2 ASX shares that pay you to own them

Earn money from Washington H. Soul Pattinson and Co. Ltd (ASX:SOL) and Retail Food Group Limited (ASX:RFG) without lifting a finger.

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There’s something about getting paid for work that someone else does that should excite any investor. By buying shares in high-quality businesses that pay dividends, investors can typically watch as the cash rolls into their brokerage accounts every six months, boosting their income whilst barely lifting a finger.

For investors who want a piece of the action, here are two ASX-listed shares that pay rather generous dividends, and could be great to buy and hold over the coming years.

The closest thing to Berkshire Hathaway

Berkshire Hathaway, which is listed on the New York Stock Exchange, is one company that is widely followed by long-term investors around the world. This is largely because of the investment conglomerate’s long-serving CEO, Warren Buffett, who is widely considered to be one of the greatest investors to have ever lived.

While most local investors prefer to keep their investments within the ASX and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is arguably the closest ASX-listed alternative investors can buy. There is one major difference: Berkshire Hathaway doesn’t pay a dividend while Soul Patts does.

Not only is Soul Patts one of the oldest surviving companies listed on the ASX – meaning it has survived wars as well as numerous recessions and economic slowdowns — it also offers investors exposure to a wide selection of industries with a view to the ultra-long term.

What’s more, the company’s objective is to hold a diversified portfolio of assets that generate a growing income stream. That, in turn, is intended to result in a growing stream of dividends to shareholders. The shares currently yield 2.9%, fully franked.

A dividend with your pizza or coffee?

If there is one thing that dividend investors love to see, it is an unbroken trend of dividend increases over a long stretch of time. One company that has done just that is Retail Food Group Limited (ASX: RFG), which has increased its dividend per share every year since it listed on the ASX just over 10 years ago.

While Retail Food Group mightn’t be a household name, the company itself owns a number of brands you’re likely to be more familiar with: Gloria Jean’s, Crust Pizza and Donut King, to name just a few. It franchises these stores out, collecting a percentage of the franchisee’s revenues along the way which provides it with a nice recurring stream of income.

It has expanded its network of stores in Australia over the years, helping to boost earnings per share significantly, while it is looking to grow its international presence in the future. What’s more, the products its franchisees sell are arguably somewhat protected from an economic downturn and many people will still buy coffee while takeaway food can also tend to rise during a slower economic period.

The shares hit a high of $8 early in 2015, but have since retreated to $5.50, giving investors a reasonable opportunity to buy. At that price, the shares are trading on a trailing price-earnings ratio of roughly 25x and a fully franked dividend yield of 4.2%, grossed to 6%.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Berkshire Hathaway (B shares). Motley Fool contributor Ryan Newman owns shares of Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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