3 top ASX dividend shares you should never sell

There are some dividend shares I don't think you should ever sell, including Washington H. Soul Pattinson and Co. Ltd (ASX:SOL).

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I believe there are some ASX dividend shares that you should never sell.

There are some shares out there like Sydney Airport Holdings Pty Ltd (ASX: SYD) which face future problems like the construction of a second airport in Sydney. Big banks like Westpac Banking Corp (ASX: WBC) are facing regulatory issues and face more tech competition in the future.

I think trading in and out of long-term dividend shares could be a mistake. They are meant to be held through the ups and downs, whilst you just sit back and collect the dividends. Dividend investors should want to pay as little brokerage fees or taxes related to capital gains as possible.

I think these three dividend shares are ones that shouldn't ever be sold:

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

Soul Patts is an investment conglomerate that has been going for 120 years. I think it's one of the most likely ASX companies to be around in 2100. One of the main things that stop me from saying "hold forever" with most businesses is that we don't know what's going to happen with that company, its industry, competition and so on.

But, when a company operates as an investment conglomerate it's quite likely that the business can just keep adjusting its investments as time goes on to businesses that have compelling futures.

It's invested in plenty of long-term focused businesses already like Bki Investment Co Ltd (ASX: BKI), Milton Corporation Limited (ASX: MLT), Brickworks Limited (ASX: BKW) and TPG Telecom Ltd (ASX: TPM). It's invested in newer growth businesses such as Clover Corporation Limited (ASX: CLV) and Bailador Technology Investments Ltd (ASX: BTI) as well.

Most of Soul Patts' operations run themselves, Soul Patts really isn't dependent on one manager like plenty of other investment businesses.  

It has increased its dividend every year since 2000 and currently has a forward grossed-up dividend yield of around 3.8%.

Rural Funds Group (ASX: RFF)

People will always need to eat food, but there's a lot of risks involved with operational farming businesses. That's why I think owning the farming landlord could be the best way to play the agricultural theme over the long-term for dividends.

The tenant has the operational risk and rewards of variable conditions, Rural Funds just collects the contracted rent which grows by a fixed 2.5% a year or it's linked to CPI inflation, plus market reviews.

Farmland has been a useful asset for hundreds of years. I imagine that will continue to be the case for many decades to come. To reduce risks, Rural Funds is diversified across different states, different climactic conditions and by farm types. It's currently invested across cattle, cotton, vineyards, almonds and macadamias.

Rural Funds aims to increase its distribution by 4% every year, which it has done since it started paying a distribution. It currently has a FY20 distribution yield of 5.7%.

Future Generation Investment Company Ltd (ASX: FGX

Future Generation is a listed investment company (LIC). But it's very different to nearly all other LICs. Instead of being directly invested in shares, Future Generation invests in the funds of ASX-focused fund managers who work for free so that the LIC can donate 1% of its net assets per year to youth charities. As you can guess, being invested in so many different funds reduces key person investment risk and means Future Generation's portfolio is very diversified.

As long as there are shares on the ASX worth investing in I think Future Generation will be able to provide solid returns with a good dividend. One of its main aims is to provide a steadily-growing dividend, which it has done since it started paying a dividend a few years ago.

It's currently trading at around a 10% discount to its net tangible assets and it has a grossed-up dividend yield of 5.9%.

Foolish takeaway

I hold each of these dividend shares in my portfolio and plan to hold them for many years to come because of the diversification and reliability that they offer. Soul Patts has the lowest dividend yield of the three but I think it could be around for the longest, so it would be my pick today, at least until the TPG merger decision.

Tristan Harrison owns shares of FUTURE GEN FPO, 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, Sydney Airport Holdings Limited, 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.

More on ⏸️ Dividend Shares

A boy hold money and dressed in business suit next to money bags on a desk, indicating a dividends windfall
⏸️ Dividend Shares

The Accent (ASX:AX1) dividend has lifted by 22%

The company will reward shareholders with an increased dividend...

Read more »

a woman sits in the driver's seat of a car with her arm resting on the door with a small smile on her face, looking out of the car.
⏸️ Dividend Shares

Carsales (ASX:CAR) share price records a modest rise on dividend slash

Australia's largest online automotive and marine classifieds business notches a conservative share price rise on its latest report.

Read more »

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
Bank Shares

ASX 200 bank shares to follow suit after CBA dividend hike: expert

Dividend investors rejoice! This expert expects more dividends to come from ASX 200 bank shares...

Read more »

sad looking petroleum worker standing next to oil drill
Share Fallers

AGL (ASX:AGL) dividend slashed. Share price down 3% on Thursday

More headwinds for the energy giant as its dividend is now in the spotlight.

Read more »

A girl looks through a microscope at money.
⏸️ Dividend Shares

The ANZ (ASX:ANZ) share price has only gained 10% in 5 years. But have the dividends paid off?

We do the math to see if it has been worth investing in ANZ shares over the long term...

Read more »

man laying on his couch with bundles of money and extremely ecstatic about high dividend returns
⏸️ Dividend Shares

The NAB (ASX:NAB) share price is flat 5 years on. But have the dividends paid off?

We calculate if it has been worth investing in NAB shares over the long run...

Read more »

two children dressed in business attire with joyous, wide-mouthed expressions count money at a desk covered in cash and sacks of money either side.
⏸️ Dividend Shares

Top-10 ASX dividend share delivers market-thumping share price gains

The Holy Grail for income stocks is to return strong capital gains as well

Read more »

happy woman looking at her laptop with notes of money coming out representing financial success and a rising share price and dividend yield
⏸️ Dividend Shares

Mining shares in the ASX 200 might unearth US$26b worth of dividends

Are shareholders about to dig some dividends?

Read more »