 40 cents, translating to a grossed-up yield of 7.1%.
Another strong contender is the WCM Quality Global Growth Fund (ASX: WCMQ), which targets a minimum annualized cash yield of at least 5%. This fund focuses on a select portfolio of high-quality global companies, aiming for consistent returns. Over the past decade, WCM has achieved an average annual return of nearly 16%, making it a compelling option for income-focused investors.
The portfolio includes major players like AppLovin, Taiwan Semiconductor, Siemens Energy, and Amazon, indicating a robust strategy for both dividend income and capital growth. This fund could be a key player for investors looking for steady returns.
As the market evolves, investors must act swiftly to capitalize on these opportunities. With BHP’s diminishing dividend appeal, exploring alternatives like Universal Store and WCM Quality Global Growth Fund could be the most prudent move for those seeking reliable passive income.
Next Steps: Investors are encouraged to reassess their portfolios immediately and consider these dividend shares for long-term income stability. With market conditions shifting rapidly, timely decisions could prove beneficial in securing financial growth.
For more insights, finance expert Scott Phillips has identified five stocks currently outperforming BHP, underscoring the need for investors to stay informed and proactive.
