If I were given $5,000 to invest into ASX dividend shares, I know where I’d want to invest it.
I think businesses on the stock market are a good way to generate higher levels of income than is possible with other asset classes.
These two ASX dividend shares are ones I’d happily buy for my portfolio:
WCM Global Growth Ltd (ASX: WQG)
This business is a listed investment company (LIC). Its job is to invest in other shares on behalf of the shareholders.
Its investment strategy is quite different compared to other investment managers.
WCM looks for businesses that have expanding economic moats. Meaning, a strengthening competitive position. It’s not necessarily about the actual size of the moat, just the direction.
Businesses that are improving will hopefully see accelerating profit and good returns.
The ASX dividend share is also looking for those businesses to have a culture that is working towards growing that moat.
The LIC pays a dividend. The current dividend is a fully franked yield of 2.5%. The board is looking to provide a progressive dividend.
The net portfolio returns have been strong. Over the three years to 31 May 2021, its net return per annum has been an average of 21.75%.
Brickworks Limited (ASX: BKW)
Brickworks continues to strengthen its proposition as an ASX dividend share.
A lot of investors know Brickworks for its quality building products businesses like Austral Bricks and Bristle Roofing.
But that’s not what pays for the dividend.
What gives me confidence about Brickworks is the other assets.
It has a very large shareholding of Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares. I think WHSP is a very strong ASX dividend share because of its defensive portfolio of assets and growing dividend that it pays to all of its shareholders, including Brickworks.
In my way of thinking about it, we can get a discounted exposure to WHSP shares because Brickworks is trading at a discount to its net assets despite the strong run of Brickworks shares recently.
Brickworks is also seeing its 50% stake of the industrial property trust continue to improve.
The business recently announced that the property trust saw a large revaluation profit within its joint venture industrial property trust. Brickworks’ share of this is expected to be around $100 million.
That valuation is expected to rise further when the two warehouses are completed for Amazon and Coles Group Ltd (ASX: COL).
Brickworks currently offers a fully franked dividend yield of around 2.5%.
