Top 5 ASX dividend shares to watch in December 2025

How ASX dividend shares work (and what to look for)

ASX dividend stocks are shares in Australian companies that pay part of their profits back to shareholders as cash or additional shares. For many traders, they’re a way to earn regular income without selling their investments.

When you’re picking dividend stocks, there are three key things to check:

• Dividend yield – This is the annual dividend amount divided by the share price. For example, if a $10 stock pays $0.50 in dividends each year, its yield is 5%. Higher yields can look tempting, but they’re not always better.
• Dividend cover ratio – This shows how many times a company’s profit can pay for its dividend. A cover ratio of around 1.5x or higher is generally seen as sustainable.  Anything much lower means the company might be stretching to afford its payouts
• Company health – Even if the yield and cover ratio look good, check that the business has steady earnings, manageable debt and a track record of paying dividends consistently

If you keep these three points in mind, you can filter out weaker candidates before you invest.

Avoiding dividend traps

A ‘dividend trap’ happens when a stock’s yield looks unusually high because the share price has dropped, often due to problems in the business. New investors sometimes buy in for the income, only to see the dividend cut and the share price fall further.

To reduce the risk of falling into a trap:

• Check the trend in profits – If earnings are falling year after year, the dividend may be at risk
• Watch the debt levels – Companies with high debt may struggle to keep paying dividends during tough times
• Look at payout history – A long history of stable or growing dividends is a good sign; frequent cuts are a warning flag

In short: a high yield on paper doesn’t mean it’s a safe income stream. A balanced approach that combines reliable dividend payers with some higher-yield opportunities can help smooth out risk.

Top 5 ASX dividend shares to watch in December 2025

From MA Financial’s humble 2.07% dividend yield to WAM Capital’s respectable 8.73%, these five shares offer dividend income, backed by solid fundamentals.

Our selection criteria

• Dividend cover ratios above 1.5x for sustainability
• Spread across a number of Australia’s strongest sectors to reduce risk, including mining, industrial services, finance and transportation
• Recent financial performance supporting dividend payments – including growing share price values over the past six months
• Market capitalisations from A$507.75 million to A$24.12 billion

Overview of the shares in this article

Each of the stocks in this article can be share traded, and all except for MA Financial Group and WAM Capital can be traded via CFDs with IG Australia.

All figures are accurate as of 1 December 2025.

1. Lycopodium Limited (ASX: LYL)

Industry: Industrial services

Market cap: A$507.75 million¹

Dividend yield: 2.72%²

Dividend cover ratio: ~1.63x³

Lycopodium is an engineering, project-delivery and consultancy group best known for its work in the resources, infrastructure and industrial sectors. What makes the company stand out for share traders is its long track record of disciplined project execution and its reputation for delivering complex projects in remote or challenging environments. This has earned it a loyal global client base, particularly across minerals processing, where the business operates as a specialist rather than a generalist.

It’s often viewed as a relatively steady operator in a sector known for its volatility. While demand for engineering and construction services tends to move with the commodity cycle, Lycopodium has historically positioned itself with a diversified pipeline spread across minerals, energy and industrial clients.

Its ability to win repeat work from major producers helps smooth out softer periods in the cycle, and its project-management model prioritises efficiency and risk control rather than chasing rapid, high-margin growth.

Highlights:

• For dividend-focused share traders, stability of operations and prudent cost management are often seen as supportive factors, although dividends naturally fluctuate with project volumes
• External conditions such as commodity price weakness, project deferrals or geopolitical issues in the countries in which it operates can affect workloads

2. WAM Capital Limited (ASX: WAM)

Industry: Investments

Market cap: A$2.01 billion⁴

Dividend yield: 8.73%⁵

Dividend cover ratio: ~1.95x⁶

WAM Capital is one of the most recognised listed investment companies (LICs) in Australia. Managed by Wilson Asset Management, the business invests in a portfolio of small- to mid-cap Australian shares with the goal of generating both capital growth and income.

What appeals to many share traders is WAM’s structured investment process, which combines company research, active trading and a strong focus on identifying mispriced opportunities in the market.

One of its defining features is its regular dividend payments. While dividends can never be guaranteed, the LIC structure allows WAM to smooth distributions over time using profit reserves, which can help make income more predictable for share traders. This has been a core part of the company’s appeal as a listed vehicle.

Its performance can vary depending on market conditions, especially given its exposure to smaller companies. Periods of heightened volatility or falling sentiment towards growth or mid-cap names may affect the portfolio.

