I think it's getting harder to find good value dividend shares these days.
The hunt for yield has pushed up the value of many ASX shares beyond what I'd be willing to pay for them, particularly the ones that are seen to have a defensive source of earnings.
But don't fear, I think there are still some good opportunities to consider. For example, these two could be good ideas:
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is a fairly unique listed investment company (LIC) in that it doesn't charge any management fees or performance fees (there are a couple of others with a similar structure).
The idea is that Future Generation invests in the funds of other investment managers who work for free to invest the money into ASX shares.
That means the underlying Future Generation funds are invested across a variety of shares, giving good diversification and can hopefully beat the market over the long-term.
One of the main objectives of Future Generation is to provide a steadily-growing dividend. It currently offers a grossed-up dividend yield of 5.6%.
WAM Microcap Limited (ASX: WMI)
Small caps aren't known for being dividend shares, but if you invest in a LIC which can turn those capital gains into a dividend stream for you, then you can get the benefit of small cap growth but also a growing dividend.
WAM Microcap invests in a variety of small cap shares with market capitalisations under $300 million at the time of acquisition. It has been a strong performer, generating average returns per annum of around 18% before fees and expenses, but don't expect that happen every 12 months – small caps are volatile.
It has a grossed-up dividend yield of 5.1%.
Foolish takeaway
Both of these options offers a solid dividend yield with growth potential and diversification. I'd be happy for each of them to play a sizeable role in my portfolio at the current prices if I were looking for dividends.
