These two ASX dividend shares in this article could be an excellent source of passive income in the coming years. I’m also hoping for capital growth.
Interest rates are starting to reduce in places like the US and Europe. Australia’s first rate cut doesn’t seem imminent, but I think a reduction in interest rates will make dividend-paying ASX shares even more appealing than they already are.
If I were buying passive income shares today, these two would be among my list of excellent contenders to consider.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
In an uncertain world where it’s unclear what inflation and interest rates are going to do next, I think WHSP shares are a wise investment.
The diversified nature of the investment house’s portfolio and its flexible mandate means it can invest almost anywhere to capture opportunities. It can pursue credit investments, property, ASX shares, private equity and other areas.
The ASX dividend share has been steadily growing its payout. In the recent FY24 result it grew its annual ordinary dividend by 9.2% to $0.95 per share. This represents a dividend yield of approximately 3.9% when including the franking credits.
It has managed to increase its annual dividend every year since 2000, while paying a dividend every year going back 120 years.
If there were one ASX share I’d rely on for my income needs, it’d be this one.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a listed investment company (LIC) that’s run by portfolio manager Chris Mackay, who also has an enormous amount of family funds tied up in the business.
It invests in global blue chip businesses, such as Alphabet, Amazon, Mastercard, Visa, American Express, Bank of America, Meta Platforms and Microsoft.
The business has been steadily growing its annual ordinary dividend since 2018. It intends to grow its half-yearly dividend payment to $0.08 per share for the period ending 31 December 2024. That translates into an annual dividend yield of almost 6% including franking credits.
I’m optimistic that the LIC’s long-term returns can continue, aside from any short-term volatility (including the US election).
On 20 September 2024, it had an underlying value (NTA) of $4.47. The current MFF share price is at a discount of around 13% to this, which I think is a good price to buy this ASX dividend share.
