ASX 200 (ASX: XJO) dividend shares can be a really good place to find income for your portfolio.
I’m not talking about those huge blue chips like Telstra Corporation Ltd (ASX: TLS) or National Australia Bank Ltd (ASX: NAB). I think there are ideas with more growth potential, a decent yield and are more defensive.
If I were looking for income from ASX 200 shares, these two would be high on my watchlist:
Collins Foods Ltd (ASX: CKF)
Fast food has been part of our lives for decades and I don’t think that’s going to change. Collins Foods is a very large franchisee business of KFCs in Australia and Europe.
The business continues to generate double digit profit growth, which is funding pleasing levels of dividend growth.
Collins Foods has been investing in its digital experience for customers – half-year online sales accounted for over 12% of total sales. The business is on track to open nine to 12 new KFC restaurants in FY21. It’s currently finalising an extension of its development agreement to build a minimum of 66 new restaurants in Australia by 2028.
Europe is obviously a much bigger potential market for the ASX 200 dividend share, which gives the business a long growth runway. It’s aiming to open at least three to four new locations each year. Collins Foods can make a lot of acquisitions here too.
It’s also steadily expanding a Taco Bell network in Australia which has a long growth runway. It’s looking to reach scale in South East Queensland and Melbourne.
In the first six months of FY21, Collins Foods grew underlying net profit after tax (NPAT) by 15.1% to $27.5 million and the dividend went up 10.5%. Collins Foods has a fully franked dividend yield of 1.9%.
Brickworks Limited (ASX: BKW)
Brickworks is another really good ASX 200 dividend share. I think it’s one of the most stable and reliable businesses around. It has been operating for decades and its dividend hasn’t been cut for over four decades. What a great record!
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a key part of the picture. Brickworks owns a big chunk of WHSP shares. WHSP owns a stake in many other businesses like TPG Telecom Ltd (ASX: TPG), Brickworks itself, New Hope Corporation Limited (ASX: NHC), Clover Corporation Limited (ASX: CLV), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and so on.
WHSP has been a source of reliable dividends and cashflow for Brickworks for many years. I think it could continue for many more years with WHSP’s long term focus.
Brickworks also has a joint venture with Goodman Group (ASX: GMG) for building industrial properties on land that Brickworks no longer needs. The properties are generating steadily-growing rental income for Brickworks and also increasing in value. It has a really good pipeline of projects, which can help grow the dividend for years to come.
Brickworks has a fully franked dividend yield of 2.9%.
I think the above two ASX 200 income ideas are two of the most promising ASX dividend shares to own for the next few years.
