The popularity of ASX dividend shares has spiked over the past two years. Dividend shares used to be thought of as something of a ‘retirees’ crutch’, but with record low interest rates – and the possibility of the Reserve Bank of Australia (RBA) cutting rates again next month – dividends are looking a lot more appealing.
But there are dividends, and there are dividends. For income investors who rely on dividend payments to fund their living expenses, the safety of cash flow is often far more important than the raw yield numbers. If tough times hit, many investors want to know if their shareholder paycheques will keep on rolling in.
So here are 3 ASX dividend shares that I think offer investors a high degree of income certainty in today’s market.
Transurban Group (ASX: TCL)
Transurban owns a vast network of tolled roads across Sydney, Melbourne, Brisbane as well as North America. Speaking from experience, it’s often very hard to avoid these toll roads as many are major arteries that knock a substantial chunk of time off your commute. This makes Transurban a highly defensive stock, and one that is very appealing from a dividend perspective.
TCL shares are currently offering a 3.98% yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Sydney Airport has a similar defensive moat around its earnings (and dividend). Being the only major commercial and international airport in NSW, Sydney Airport has a virtual monopoly on Sydney’s airways, which gives it license to charge a high rent for their use. Although this company is still subject to fluctuations in tourist numbers and other variables, it remains another highly defensive company.
SYD shares are offering a 4.52% dividend yield on current prices.
APA Group (ASX: APA)
APA Group is essentially an infrastructure company – it owns a gas distribution network that covers most of the east coast of Australia. Gas is of course a modern necessity of living, both for business and private use, making this stock a rock-solid earner. There is very little that would seriously affect the ability of this company to consistently churn out profits, and this makes APA a great buy for steady dividend income.
APA shares are currently paying a 4.09% yield.
With these 3 ASX dividend shares, you are getting 3 highly defensive companies that I think can maintain their dividends – rain, hail or shine. All are looking expensive, but that can be put down to the market’s willingness to pay a premium for safety these days.
These 3 stocks could be the next big movers in 2020
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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 Sydney Airport Holdings Limited and 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.
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