There are two ASX dividend shares that I’d happily own in my portfolio over the long-term for income.
It’s tricky to find options for good dividends at the moment. However, if investors can just go for businesses that have already proven themselves to be good dividend payers, then they should do well on the income side over the longer-term.
WAM Microcap Limited (ASX: WMI)
WAM Microcap is one of the leading listed investment companies (LICs) when it comes to dividends. It has been steadily growing its ordinary dividend whilst also paying a special dividend each year (which has also been growing).
LICs are useful as ASX dividend shares because they can provide a diversified portfolio and pay dividends from the profits that they make. WAM Microcap has been performing very well in this advantageous market. Since inception, the LIC’s portfolio return (before fees, expenses and so on) has been an average of more than 20% per year. That has been enough to keep paying good dividends and retain enough profit to keep growing the underlying portfolio value over time.
It looks for small businesses, typically with valuations of less than $300 million. This is the part of the market that can hold hidden gems or future stars of the ASX.
Excluding the special dividend, the WAM Microcap fully franked dividend yield is currently 3.85% based on FY21’s payments. There may be another good dividend increase in FY22.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP may be able to claim to be the king of the ASX dividend shares. It has increased its dividend every year for the past two decades, with no sign of that progress ending.
It has a large asset base in different industries including telecommunications, building products, property, resources, LICs, financial services, agriculture and swimming schools.
I expect that WHSP will be continuing to diversify its portfolio as time goes on, investing in areas that have good growth potential, but are still dependable – like retirement living.
The strong run of the WHSP share price has pushed down the starting dividend yield, however it’s not a terrible yield. The fully franked yield is now 1.7%.
Considering WHSP has already been going over 100 years, and combine that with its ever-changing portfolio, I think this ASX dividend share will be around for many decades to come.
