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3 top dividend shares to boost your income

Income is a very important thing to sustain your lifestyle, so dividends are a great way to boost your income. 

We can’t always rely on our job to provide us the cashflow we need, particularly if it’s a physical job or in a cyclical industry. Dividend income can supplement or even replace our normal job earnings if our portfolio becomes big enough.

These three ASX dividend could definitely boost your dividend income with good yields:

WAM Leaders Ltd (ASX: WLE) 

WAM Leaders has a grossed-up dividend yield of 6.3%. It’s a listed investment company (LIC) which largely invests in shares in the ASX 200 (ASX: XJO), so it targets blue chips.

Its top holdings are leaders in the industry like Challenger Ltd (ASX: CGF), Amcor Plc (ASX: AMC), CSL Limited (ASX: CSL), Ramsay Health Care Limited (ASX: RHC) and so on.

A LIC structure allows the company to pay dividends from the investment returns it makes. WAM Leaders has been a strong performer, over the past year the WAM Leaders portfolio produced a gross return of 27.3% and since inception in May 2016 its average return per annum has been 12.8%.

WAM Leaders is able to use this solid performance to pay a steadily growing dividend which has increased each year since 2017.

Rural Funds Group (ASX: RFF) 

Rural Funds has a FY20 distribution yield of 5.75%. It’s a real estate investment trust (REIT) that specialises in owning and leasing out farmland.

It owns a diverse portfolio of farms including vineyards, almonds, macadamias, cotton and cattle. These farms are spread across different states and different climactic conditions.

Rural Funds aims to grow its distribution by 4% per annum. This goal is supported by a number of different factors. The rental contracts have rental increases built-in, which are linked to either a fixed 2.5% annual increase or linked to CPI inflation, with market reviews. Rural Funds also retains about 20% of its cash rental profit each year to invest in productivity improvements at its farms to gain further rental income.

With long-term contracts and high-quality tenants like Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE), Rural Funds provides very reliable distributions.

Future Generation Investment Company Ltd (ASX: FGX) 

Future Generation has a grossed-up dividend yield of 5.8%. It’s a LIC that invests into the funds of ASX-focused fund managers.

The ‘Future Generation’ part of the name refers to the fact that it donates 1% of its net assets each year to youth charities. It doesn’t charge its shareholders any management fees or performance fees. The underlying fund managers also don’t charge any fees so that Future Generation can donate as much as it does. 

However, Future Generation’s overall investment portfolio can make profit for its shareholders and aims to pay a growing dividend from the returns it makes. It has increased its dividend each year since 2015 when it started paying a dividend.

Foolish takeaway

Each share offers a dividend yield of around 6%, which is a very good income-boosting yield. Out of the three I think I’m drawn to Future Generation the most – it’s the only one trading at a large discount to its underlying net assets and it has the most diversified portfolio.

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Tristan Harrison owns shares of FUTURE GEN FPO and RURALFUNDS STAPLED. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Challenger Limited, RURALFUNDS STAPLED, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended Amcor Limited and Ramsay Health Care Limited. 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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