If I had $4,000 to invest into ASX dividend shares then I know where I’d want to put it.
I always think it’s a good time to invest in shares, but after a strong 12 months of performance I believe that investors need to be a bit more selective about which ASX shares they’re going for.
In the current situation with the ASX share market and potential interest rates changes, these are two ASX income stocks I’d be happy to buy next week:
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital has been one of the best listed investment companies (LIC) over the last decade in my opinion.
The average annual total shareholder return (TSR) over the last 10 years has been 17.2% according to CMC. Past performance is no guarantee of future performance, but I think it shows the ability of MFF Capital’s stock picking. Current top holdings include Visa, Mastercard and Amazon. It has a global portfolio of US, European and Asian shares.
That return also has been partially possible thanks to the fee structure. The ASX dividend share’s management costs are now low and fixed, meaning the cost as a percentage of assets gets smaller as the LIC becomes larger. It also doesn’t have outperformance fees like most fund managers charge.
Chris Mackay, the fund manager, is very aligned with shareholders because he owns around $230 million worth of MFF shares.
In terms of the dividend, the board has said that by July 2023 it wants to be paying a 5 cents per share six-monthly dividend. That would translate to a fully franked dividend yield of 3.7%.
Evolution Mining Ltd (ASX: EVN)
I’m not normally a fan of investing in commodity businesses for income. But gold is an interesting one. For some reason, investors decide that gold should typically rise when other asset values decline. That can help gold miners as the commodity prices rise.
There’s also a looming threat of inflation, which may also be a benefit for the gold price.
Don’t get me wrong. Over the long term, a gold bar isn’t likely to do well compared to the share market. It doesn’t generate any profit, it just sits there being shiny. There’s no compounding or re-investment.
However, a gold mining ASX dividend share could be useful in a diversification strategy, particularly if it’s a solid dividend payer.
We don’t know what the annual FY21 dividend will be, but Evolution Mining has increased its dividend each year between 2016 and 2020. That’s an attractive dividend profile.
Compared to other gold miners, Evolution Mining is based in two of the most reliable countries for gold mining – Canada and, predominately, Australia.
Based on the last 12 months of dividends, Evolution Mining has a fully franked dividend yield of 3.3%.
There are also some other ASX dividend shares that I often write about that I’m interested in and regularly invest in.
