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3 top ASX dividend shares you should never sell

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.

Some more dividend shares that are worth holding onto for the long-term are these top income ideas.

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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.

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