Dividend shares are some of the best wealth-creating assets in Australia. The possibility of investing in businesses that grow over the long-term and provide good income in the short-term is a powerful combination.
The key is to select growing dividend shares. If you just select businesses with big dividends you won't generate much capital growth. Here are four of the best dividend shares on the ASX in my opinion:
Rural Funds Group (ASX: RFF)
Rural Funds is the only real estate investment trust (REIT) that focuses purely on agricultural property.
It owns a variety of farm types including almonds, cattle, cotton, vineyards, poultry and macadamias. This diverse and growing strategy has seen the business grow very nicely since it listed a few years ago.
It's currently trading with a distribution yield of 5.24% and has increased its distribution every year since it first listed in 2014.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment conglomerate that has been operating for decades and has provided shareholders with steady capital growth and growing dividends.
It has large stakes in businesses like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Australian Pharmaceutical Industries Ltd (ASX: API). The concentrated portfolio strategy is what sets it apart from index investments and is why it has outperformed the index over the long-term.
Soul Patts currently has a grossed-up dividend yield of 4.5% and has increased its annual ordinary dividend every year since 2000.
WAM Research Limited (ASX: WAX)
WAM Research is a listed investment company (LIC) run by Geoff Wilson and his high-performing team.
This LIC, along with WAM Capital Limited (ASX: WAM), focuses its investing on smaller and faster growing companies that should outperform the index. It keeps a good amount of cash on hand for downside protection and ammunition for opportunities.
It's currently trading with a grossed-up dividend yield of 8.22%. It has increased its dividend every year since the GFC.
Australian United Investment Company Ltd (ASX: AUI)
Australian United is a LIC that has been operating since the 1950s. It focuses on the large blue chips like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS).
Although I'm not a huge fan of the large cap space at the moment I think investing in a LIC that focuses on that area of the market wouldn't be a bad long-term idea.
Australian United is trading with a grossed-up dividend yield of 5.87%. It has grown or maintained its dividend every year for at least the last 25 years.
Foolish takeaway
If your focus is a decent, growing dividend then I think the above four are all very good options. At the moment I think Soul Patts offers the best value, but I'd also be willing to buy Rural Funds at the current price for a long-term hold.
