It could be a great time to consider ASX dividend shares to generate good investment income.
There has been a lot of market volatility and one of the advantages of that has been the decrease of share prices. A lower share price means that the dividend yield goes up, assuming the dividend yield isn’t cut.
With that in mind, I think these ASX dividend shares are going to be very useful income payers in the coming years:
Brickworks Limited (ASX: BKW)
Brickworks could claim to be one of the best ASX dividend shares around, at least in terms of reliability.
Its normal/ordinary dividend has been maintained every year since 1976. That means for four and a half decades, it has managed to provide income stability for investors.
The company is proud to be one of the few ASX 200 (ASX: XJO) shares that increased dividends to shareholders during the COVID-19 pandemic and have not needed to raise capital or receive government support payments.
Multiple divisions support the dividend. It is a leading building products business in Australia. It’s also the leading brickmaker in parts of the US.
For me, the crucial segments of the ASX dividend share are its Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and 50% share of the industrial property trust with Goodman Group (ASX: GMG).
WHSP is a diversified investment business that gives Brickworks increasing dividends and diversification. WHSP continues to invest in new sectors and businesses.
The industrial property trust is benefiting from the considerable increase in demand for well-located properties that provide distribution and/or logistics capabilities. COVID-19 has caused a significant surge in e-commerce, accelerating the demand for these industrial properties.
Including the franking credits, Brickworks has a dividend yield of 4%.
L1 Long Short Fund Ltd (ASX: LSF)
As the name suggests, L1 Long Short Fund invests in businesses it thinks will deliver growth and also shorts businesses as well.
The shorting strategy allows the L1 Long Short Fund to provide capital protection even when share markets drop. Its investment picks have meant the business has been able to deliver outperformance over the longer-term.
An example of that was in January 2022, the LSF portfolio delivered a net return of 2.8% even though the ASX 200 Accumulation Index fell 6.4%. That was outperformance of 9.1% in just one month.
Since inception in April 2018, the ASX dividend share’s net performance has been an average of 14.9% per year, outperforming the ASX 200 by 6.1% per annum.
Past performance is not a reliable indicator of future performance though.
With those investment returns, the LIC can pay a growing dividend. It recently more than doubled the interim dividend to $0.04 per share. If it pays an annual dividend of 8 cents per share, that would be a yield of 3.9% including the franking credits, which I expect will keep growing.
