A high yield is great, but it can lead us astray if the yield is all we focus on.
While the income today might be great, if the dividend doesn’t grow, then the income has less purchasing power each year due to inflation.
What we really want is a solid income which can grow over time to at least keep up with inflation. Here’s a couple of shares to continue to deliver on that front…
Spark Infrastructure Group (ASX: SKI)
Spark owns regulated utility assets, focusing on electricity networks. The company has interests in multiple networks, including Victoria Power Networks and SA Power Network.
The company again delivered a solid result recently, with cashflow growing by 6.9% during the first half of 2018. Being a regulated monopoly, Spark has very predictable cashflows and pays much of it to shareholders as distributions.
It has increased payments to shareholders for the last 7 years in a row and Spark has forecast another increase this year of 4.9%.
At the current price, shares trade on a distribution yield of 6.8%.
Viva Energy REIT Ltd (ASX: VVR)
This property trust is relatively new to the ASX, having listed around 2 years ago. Viva Energy REIT owns a large portfolio of over 400 service stations around the country.
Most of the properties are located in higher-traffic metropolitan areas and almost entirely leased to Shell Coles Express. Leases are currently locked in for an average of 13 years, with 3% per annum fixed rental increases.
The portfolio is 100% occupied and Viva Energy plans to acquire further well-located sites to grow its portfolio further. Gearing is a comfortable 32% and the distribution is expected to increase by 3%-3.75% this year.
I’d much prefer this property business over the likes of BWP Trust (ASX: BWP) for example, which is currently struggling to grow its earnings much at all.
Viva Energy REIT currently trades on a forecast yield of 6.3%.
Both businesses have predictable earnings, which enable them to pay a reliable stream of income to shareholders. With a bit of growth built-in, a decent total return can be achieved through shares like this. If you’re looking for companies with faster dividend growth, check out the free report below.
These 3 stocks could be the next big movers in 2020
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 more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
Motley Fool contributor Dave Gow owns shares of Viva Energy Ltd. 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.
- 2 ETFs I’d buy and hold for the next 10 years – January 8, 2019 1:27pm
- 3 quality ASX shares giving shareholders regular pay rises – January 7, 2019 2:39pm
- 2 high yield ASX shares to boost your income in 2019 – January 3, 2019 9:58am