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Where to invest $1,000 in ASX shares for dividends

Do you have $1,000 that you want to invest in ASX shares for dividends?

Getting paid dividends is a very fulfilling thing. Being rewarded for simply owning shares is a nice feature of investing. You don’t have to sell shares to benefit from businesses making profits.

Here are three different dividend options to consider:

High yield – WAM Research Limited (ASX: WAX) 

WAM Research has a grossed-up dividend yield of 9.25%. It’s a listed investment company (LIC) which invests in undervalued small and medium growth businesses which have a good chance of beating the market.

It pays out dividends from the investment returns that it makes. WAM Research has been one of the best-performing LICs over the past decade, which is how it has been able to grow its dividend every year since the GFC. Over the past seven years its gross portfolio performance has been 17.1% per annum.

Being a LIC gives WAM Research a lot of investment flexibility, so there isn’t much danger of being in an industry that becomes irrelevant.  

Reliability – Brickworks Limited (ASX: BKW) 

Brickworks has a grossed-up dividend yield of 4.4%. It’s best known for being a building products business. But it has grown into a substantially different business compared to the one at the start of this century.

It now owns 50% of an impressive industrial property trust in partnership with Goodman Group (ASX: GMG) which utilises the land that Brickworks used to own.

Brickworks has also acquired three brick manufacturers in the US which has quickly given it a market-leading position in the north east of the US. The United States is a much bigger market than Australia, so this is a promising long-term opportunity for Brickworks.

The best part about Brickworks’ dividend is that it has maintained or grown its ordinary dividend every year for over 40 years. That’s excellent reliability to me.

Steady growth – Rural Funds Group (ASX: RFF) 

Rural Funds has a FY20 distribution yield of 5.6%. It’s a farmland real estate investment trust (REIT) that owns a variety of properties in industries like almonds, macadamias, cattle, vineyards and cotton.

The management of Rural Funds aim to increase its distribution by 4% a year, which is comfortably ahead of inflation. The REIT can predict the distribution growth because of rental increases built into its contracts, productivity investments at its farms for the tenants and any additional acquisitions.

Rural Funds has increased its distribution by at least 4% each year since FY15.

Foolish takeaway

With $1,000 you can add between $44 to $92.50 of annual dividends to your income. If you’re not desperate for yield I think I’d prefer to go for Brickworks, it has compelling long-term growth plans and attractive diversified assets.

If you have more than $1,000 to invest in dividend shares then I’d want to consider these leading income stocks as well.

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

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