There are a handful of ASX dividend shares that I’d be willing to buy for my grandparents.
You’re not going to see me say that names like Westpac Banking Corp (ASX: WBC) or Telstra Corporation Ltd (ASX: TLS) are good options for income. The last five years have seen profit and dividends from those two have gone backwards. That’s not good if you are relying on the dividends.
I think there are a few names that offer a good level of yield, growth and reliability:
Future Generation Investment Company Ltd (ASX: FGX)
In my opinion, listed investment companies (LICs) are an effective way to receive more income from a portfolio of shares because the boards of the LICs have the flexibility to decide the dividend payments. Exchange-traded funds (ETFs) have to just pass through the income they receive. LICs can pay higher yields.
Future Generation Investment Company is a particularly diverse LIC because it doesn’t invest in individual ASX shares, it actually invests in the funds of fund managers. This means it’s invested across plenty of portfolios of shares. The underlying representation of ASX shares probably goes to hundreds of different shares. It ticks the diversification box. And it only invests in good Aussie managers. The portfolio has outperformed the ASX since it started in September 2014.
Those fund managers work pro bono, for free, so that Future Generation can donate 1% of its net assets each year to youth charities.
The LIC has actually grown its dividend for several years in a row, including through 2020, making it one of the more reliable ASX dividend shares around.
As for the yield, it has a fully franked dividend yield of 4%.
Brickworks Limited (ASX: BKW)
Brickworks is another really reliable income option. It hasn’t actually cut its dividend for more than 40 years. That’s quite amazing for a building products business, considering how volatile the industry can be.
It does have plenty of good building product divisions. But, over the decades, it has been the investment in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) that has paid dividends for Brickworks. The investment house has a diverse portfolio spread across different sectors like telecommunications, property, resources, agriculture and financial services. WHSP has been growing for a very long time, paying Brickworks bigger dividends as it goes. WHSP itself is a really good ASX dividend share.
Brickworks also has a high quality property trust which gives exposure to industrial properties, which are in even higher demand in this COVID-19 world. The property trust, which is building on excess Brickworks land, has enough land for several years of more development. When it finishes building properties for both Amazon and Coles Group Ltd (ASX: COL), it should add a lot more rental income each year, which can be paid out or re-invested.
Brickworks has a fully franked dividend yield of 2.9%.
