2 ASX shares with dividend yields above 9.5%

There are some ASX dividend shares with such a large dividend yield that they could deliver market-beating returns just with the passive income.

If we say that the share market’s long-term average annual return has been roughly 9% to 10%, then a double-digit dividend yield could be very compelling.

But, I wouldn’t just invest in any business with a high dividend yield. I’d want to ensure I had a high level of confidence that the payouts would continue to flow even if there was wider economic uncertainty.

With that in mind, I think the two stocks below fit the bill.

Hearts and Minds Investments Ltd (ASX: HM1)

This business is a listed investment company (LIC) that aims to provide investment returns and also provide financial contributions equivalent to 1.5% of its net assets per year to leading Australian medical research organisations to fund the development of new medicines and treatments, driving a new generation of medical research in Australia.

The portfolio is picked by a variety of investment professionals who all work for free to make picks for the portfolio. A majority of the portfolio is chosen by a permanent group of fund managers, while a minority of the picks are chosen at an annual investment conference.

It’s a portfolio of best picks, which aim to produce good returns. Over the three years to June 2026, its portfolio produced an average return per year of 13.8%, which is a strong enough return to deliver very good returns.

The business is steadily increasing its payout by 0.5 cents every six months. That suggests the next two dividends to be paid could come to 20.5 cents for the year ahead. That would be a grossed-up dividend yield of 9.6%, including franking credits, at the time of writing.

WAM Microcap Ltd (ASX: WMI)

WAM Microcap is another LIC, it targets small-caps on the ASX. This is an effective strategy because of how small-caps may have a lot of growth ahead of them while also being undervalued for that growth.

The business owns dozens of the most attractive small ASX shares out of the hundreds it could choose from.

By generating such good returns over the long-term, the business is able to fund pleasing dividend payouts. Its portfolio has returned an average of 13.1% per year since June 2017 (excluding fees, other expenses and taxes).

Excluding special dividends, its annual payout has increased every year since it started paying dividends in 2018, aside from FY24 when it maintained the payout.

Its annual dividend per share of 10.7 cents for FY26, which translates into a grossed-up dividend yield of 10.6%, including franking credits, at the time of writing.