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2 great ASX dividend shares giving their shareholders payrises every year

With interest rates going so low it’s getting harder to find great ASX dividend shares that are growing their payments to shareholders every year.

Part of the reason why it’s hard to find dividend shares is because some yields have been pushed so low they’re hardly dividend shares any more.

People looking for income may be looking for shares that are yielding around 6% or higher. Here are two dividend shares I believe are great income options, which is why they’re in my portfolio:

Future Generation Investment Company Ltd (ASX: FGX) 

Future Generation is a listed investment company (LIC) that has a grossed-up dividend yield of 6%.

But it’s not like any ordinary LIC. There are underlying no management fees and no performance fees, even though it’s invested in the funds of other fund managers focused on ASX shares. That’s because those fund managers are working for free so that Future Generation can give 1% of its net assets each year to youth-focused charities.

I think this is a great cause to support and it’s actually a pretty cheap LIC because many service providers also work for free, so the main detraction from the returns is the wonderful charitable donation. If Future Generation outperforms the index then there’s no performance fees.

One of the main aims of Future Generation is to increase the dividend each year. It has done this since 2015 and the profit reserve continues to grow.

Rural Funds Group (ASX: RFF) 

This is an under-pressure farmland real estate investment trust (REIT), it has a FY20 distribution yield of 6.4%.

Two overseas outfits have claimed that Rural Funds is not worth what its balance sheet says and that Rural Funds Management has been up to accounting wrongdoing. However, Rural Funds has defended itself, it reported its FY19 result and continues to predict growing net rental profit and higher distributions.

The FY20 distribution is expected to grow by a further 4%, which is the increase Rural Funds aims for every year.

It has a variety of farm types including vineyards, cotton, cattle, poultry, almonds and macadamias. Food demand is likely to grow in the coming decades due to a rising population and reportedly less arable land.

Rural Funds continues to diversify its portfolio geographically and climactically, so if you’re willing to take Rural Funds’ side in the arguments, it could be a very good option for income today.  

Foolish takeaway

Both of these shares are trading at a small discount to their underlying net asset value per share, so I think both could be good options. Future Generation could be the lower-risk option of the two, but Rural Funds could produce stronger shorter-term returns if investor confidence returns.

Here are some more high-quality dividend shares to consider for your income needs.

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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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.

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