Higher interest rates give us the chance to buy ASX dividend shares with much-improved dividend yields. March looks like a good time to invest.
I’m always on the lookout to buy businesses that are at good prices. Jumping on a quality business that has seen a large dip in the share price is just the type of opportunity I’m looking for.
After recent share price movements, these are some of the names I’m looking at.
Rural Funds Group (ASX: RFF)
I think the Rural Funds share price is finally reflecting the higher interest rate environment. It’s down 30% from the start of 2022.
Higher interest rates do impact the rental profit because interest is one of the most important costs for a real estate investment trust (REIT). However, strong inflation is helping boost Rural Funds’ rental income as well.
I like that the ASX dividend share has a diversified farm property portfolio across a number of different categories including cattle, vineyards and almonds.
It aims to increase the distribution by 4% each year for investors, with the FY23 distribution amounting to a current yield of 5.6%.
I think the outlook is promising for this business as an income play, and the current Rural Funds share price gives it a useful margin of safety compared to the stated underlying value of the farms and water entitlements.
WCM Global Growth Ltd (ASX: WQG)
This is a listed investment company (LIC) that targets business with improving competitive advantages, a growing return on equity (ROE) and has a business-wide culture of wanting to improve those competitive advantages.
The portfolio changes over time, so I won’t focus too much on the names in there, but at the end of January some of the shares it owned included Amphenol, United Health, Visa, Thermo Fisher Scientific and LPL Financial.
I think this way of investing can lead to outperformance over the long-term, but the short-term underperformance means we can buy shares of the ASX dividend share at a 15% discount to its underlying net assets.
The board of WCM Global Growth have committed to a growing dividend.
It has a fully franked dividend yield of 5.6%, or 8% if we include the franking credits.
