I’m of fan of ASX dividend shares as a way to boost your income in February 2021.
These record low interest rates have pushed up asset prices and made it really hard to make decent money from having cash in the bank.
Over the long run, I believe that ASX dividend shares are the best way to make good income. That’s why I’m a fan of these dividend payers:
Brickworks Limited (ASX: BKW)
I think that Brickworks is one of the safest businesses when it comes to dividends. Don’t get me wrong, a building products business isn’t going to provide consistent earnings. Just look at what happened to the Boral Limited (ASX: BLD) dividend in 2020.
In my opinion, Brickworks is a high quality building products business. Its management are very focused, it’s investing to stay at the top of the industry and it’s expanding its product ranges.
However, what excites me about Brickworks as an ASX dividend share is that it doesn’t even need any profit from the building product division to keep paying a solid dividend. Investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which itself is a great dividend stock, has been a cashflow stalwart for Brickworks for many years. The investment house has a defensive, reliable portfolio that pays dividend up to WHSP which can then pay its growing dividend to Brickworks.
Brickworks also has a 50% stake of a high quality industrial property trust. Those big metal sheds are very important in today’s e-commerce economy. Amazon is actually going to be a paying tenant by the end of 2021, which will significantly improve the rental profit for the trust which will be distributed to Brickworks each year.
Brickworks doesn’t have a huge dividend yield, but it’s enough to start with – it’s a fully franked yield of 3.2%.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is one the most attractive listed investment companies (LICs) in my opinion. One of the advantages of LICs compared to index-based ETFs is that they can create their own portfolios and decide on their own levels of dividends.
This LIC has a pretty low operating cost, as a percentage of assets, compared to other most other actively managed LICs. Most of MFF Capital’s costs are fixed, so the cost percentage will reduce even more as it grows in size.
Over the past decade, MFF Capital’s returns have been among the best on the ASX by focusing on quality large US shares like Visa, Mastercard and Microsoft. Those businesses, particularly the payment giants, are still among the biggest positions.
The MFF board have a medium term goal of reaching half-yearly dividends of 5 cents per share, equating to a 10 cents per share annual dividend. That means that the dividend yield will be a fully franked yield of 4% in the next couple of years.
There are other ASX dividend shares that I’ve also go my eyes on such as Magellan Financial Group Ltd (ASX: MFG) and Wesfarmers Ltd (ASX: WES).