Why these 2 top-performing income shares are on my radar

These two businesses produce strong cashflow from reliable assets which enables them to pay out large distributions to shareholders.

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I’m a pretty simple investor. I like to find companies which are easy to understand and pay a decent dividend. That way, if a company ends up growing slower than expected, at least you’re well compensated along the way.

As long as the business can grow its earnings faster than inflation, happy days. Your dividend income, of course, will follow the company’s earnings.

On that note, here’s two shares which look appealing at the moment…

Hotel Property Investments Ltd (ASX: HPI)

HPI is a Real Estate Investment Trust (REIT) which owns a portfolio of 43 pubs and hotel venues across Queensland and South Australia, leased predominantly to Coles. The tenancies are long term in nature and come with contracted rental increases.

HPI currently has an occupancy rate of 100% and gearing of approximately 38%. The weighted average rental increase across the portfolio going forward is 3.6%, which underpins future distribution growth.

The business has produced a total shareholder return of roughly 15% per annum for the last 3 years with a strong level of income paid. Shares currently trade on a distribution yield of 6.2%.

A blue-chip tenant with contracted increases makes this an attractive proposition. On the downside, the share price is trading at a premium to NTA (net asset value per-share) of about 15%.

Spark Infrastructure Group (ASX: SKI)

Spark invests in regulated utility assets, focusing on electricity networks. The company has interests in multiple networks, namely Victoria Power Networks and SA Power Network.

Because in essence Spark is a regulated monopoly, the company has very predictable cashflows. And from that, it can pay regular and reliable distributions to shareholders, which remains a core focus of the business.

Performance has been solid with a total return to investors over the last 10 years of 13.1% per annum. Shares in Spark currently trade on a yield of 6.5%, and over the last 5 years the distribution has increased by 7.7% per annum.

Foolish takeaway

Both of these businesses produce strong and reliable cashflow. And the assets they own should continue to generate increasing amounts of earnings for many years to come, which will allow them to pay larger distributions to shareholders.  For more ideas on businesses with increasing dividends, check out the report below.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Dave Gow has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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