Dividends are one of the most pleasing aspects about investing in shares. It’s so satisfying to do no work for the companies you own, yet receive a dividend every six months.
Not only that, but the income on offer from many ASX shares is a lot higher than you could possibly get from all the various bank accounts that are out there. Even the best ones only offer an interest rate of around 2.8% to 3%.
So, to solve that income dilemma, here are three good income shares on the ASX:
Tassal Group Limited (ASX: TGR)
Tassal is one of Australia’s largest fish companies with its large salmon farms in Tasmania’s waters. The company also owns a large fish wholesale business as well.
Salmon is becoming increasingly popular thanks to its status as a (vegetarian/)pescatarian food and also because of its health benefits compared to most meats.
This rising demand has seen Tassal’s operating profit increase year-on-year over the past few years despite concerns about the stocking levels of its farms.
Tassal is currently trading at 15x FY18’s estimated earnings with a grossed-up dividend yield of 5.1%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is one of my favourite businesses on the ASX. It’s an investment conglomerate that looks to take large long-term stakes in businesses that it believes are opportunities.
Some investors may think of Soul Patts as its main investments like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW), but its smaller holdings could drive underlying profit higher in the future.
I love that it aims to increase its dividend each year, this provides a sound source of income. It has increased its annual ordinary dividend each year since 2000.
It’s currently trading at 16x FY19’s estimated earnings with a grossed-up dividend yield of 3.7%.
National Storage REIT (ASX: NSR)
National Storage is Australia’s largest self-storage provider. It has been a big beneficiary from the booming house prices across the country. That means more people want to use a storage unit and it also means that National Storage can charge more per square metre.
When you do a quick analysis of how much an extra bedroom costs in a house simply used for storage – over $100,000 in Melbourne and Sydney – it makes sense why National Storage is seeing such strong demand.
Over time, National Storage should be able to steadily increase its prices and also benefit from economies of scale.
It’s currently trading with a distribution yield of 5.6%.
Soul Patts has the smallest yield but I think it’s the best business. The problem is that it’s expensive compared to its historical dividend yield. National Storage’s current price could be a danger because of rising interest rates.
Tassal would be my pick at today’s price, however investors should be wary of ‘wipeout’ risk – a disease in a salmon farm could extensively damage profit.
A safer bet for dividend growth might be this top share which grew its half-year dividend by more than 25%.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
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