Although the trade tensions that shook global markets as well as the ASX seem to be behind us (for now), it was an important reminder of how fast things can change in the share market. Here are three ASX dividend shares that investors who are looking for steady returns and income should have a look at. All are highly resistant to poor economic conditions and all have revenue streams that should continue to pay (literal) dividends to shareholders for many years to come.
Rural Funds Group (ASX: RFF)
Rural Funds Group is a REIT (real-estate investment trust) specialising in agricultural land, including vineyards, cotton, cattle, and tree nuts like macadamias. Farmland has been a fantastic place to invest your money for at least hundreds of years and demand for food, wine and clothes something you can pretty happily bet on (in my opinion).
Rural Funds’ average farm lease is around 13 years, with most also having inflation clauses written into contracts. This has and should continue to enable the company to increase its dividend annually, which it has done since listing in 2014 and is currently sitting on a yield of 4.25%. Being a REIT, RFF shares do not come with franking credits attached, which is something to keep in mind.
InvoCare Limited (ASX: IVC)
InvoCare is the largest funeral provider in Australia. The funeral market is a highly decentralised industry, but InvoCare has managed to establish a significant market share using strong and multilayered brands, such as White Lady Funerals.
The foundation of InvoCare’s profitability is death rates, which the company expects to increase at a rate of around 3% annually by 2034. If I was to pick a reliable business in a reliable market, InvoCare is at the top of the list (death is, after all, one of the only certainties in life). InvoCare is currently yielding 2.43% before franking but I believe it to be one of the most reliable dividends in the ASX. Putting the (slightly) morbid nature of this industry aside, with the ageing population in Australia, I am very bullish on the InvoCare dividend over the next decade.
Woolworths Group Ltd (ASX: WOW)
As well as owning Australia’s largest supermarket chain, with over 955 stores Australia-wide, Woolworths also owns discount store chain Big W, pub-operator ALH Hotels and alcohol retailers Dan Murphy’s and BWS.
Woolworths managed to maintain and grow its market share of the grocery sector despite being faced with fierce competition from arch-rival Coles Group Ltd. (ASX: COL) as well as the German-owned Aldi. Although many investors consider Woolworths share to be a little on the expensive side, Woolworths is highly resilient business and earnings are unlikely to be affected by a downturn (food, alcohol and pubs are very recession-proof products). WOW shares are currently yielding 2.8% before franking.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and RURALFUNDS STAPLED. 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.