If you're wanting to invest in ASX dividend shares for the income, I would only want to choose the most reliable ones.
That's why I really like the following three ASX dividend shares:
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that invests in quality farmland where the management can see potential for capital expenditure to improve the rental income from the tenant.
The valuations of farms can change year to year, but management aim to increase the distribution income that Rural Funds pays each year by (at least) 4%. This increase rate soundly beats annual inflation.
Rural Funds has rental increases built into its contracts that relate to a 2.5% fixed increase or CPI inflation. Even if the market tanks, the distribution from Rural Funds should hopefully keep going up every year.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts has arguably been the best dividend share on the ASX over the past 100 years. That's because the investment conglomerate has paid a dividend in every year of its century-long history.
The diversified nature of Soul Patts holdings means that it doesn't suffer significantly if one of its larger holdings is having a rough time. Management invest for the long-term and don't charge external management fees, like most other investment vehicles on the ASX.
Soul Patts has increased its dividend every year since 2000 and the total returns have outperformed the index over time.
Challenger Ltd (ASX: CGF)
Challenger is an annuity-selling business that aims to grow its assets under management whilst providing retirees a guaranteed source of income.
Challenger has grown or maintained its dividend every year since 2005, which is a pretty strong record to have.
Its profit can shift around significantly year to year with its huge balance sheet, but long term growth is quite likely with the benefit of compounding and the ageing population, Challenger's dividend could keep being reliable.
Foolish takeaway
Soul Patts and Rural Funds are higher quality dividend shares in my opinion, but they are trading at much higher valuations compared to their assets than compared to the past few years.
