Looking for top dividend shares for 2020 and beyond? The four I mention in this article could be the top picks.
The banks of CBA (ASX: CBA), ANZ (ASX: ANZ), NAB (ASX: NAB) and Westpac (ASX: WBC) seem on course to cut their dividends to shareholders. It’s hard to say whether those dividend cuts will be closer to 20% or at least 50%, but they are coming.
If banks aren’t solid dividend shares any more, what is?
What is a dividend?
What are some dividend alternatives?
WHSP (ASX: SOL)
Assuming another dividend increase later this year, WHSP has a dividend yield of 4.5% (including franking credits).
WHSP is an investment house that was established over a century ago. It has a very impressive dividend history. According to WHSP, it has paid a dividend every year since it started. Plus, it has increased its dividend each year starting from 2000. Apparently only Ramsay Health Care (ASX: RHC) can match that record.
The investment house has such a reliable dividend because it’s invested in lots of different listed and unlisted businesses like telecommunications, resources, pharmacies, building products and many more.
WHSP pays its dividend from the investment income it receives (less cash expenses) and it reinvests some of the retained money for more growth.
Growing the dividend is one of the main aims as well as investing in uncorrelated assets.
Brickworks (ASX: BKW)
Brickworks just increased its interim dividend by 5%, right now it has a dividend yield of 6.4% (including franking credits).
How good is the dividend record? I think it’s very good. Its normal dividend has been maintained or increased since 1976. That record is (comfortably) older than me!
It’s a building products business. It’s actually the largest brickmaker in Australia but it also offers other products like roofing and cement.
Australia is a good country to be a building products business in with how much construction there usually is. It has also grown into the United States after buying a few brickmakers there.
But whilst COVID-19 is going on, Brickworks can fall back on its other assets. It actually owns a large chunk of WHSP shares and it also owns half of an industrial property trust in conjunction with Goodman Group (ASX: GMG).
Wesfarmers (ASX: WES)
It has a dividend yield of 5.7% (including franking credits).
Wesfarmers could be the best large blue chip dividend share right now. Banks are struggling and the best that Telstra can hope for is its customer base to keep paying their bill.
The old company owns a number of different businesses including Bunnings, Officeworks, Kmart, Target, Catch and so on.
I’m not sure how Kmart or Target will be going, but the other retail businesses are supposedly doing pretty well. Officeworks was the perfect business to cater for the huge demand of workers who needed home office equipment to work at home. Catch’s whole business model is selling stuff online, which is obviously in higher demand.
And Bunnings, the key profit centre for Wesfarmers, is apparently doing a roaring trade because lots of people are doing DIY projects whilst they’re stuck inside.
It has a great chance of maintaining, or even growing, the dividend during COVID-19.
Magellan Global Trust (ASX: MGG)
Magellan Global Trust targets a 4% distribution yield.
It’s a listed investment trust (LIT). That means it invests in shares on your behalf. This particular LIT is run by the excellent fund manager Magellan (ASX: MFG) which specialises in looking at international shares.
Some of the shares that are best placed to get through the lockdowns are shares like Microsoft, Alphabet/Google, Alibaba, Visa and Mastercard. These are exactly the shares that Magellan Global Trust owns which have strong economic moats.
You don’t necessarily need to invest in risky industries (like travel) to make good returns over the next few years.
But perhaps total returns is your main concern. In that case, these tech shares could be the best ideas:
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Disclosure: at the time of publishing, Jaz owns shares of WHSP and Magellan Global Trust at the time of writing, but this could change at any time.
