Gold is an asset class that has got a lot of attention in recent years, especially with share markets in their longest bull run in history. But gold has one big problem as an asset – it doesn't pay an interest or dividend yield of any kind. That means no one pays you to hold it.
That's why I think ASX dividend shares are a much better deal in our current investing climate. If you consider the additional benefits of franking credits, dividend shares literally pay you to hold them. It's passive income in its finest form.
With that in mind, here are two top ASX dividend-paying shares that I'm looking at this year.
National Australia Bank Ltd (ASX: NAB)
NAB has recently been hit with some further allegations that might result in the company facing a fine in 2020. Together with the company's dividend cuts in 2019 and the woes facing the ASX banking sector as a whole – sentiment has certainly waned on this financial ASX giant. Still, even with last year's dividend cuts, NAB shares are today offering a yield of 6.75%. That grosses-up to a whopping 9.64% if you include franking.
Thus, for income investors today, it's hard to go past NAB in my view. Even if 2020 brings more dividend cuts to the ASX banking sector, I think the company will recover in time and NAB will remain a fantastic income stock to own for years to come.
Transurban Group (ASX: TCL)
In terms of a robust dividend payer, it's hard to go past Transurban. This company owns a virtual monopoly on the toll roads of Sydney and Melbourne, with significant assets across Brisbane and outside Australia as well. With population growth and increasing urbanisation, it's hard to see the vehicle volumes in our capital cities going anywhere but up in the coming decades.
Transurban also has built-in toll rises that are linked to inflation. This extends investors even more certainty over the company's future earnings. Today, TCL shares are offering a 4.08% dividend yield, which I think is a solid income opportunity from a defensive company like Transurban.
Foolish Takeaway
Although you may not be impressed with NAB's recent performance or the Transurban share price, both companies remain great alternatives to gold or even a term deposit in today's low-interest-rate world. Both offer solid, inflation-beating dividend yields and well-known, powerful brands and assets from which to draw profits.
