Although the S&P/ASX 200 (INDEXASX: XJO) and the All Ordinaries (INDEXASX: XAO) indices cracked all-time highs in July, so far for August it’s been a jarring jerk back to reality (thanks Donald). There is a silver lining in a falling share market though – the ability to pick up our favourite dividend paying shares at a discount. With the market placing an ever-higher premium on good quality dividend stocks in our low-rate environment, it is more important than ever to take advantage of a discount whenever we can.
Here are 2 quality ASX dividend payers that I think are looking cheap today.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
‘Soul Patts’ has been described as the Berkshire Hathaway of the ASX, which is a shower of praise if I ever heard one. While I wouldn’t quite say that SOL shares have rewarded long-term shareholders as much as a good ol’ BRK.A share has, at least it won’t set us back a cool half mil to buy one today.
Soul Patts is an investment company with stakes in other high-quality ASX business like TPG Telecom Ltd (ASX: TPM). The company has paid a rising dividend every year since 2000, which is not something many other stocks can claim. SOL shares are looking quite cheap at the moment at $20.74 – a considerable discount to its 52-week high of $31.87.
Rio Tinto Ltd (ASX: RIO)
Rio shares have been smashed on the back of a falling iron ore price, falling over 13% in the last month. However, this is a fairly dramatic share price move that may be an overreaction – for one, we don’t know what the iron ore price will be in a few months time. Another reason to love Rio is the company is flush with cash at the moment, recently announcing a special interim dividend of US$2.12 per share (equating to roughly a 6% yield on an annualised basis) that will close to new investors tomorrow when the stock goes ex-dividend. Rio has a solid history of nice dividends, so another one to keep an eye on!
Both of these stocks are solid businesses that are trading at a discount to their 52-week highs. I like SOL shares a bit more at current prices due to a more predictable business model.
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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 Washington H. Soul Pattinson and Company 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.