ASX dividend shares can be a great source of income for investors, so I’m going to talk about two ideas for August.
Share markets have been going through significant movements over the past week. I like it when share prices decline because it means we can invest at cheaper prices and get a better dividend yield.
Taking into account the uncertainty of the economic picture, I’m going to choose two relatively sturdy ASX dividend shares as ideas.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP is one of the oldest businesses on the ASX, it’s well over 100 years old. It started as a pharmacy business and then branched out by taking stakes in a number of other businesses over the decades, gaining exposure to building products, resources and telecommunications.
Its portfolio now includes ASX shares like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Ltd (ASX: NHC), BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG) and so on.
It also has a non-ASX portfolio comprising swimming schools, credit/bonds, agricultural assets, other property assets, an investment bank and other private businesses.
The portfolio is designed to be able to beat the ASX share market, while taking on less risk. This can lead to outperformance in both boom times and leaner times.
Pleasingly, the ASX dividend share has grown its payout every year in a row for 24 years. It currently has a dividend yield of 3.8% including the franking credits. I believe this dividend can keep growing for the foreseeable future .
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a listed investment company (LIC), its job is to invest in other shares for shareholders. It’s run by Chris Mackay, one of the founders of the fund manager Magellan Financial Group Ltd (ASX: MFG).
Unsurprisingly, MFF focuses on international shares and has a portfolio full of strong, global names including Alphabet, Amazon, Mastercard, Visa, American Express, Bank of America, Meta Platforms and Microsoft.
While it’s weighted towards US businesses, it’s important to note that a lot of these businesses earn a significant portion of their revenue outside of the US, which is good diversification.
The ASX dividend share has grown its annual ordinary dividend every year since 2018.
MFF intends to increase the rate of its six-monthly dividend to $0.08 per share for the period ending 31 December 2024.
An annualised dividend of $0.16 per share translates into a dividend yield of 6.1% at the current MFF share price. It’s also trading at a discount of around 10% to its pre-tax net tangible assets (NTA). This means we can buy MFF’s assets for cheaper than they’re worth.
However, keep in mind that the upcoming US election could potentially cause some volatility, depending on what happens.
