ASX dividend shares are among the most appealing investments Australians can buy because they can provide both passive income and capital growth.

In my opinion, the last couple of years have been a good time to invest in the stock market for income because higher interest rates have decreased asset prices and boosted the dividend yields of many of those stocks.

When a share price decreases, it increases the dividend yield. For example, if a business has a 6% dividend yield and then the share price falls 10%, the dividend yield becomes 6.6%.

But, the opposite effect may start happening when interest rates fall, which makes me believe that it could be better to buy ASX dividend shares in 2024 than wait for 2025. Let's take a look.

Why I'd pounce on ASX dividend shares now

Understandably, some investors may have been drawn to the safety of bonds and term deposits in the past year or two because they offer much higher interest rates. They could earn satisfactory returns from the least risky assets.

But, central banks are now starting to cut interest rates. Both the US Federal Reserve and Reserve Bank of New Zealand recently cut their interest rate by 50 basis points (0.50%).

In contrast, the Reserve Bank of Australia (RBA) doesn't appear close to cutting its own interest rate and has indicated that a cut in 2024 is unlikely.

However, if we wait until the RBA cuts rates to invest, share prices may have already adjusted higher, and it may be too late to grab that higher yield. Some investors seem to already be bidding up rate-sensitive yield plays.

For example, since August this year, the Charter Hall Long WALE REIT (ASX: CLW) share price has climbed 18%. This has already pushed down the diversified real estate investment trust's FY25 distribution yield to 6.2% based on a guided 25 cents per unit. On 6 August, the FY25 yield would have been 7.3%.

Interest rate cuts could also help boost the share prices of ASX dividend shares, as we're already seeing.

Which passive income stocks I'd look at

Going with the theme of interest rate-sensitive stocks, I believe certain ASX dividend shares could benefit from a boost in profitability, and investors may decide to pay a higher multiple for their earnings.

Some of the companies that appeal to me include KFC franchisee operator Collins Foods Ltd (ASX: CKF), furniture retailer Nick Scali Limited (ASX: NCK) (which recently expanded to the United Kingdom), and industrial property business Centuria Industrial REIT (ASX: CIP).

Also on my list would be building product and diversified asset business Brickworks Limited (ASX: BKW), youth apparel retailer Universal Store Holdings Ltd (ASX: UNI), sustainable underwear retailer Step One Clothing Ltd (ASX: STP) and investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

I think if I built an ASX dividend share portfolio with these companies, it'd deliver a solid, growing stream of passive income. And I'm hopeful of elevated capital growth when interest rates come down in 2025 and beyond.