ASX dividend shares could be the answer to boost income in this low interest rate world.
However, I’d want to make sure that I bought investments that would genuinely help boost my income, so I’d want a good yield.
But, I’d also want to find businesses that are able to offer a pretty high level of reliability. Though keep in mind that nothing is certain on the ASX share market.
With that in mind, these are two ASX dividend shares I’d buy:
APA Group (ASX: APA)
I am somewhat surprised by the weakness in APA shares considering the yield it offers and that so many investors are looking to boost their income.
APA has provided distribution guidance for FY22 of $0.53 per share. That puts the ASX dividend share’s yield at 6% for this financial year.
But it’s not just the yield that is attractive about this business. It has grown its distribution in every year over the last decade and a half. I believe it’s the second best growth streak record behind Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
How is it so reliable? It pays the distributions from its cashflow. That cashflow has grown thanks to its portfolio of energy assets including its huge gas pipelines around Australia. This business delivers half of the country’s natural gas usage.
It has a number of investment projects in the gas and non-gas space which will hopefully increase cashflow further.
The ASX dividend share also sees huge investment opportunities in the green energy space across Australia and the US. Its pipelines could be converted to hydrogen transportation, and there are huge opportunities in green energy generation and electricity transmission.
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is a special listed investment company (LIC). The job of LIC is to invest in other assets to try to make a return for shareholders.
But this LIC is quite different to most others. Instead of investing in individual shares, the ASX dividend share invests in the funds of other fund managers that invest in ASX shares.
It usually has between 15 to 20 investments in different funds. When you think about the fact that each of those funds is a portfolio of shares, the underlying Future Generation portfolio is very diversified.
LICs can pay dividends from the investment returns that they make. Future Generation has performed soundly since it started.
Compared to the S&P/ASX All Ordinaries Accumulation Index, since inception in September 2014 it has outperformed its benchmark by an average of 2.5% per year.
But all of these fund managers don’t charge any fees to Future Generation. They all work for free, no management fees and no performance fees. Why? So that Future Generation can donate 1% of its net assets per year to youth charities.
Future Generation currently offers a fully franked dividend yield of 4.25%. Including the franking credits, that’s a yield of 6.1%.
The Future Generation share price is also at a discount to the August underlying value of $1.54 (the net tangible assets (NTA)) at the moment.
