Most people would like to build a diversified dividend portfolio of ASX shares paying an attractive level of income each year.
But I don't think investing in a portfolio of shares like Australia and New Zealand Banking Group (ASX: ANZ), Telstra Corporation Ltd (ASX: TLS) and BHP Group Ltd (ASX: BHP) is defensive or offers much profit.
There are plenty of ASX shares out there that have good yields that keep growing their dividend for shareholders, such as these three businesses:
Tassal Group Limited (ASX: TGR)
Tassal is Australia's largest fish company with its big salmon operations and its newer prawn business.
The company has been steadily been increasing its operating earnings over the last several years. Tassal is benefiting from growing demand for healthy fish from Australian and overseas consumers.
Acquiring the prawn business was a good way to diversify its operations by fish and geography. Tassal has grown its dividend each year since 2012 and it currently offers a partially franked dividend yield of 4.2%.
Future Generation Investment Company Ltd (ASX: FGX)
One of most attractive ways to receive dividends is from listed investment companies (LICs). Their job is to invest in other shares on behalf of shareholders. This means they (should) instantly provide diversification through just one company. LICs can turn the investment returns they generate from capital growth and received dividends into dividends for shareholders.
Future Generation is very different to nearly every other LIC on the ASX. It doesn't invest in individual shares, instead it invests in the funds of ASX-focused fund managers – around 20 of them. Each of those funds are diversified, so Future Generation's underlying portfolio is very diversified – it could be indirectly invested in hundreds of different shares.
The great thing about Future Generation is that those fund managers work for free for Future Generation so that it can donate 1% of its net assets each year to youth charities.
Future Generation has a grossed-up dividend yield of almost 6%. It has increased its dividend each year since 2015.
WAM Microcap Limited (ASX: WMI)
WAM Microcap is another LIC. It has been one of the best-performing LICs over the past couple of years with its focus on undervalued growth companies with market capitalisations under $300 million.
Investing in small caps can be tricky, which is why I'm happy to leave my exposure to small cap investing to a high-performing team, but small caps could be the hunting ground for the biggest growth.
It's invested in dozens of exciting small caps which will hopefully beat the market. WAM Microcap has been turning that performance into a growing dividend for shareholders. It now has an annualised grossed-up dividend yield of 5.7%.
Foolish takeaway
I think all three of these dividend shares are solid ideas for income, they provide different returns to the general ASX share market and offer dividend growth.
