There aren’t many great ideas out there for cashflow at the moment, but I think I’ve found three leading ASX dividend shares to buy for income.
A lot of people rely on investment income to fund their life.
It could be retirees who have worked hard and now want to enjoy the fruits of their labour. It could be someone who was injured and received a large payout. It could be a lucky person who inherited a lot of money. It could a regular person who’s building wealth and wants an income stream.
You won’t get decent income from bank accounts or bonds these days. The best place to find good income is the share market. Here are three leading ASX dividend ideas:
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation currently offers a grossed-up dividend yield of 5.4%.
Future Generation Investment is a listed investment company (LIC) that invests in some of Australia’s leading investment funds which provide their investing services for free. This allows Future Generation to donate 1% of it NTA each year to charities focused on youth issues.
One of Future Generation’s key objectives is to provide shareholders with a growing dividend stream, so it should be able to do so as long as the market doesn’t crash.
WAM Research Limited (ASX: WAX)
WAM Research currently offers a trailing grossed-up dividend yield of 9.7%.
WAM Research is one of my favourite LICs on the ASX. It looks to invest in undervalued small and medium sized ASX businesses that it thinks are good investment opportunities.
It has been one of the best-performing LICs over the past five years, its gross portfolio return has been an average of 13.9% per annum before fees and taxes. It has achieved this good performance whilst also holding a conservative level of cash – at the end of October it had around 38% of the portfolio as cash.
WAM Research has used the strong performance and conservative profit reserve to pay a steadily-increasing dividend yield since the GFC.
Paragon Care Ltd (ASX: PGC)
Paragon currently offers a trailing grossed-up dividend yield of 7%.
Paragon is currently my favourite healthcare business. It supplies medical products like beds and devices to various healthcare clients such as hospitals and aged care facilities.
The current share price of $0.63 looks very attractive to me if it can achieve earnings of 7 cents per share in FY19, meaning it’s trading at around 9x FY19’s earnings.
If Paragon can achieve high single digit organic revenue growth over the long-term and growing profit margins due to its business model then Paragon could be a good option. Additional acquisitions could also provide pleasing boosts to its earnings.
Paragon has increased its dividend each year over the past five years and is maintaining a conservative payout ratio of around 50% of underlying earnings.
All three of these shares look like very good dividend options in my opinion. At the current prices I think the yields of WAM Research and Paragon would be much better options than term deposits.
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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and Paragon Care Limited. The Motley Fool Australia has recommended Paragon Care 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.