I’m always on the lookout for ASX dividend shares that would be the right candidates to help my own portfolio sustainably grow dividends.
I want to find shares that have a solid dividend starting dividend yield, want to grow dividends to shareholders, have a track record of increasing dividends and are trading at good value. If I were to buy three dividend shares for my portfolio today, I’d choose these three:
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
This listed investment company (LIC) aims to invests in good value global shares, it usually aims for shares that are trading at a relatively cheap value compared to the market. That’s why it’s focusing on some shares like European builders and copper miners.
The LIC has delivered net returns of an average of 15.1% per annum over the past three years whilst steadily growing the dividend. Despite that performance, it’s valued at a discount of 13% to the pre-tax net asset value at 6 December 2019.
It currently has a trailing grossed-up dividend yield of 4.4%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is the gold standard for dividend shares on the ASX in my opinion. It’s an investment house, meaning it has investments in a variety of different businesses and industries.
Some of its largest holdings include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Clover Corporation Limited (ASX: CLV), Palla Pharma Ltd (ASX: PAL), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI).
Its portfolio continue to diversify with new investments into luxury retirement living and agriculture.
Soul Patts funds its dividends just from the cashflow that it receives as dividends, distributions and interest, so it’s very sustainable.
It has increased its dividend every year since 2000 and it currently has a trailing grossed-up dividend yield of 3.8%.
Rural Funds Group (ASX: RFF)
Rural Funds is a farmland real estate investment trust (REIT). It owns a variety of farm types including almonds, cattle, vineyards, macadamias and cotton. It continues to increase its climate diversification by acquiring assets away from the drought areas. It’s looking to acquire cattle farms in WA next.
There are rental increases built into its contracts with high-quality tenants, the indexation is linked to either CPI and or a fixed 2.5% increase. It’s this, along with productivity improvements at the farms, that allow management to forecast distributions can grow by 4% a year.
It has a FY20 distribution yield of 6.1%.
I don’t own PM Capital Global Opportunities Fund shares yet, but once I do I plan to own shares of all three for many years to come because of their strong underlying performance and dividend growth.
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Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Clover 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 Brickworks. 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.