In my opinion, ASX dividend shares are a great choice for income for investors.
In this period of very low interest rates, it’s very hard to find attractive income sources.
Plenty of the best savings accounts are now offering an interest rate of less than 1%.
The rental yields on residential property have been pushed lower after another strong run of property prices.
Quality government bonds are offering a low yield too.
ASX dividend shares seem like the only good option in my opinion.
There are several good reasons to like them:
Higher yield
As mentioned, there are plenty of options that actually offer an attractive yield.
There needs to be capital growth potential, and the current dividend yield needs to make sense. Meaning, the yield must be sustainable from its earnings over time.
I think some of the yields from businesses like APA Group (ASX: APA), Future Generation Investment Company Ltd (ASX: FGX) and WAM Microcap Limited (ASX: WMI) do make sense and that the dividends can keep rising.
If am income goal is an investor’s target, then these higher-yielding options can help achieve that goal with a smaller portfolio balance.
ASX dividend shares don’t take much time to manage
Once you’ve found a good dividend share, it doesn’t require much ongoing effort to manage them.
Dividend shares pay out every three or six months. And that’s it. No dealing with tenants, repairs or things like that.
The amount of information needed to report to the ATO is minimal, which is hopefully also available on the ATO’s pre-fill report.
If I’m focused on receiving dividends, then easy investing sounds good – it leaves more time for other things.
They can be very reliable
There are some options that have been consistently paying a dividend. Even growing it for several years (or more) in a row. A recession is when investors may need that income the most. That’s not when you want your dividend income disappearing.
The benefit of some ASX dividend shares is that their operations are very defensive, or perhaps a company has built up so much profit reserves that it can continue to pay growing dividends to investors.
I do think that APA, Future Generation and WAM Microcap are pretty reliable options. But I also really like others such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), MFF Capital Investments Ltd (ASX: MFF), Sonic Healthcare Ltd (ASX: SHL), Rural Funds Group (ASX: RFF) and Charter Hall Long WALE REIT (ASX: CLW).
