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:
Magellan Global Trust (ASX: MGG)
Magellan Global Trust targets an annual distribution yield of 4%. The listed investment trust (LIT) is run by the high-performing overseas-focused fund manager Magellan Financial Group Ltd (ASX: MFG).
It invests in what it thinks are the highest-quality businesses in the world such as Visa, MasterCard, Alphabet (Google), Facebook, Kraft Heinz and so on. It also keeps a handy amount of cash on hand – which currently makes up around 20% of the portfolio.
I think its defensive positions are defensive enough to outperform when the market goes down and the growth positions can grow enough for Magellan Global Trust to outperform the market when it’s going up.
It’s a good way to diversify your dividend portfolio because it derives its earnings from overseas shares, not ASX ones.
InvoCare Limited (ASX: IVC)
The country’s leading funeral provider currently has a trailing grossed-up dividend of 5.5%.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This should be a supportive tailwind for InvoCare for many years to come.
The fall in the share price has really boosted the dividend yield. I think the refurbishments are actually a good idea and already are proving to be more profitable than management were expecting. Many ASX investors seem to focus on the short-term rather than the long-term.
Future Generation Investment Company Ltd (ASX: FGX)
The locally-focused Future Generation has a grossed-up dividend yield of 4.8%.
It invests in funds of Australia’s leading ASX-focused fund managers. However, there are no associated management fees or investment fees. Instead it donates 1% of NTA to youth-related charities.
One of Future Generation’s objectives is to pay a rising stream of fully franked dividends.
I believe all three of these shares are good income choices, I own shares in all three. At the current prices I’m most drawn to InvoCare as it’s trading significantly lower than what it has been over the past year
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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO, InvoCare Limited, and MAGLOBTRST UNITS. The Motley Fool Australia has recommended InvoCare 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 Scott Phillips.