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Retirees will love these 3 ASX dividend shares

Retired couple

If you’re a retiree you’re probably looking for a dividend share or two to boost your income.

Term deposits from Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) or Australia and New Zealand Banking Group (ASX: ANZ) just won’t do these days. I don’t think owning their shares is a great idea either.

Earning less than 2% from a term deposit isn’t going to cut it. The actual dividend income from most of the banks is actually going backwards as well.

Good dividend shares can offer higher dividend income and better growth. That’s why I’m attracted to these three top ideas:

Duxton Water Ltd (ASX: D2O)

Duxton Water has a forward grossed-up dividend yield of 5.5%. It aims to steadily increase its dividend each year and it has done so since 2017 when it started paying a dividend.

What is Duxton Water? It’s a company that exclusively invests in and owns water entitlements, then leases them out. Water values will go up and down depending on how much rain there is each year, but as Duxton Water builds its water portfolio it should receive higher payments over the long-term. If Australia is going to remain drier for longer than Duxton Water could be one of the beneficiaries. 

The share price is currently trading at a large discount to the underlying net assets of Duxton Water, so it’s a decent time to buy its shares.

WAM Research Limited (ASX: WAX)

WAM Research has a trailing grossed-up dividend yield of 9.4%. It aims to pay a growing stream of dividends each year, and it has done so since the GFC.

What is WAM Research? I think it’s one of the best listed investment companies (LICs) on the ASX. Its job is to invest in other ASX shares on behalf of shareholders. It has done very well, during the 2010s it was one of the best-performing LICs by focusing on those undervalued smaller growth companies that WAM is known for.

WAM Research certainly isn’t cheap right now – it’s at a fairly hefty premium to its net tangible assets (NTA), but it’s one of the few businesses on the ASX with a growing dividend where the yield is above 9% thanks to franking credits.

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

Soul Patts has a forward grossed-up dividend yield of 3.9%. Its aim is to pay a growing dividend and it has increased its dividend every year since 2000.

What is Soul Patts? It’s an investment house that takes large, long-term stakes in growing businesses like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM) and so on.

One of the most attractive things about Soul Patts’ dividend is that it is entirely funded by the cashflow it receives. All of the capital growth of its holdings is a (huge) bonus.

I think Soul Patts is one of the best set-and-forget investments on the ASX and will continue to be a solid investment for the next few decades.

Foolish takeaway

All three of these shares have got attractive dividend streaks going on, good starting yields and effective management.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended Brickworks and DUXTON FPO. 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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