The ASX got a big scare this week when US President Donald Trump revived the US-China trade war. Although the panic seems to have subsided somewhat, it nevertheless reflects the current jitteriness of the share market, and our need for constant vigilance going forward. After all, we don’t know what President Trump will say (or tweet) next.
Here are three ASX dividend shares which I think will be able to maintain (or even increase) their dividends no matter the economic climate.
Medibank Private Ltd (ASX: MPL)
Medibank is a relatively new member of the ASX, having only been floated by the government in 2014. Still, this health insurance giant has started an impressive dividend track record, having increased its payout every year since listing. With our ageing population and the soaring cost of medical care, I expect that government subsidies and incentives for private health cover will only increase over time. This should (in my opinion) provide a floor under Medibank’s earnings and allow the dividend to keep rising as well.
AGL Energy Ltd (ASX: AGL)
AGL is one of the oldest companies on the ASX – which you can see from its original name – Australian Gas Lighting. Despite some uninspiring results released today by AGL, the company still managed to bump up its 2019 final dividend by 1%, giving it an annualised yield of 6.31% on current prices – which also comes 80% franked. Since AGL is in the business of generating and selling electricity and gas, I don’t expect its earnings to be dramatically affected by an economic downturn – we all need to keep the lights on and the stove cooking after all.
Transurban Group (ASX: TCL)
The market is currently pricing Transurban’s dividend as rock-solid – and for good reason. This toll-road operator has a virtual monopoly on tolled-highways in Australia and especially in our largest city Sydney. With cars and congestion only going up across the capital cities, I think that Transurban provides a pretty strong case for a solid, all-weather dividend that will be bolstered by the gargantuan Westconnex motorway in Sydney coming online over the next few years. TCL shares are yielding a 3.93% dividend at current prices.
I expect all three of these companies to be able to doll out robust dividends for the foreseeable future, given their defensive earnings bases. In terms of reliable income, I would probably give preference to Transurban, as the private healthcare and electricity markets are heavily regulated and subject to political risk.
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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 Transurban Group. 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.