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10 ASX dividend shares to buy for rock solid income in 2020

With current interest rates around the world being so low, it’s no wonder that investors are searching for ASX dividend shares that can fulfil income needs.

Normally when I write these types of dividend articles I would throw a dividend share like WAM Research Limited (ASX: WAX) into the mix for its excellent grossed-up dividend yield. It’s still a solid dividend share, but I’m going to choose shares that aren’t trading at high prices compared to their underlying value and therefore have good capital growth prospects too.

It’s getting harder for old-school dividend shares like banks or telcos to remain good choices because of changing industries, more competition, low interest rates and high valuations:

Here are my 10 ASX dividend shares for 2020:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

What it is: It’s an investment conglomerate which has been operating for over a century.

Why I think it’s a dividend opportunity in 2020 and beyond: The investment business has been performing for shareholders for many decades, delivering excellent long-term results. It has paid a dividend every year since it started in the early 1900s and has increased its dividend each year since 2000. If a couple of court decisions go Soul Patts’ way next year it could easily outperform in 2020. It continues to diversify its investment portfolio, making it an even safer long-term dividend choice.

It has a forward grossed-up dividend yield of almost 4%.

PM Capital Global Opportunities Fund Ltd (ASX: PGF) 

What it is: It’s a listed investment company (LIC) that invests in overseas shares.

Why I think it could do well in 2020 and beyond: It’s currently trading at an attractive double digit discount despite having achieved net returns of more than 10% per annum since inception. It’s growing the dividend, it’s willing to invest in unloved global shares and currently has a grossed-up dividend yield of 4.4%.

Rural Funds Group (ASX: RFF) 

What it is: It’s a farmland real estate investment trust (REIT).

Why I think it could do well in 2020 and beyond: Recent short attacks has driven the share price down, but the cash rental profit and distributions keep on flowing from the REIT. It has a diverse portfolio and continues to looking for investment opportunities and productivity improvement potential. It currently has a FY20 distribution yield of 6.1%.

WAM Microcap Limited (ASX: WMI) 

What it is: It’s a LIC that invests in small caps with market capitalisations under $300 million.

Why I think it could do well in 2020 and beyond: Small caps have the ability to outperform because it doesn’t take much to double the size of a small business, whereas going from $1 billion to $2 billion is much harder. WAM Microcap is producing great returns for investors and it’s steadily growing its ordinary dividend whilst also paying out special dividends from excess returns. It currently has an ordinary grossed-up dividend yield of 4.3%.

Future Generation Investment Company Ltd (ASX: FGX) 

What it is: It’s a LIC which invests in ASX-focused fund managers who work for free so Future Generation can donate 1% of its net assets to charities each year.

Why I think it could do well in 2020 and beyond: Not only is Future Generation a wonderful philanthropic idea, but it is producing solid returns for shareholders too, with lower volatility. Its underlying portfolio is extremely diverse considering each fund manager has its own investment portfolio. One of its main aims is to steadily increase its dividend over time. Future Generation currently has a grossed-up dividend yield of 5.9%.

Duxton Water Ltd (ASX: D2O) 

What it is: Duxton Water owns water entitlements and leases them out to agriculture businesses.

Why I think it could do well in 2020 and beyond: Water entitlement values have gone up a lot during 2018 and 2019 which has benefited Duxton Water’s net asset value (NAV) substantially. Duxton Water is aiming to steadily grow its dividend and it has guided increases over the next two half-year results. It’s at a heavy discount to its net assets and currently has a forward grossed-up dividend yield of 6.1%.

InvoCare Limited (ASX: IVC) 

What it is: It’s Australia and New Zealand’s largest funeral operator.

Why I think it could do well in 2020 and beyond: Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. It’s a morbid prediction but an undeniable tailwind as Australia’s population ages. This should support higher earnings and dividends for many years to come.

Amcor Plc (ASX: AMC) 

What it is: It’s one of the world’s largest manufacturers of rigid and flexible packaging.

Why I think it could do well in 2020 and beyond: The merger with Bemis could be good for earnings growth, particularly with all the synergies. But it could be even more attractive for the dividend. Amcor has a projected FY20 dividend yield of 4.4%. Before the merger, Amcor had one of the most attractive dividend growth profiles on the ASX.

WAM Global Limited (ASX: WGB) 

What it is: It’s a LIC focused on investing in global shares.

Why I think it could do well in 2020 and beyond: The WAM leadership like their LICs to steadily grow the dividend as long as profit reserves allow. WAM Global’s dividend streak is just getting started, but it could be a very good dividend pick with the entire global share market as potential investments. It currently has a conservative grossed-up dividend yield of 2.5%, but I expect the dividend yield could continue to rise.

Brickworks Limited (ASX: BKW)

What it is: It’s a building products business which also owns shares of Soul Patts and has a 50% stake of a growing industrial property trust.

Why I think it could do well in 2020 and beyond: The Australian construction industry is now at a low point – it’s best to buy cyclical shares when they’re at a low point. Brickworks’ assets are high-quality with good long-term growth prospects and the US building products business has a very exciting future. Brickworks hasn’t seen a dividend cut in four decades and it has a grossed-up dividend yield of 4.3%.

Foolish takeaway

I think all of these dividend shares can keep increasing their payments to shareholders. At the current prices I’d be very happy to buy shares of Soul Patts, PM Capital Global Opportunities, Rural Funds and Brickworks.

I believe that these top ASX shares are also excellent income picks.

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Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO, FUTURE GEN FPO, RURALFUNDS STAPLED, WAM MICRO FPO, WAMGLOBAL FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Amcor Limited, Brickworks, DUXTON FPO, and InvoCare 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.

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