I love the idea of buying quality ASX dividend shares. The good ones can provide reliable income and solid capital growth over time.
There aren’t too many ASX dividend shares that I’m willing to buy for my own portfolio.
But I think these two are amazing:
Washington H Soul Pattinson and Co Ltd (ASX: SOL)
WHSP has a claim of being the dividend king of the ASX.
It has a very impressive annual dividend growth streak stretching back over two decades. That’s the longest streak on the ASX.
How has it managed this?
It keeps growing the dividend by having a long-term focused portfolio of assets like shares, private equity and property.
Big drivers of value for WHSP over the last decade have been Brickworks Limited (ASX: BKW) and TPG Telecom Ltd (ASX: TPG).
However, the company recently bought the old listed investment company (LIC) Milton which gives WHSP much more financial firepower to go after more opportunities as it sells down some of those blue chips.
Some of the areas it’s looking for opportunities are education, health and ageing, global shares, agriculture, the energy transition and financial services.
Whilst this ASX dividend share isn’t going to shoot the lights out, I think it can offer investors solid long-term performance whilst steadily growing the dividend.
I reckon that WHSP is going to pay a dividend of $0.64 per share in FY22. That translates into a dividend yield of 3.5% when including the franking credits.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is one of the best LICs in my opinion.
It has all of the qualities that I like to look for in a LIC – reasonable management costs, solid long-term net returns, a growing dividend, a sgood portfolio and it’s good value.
MFF Capital has a relatively low fixed cost, which means the cost gets smaller in percentage terms as the LIC gets bigger.
The ASX dividend is steadily working towards having a half-yearly dividend of 5 cents per share. An annual payout of 10 cents per share turns into a dividend yield of 5.4% including the franking credits.
The portfolio is full of global blue chips with solid growth potential. Examples include Visa, Mastercard, Amazon, Home Depot, Microsoft and many more.
A LIC’s share price can sometimes trade at a discount to its underlying value (the net tangible assets (NTA) per share) and sometimes it can trade at a premium.
Wouldn’t it be cool to be able to buy $1 of shares of $0.90? That would be a NTA discount of 10% in the LIC world.
At the time of writing, the MFF Capital share price is $2.64. The latest NTA update from MFF Capital shows the pre-tax NTA was $3.207 at the end of February 2022. That’s a really attractive discount of around 18%, which is the probably the biggest discount I’ve seen after following MFF Capital for a few years.