Highlights:

• WAM Capital has, at times, traded at a premium due to strong demand from income-oriented share traders. While this reflects confidence in the strategy, it’s also something that new investors commonly assess before buying shares
• Overall, the business suits share traders who want exposure to an actively managed equities portfolio with an income focus – and who understand the dynamics of LICs, including how premiums and discounts influence returns

3. Evolution Mining Limited (ASX: EVN)

Industry: Non-energy minerals

Market cap: A$24.12 billion⁷

Dividend yield: 1.68%⁸

Dividend cover ratio: ~1.75x⁹

Evolution Mining is a mid-tier gold producer with a portfolio of mines across Australia and other regions. It’s built its identity around operational discipline, a focus on margins rather than sheer production volume, and an ongoing programme of portfolio optimisation.

This approach positions the company between the high-risk, high-reward junior miners and the much larger, slower-moving global gold producers.

Gold companies naturally attract share traders looking for diversification and a potential hedge during periods of market or economic uncertainty. Evolution’s portfolio is structured with this in mind, prioritising assets that can deliver consistent output and manageable operating conditions.

Over the years, the company has refined its asset base, divesting non-core operations and reinvesting in projects that offer more predictable long-term performance.

From a share trader’s perspective, Evolution’s commitment to maintaining operational efficiency and focusing on costs is particularly important. The gold price can be volatile, so companies that operate with discipline are often viewed more favourably during downturns.

Highlights:

• While dividends depend on operating conditions and gold prices, the company aims to reward shareholders when margins are strong
• Risks include the usual factors associated with mining – cost pressures, fluctuating commodity prices, mine-life considerations and regulatory or environmental compliance
• Gold markets respond to macroeconomic trends, meaning investor sentiment can change rapidly

4. Aurizon Holdings Limited (ASX: AZJ)

Industry: Transportation

Market cap: A$6.27 billion¹⁰

Dividend yield: 4.39%¹¹

Dividend cover ratio: ~1.70x¹²

Aurizon is Australia’s largest rail-freight operator, best known for transporting coal, bulk commodities and general freight across the national network. It also manages and maintains significant rail infrastructure.

Because of the utility-like nature of its operations, it’s often viewed as a more stable business within the broader industrials sector, making it appealing to share traders seeking dependable cash flow and dividend potential.

A major reason income-focused share traders consider Aurizon is the relatively defensive profile of its core operations. Freight rail sits at the backbone of Australia’s export supply chain, and long-term haulage agreements help support revenue visibility. While coal volumes remain central to its network, the company continues to diversify into bulk transport, agriculture and other commodities to reduce concentration risk.

Aurizon is also focused on modernising its network, improving cost efficiency and selectively investing in new freight corridors. These operational upgrades are intended to support reliability and margin stability over time.

Highlights:

• The company is navigating the long-term transition toward lower-emission transport solutions
• Risks include regulatory changes, shifts in global commodity demand and the ongoing debate over coal’s long-term outlook. Extreme weather can also impact performance and reliability
• Aurizon’s relatively steady cash-generation profile, large customer contracts and long-operating history contribute to its appeal as a dividend-paying industrial

5. MA Financial Group Limited (ASX: MAF)

Industry: Finance

Market cap: A$1.80 billion¹³

Dividend yield: 2.07%¹⁴

Dividend cover ratio: ~1.50x¹⁵

MA Financial Group is a diversified financial services firm offering asset management, lending, advisory services and specialist investment products. The company has grown over the past decade by positioning itself as an agile alternative to traditional investment banks and wealth managers.

For share traders, MA Financial stands out because of its ability to benefit from multiple revenue streams, reducing reliance on any single part of the market.

The company’s broad base allows it to tailor products to different market conditions. When equity markets struggle, for example, private credit or real-asset strategies may outperform, helping smooth overall performance.

MA Financial’s lending and advisory divisions complement its asset-management arm.

Advisory revenue tends to be more cyclical, shaped by deal-making conditions, share trader sentiment and capital-market activity.

Asset management, meanwhile, focuses on building long-term client relationships, recurring fees and scalable investment platforms. This blend creates a business model that can adapt to both expansions and contractions in economic activity.

Highlights:

• The company frequently looks for niches and specialist opportunities where larger competitors may be slower to move. While this agility can create upside, it also introduces risks if new strategies take time to scale or encounter regulatory or market headwinds
• While dividend income can fluctuate based on performance and market cycles, the company aims to balance shareholder returns with reinvestment into new growth areas

How to trade ASX dividend shares with IG AU

CFDs

1. Open a CFD trading account with IG AU
2. Search for ASX dividend shares on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it

Share trading

1. Open a share trading account with IG AU
2. Search for ASX dividend shares
3. Choose the stock you want to buy
4. Determine how many shares you want to purchase
5. Place your order
6. Monitor your investment and collect any dividends

FAQs about dividend shares 

Footnotes

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