The share markets around the world are showing extreme volatility. Down 9% and up 9% the next day. Next week may be just as wild.
There are concerns that the disruption caused by the coronavirus outbreak could cause a recession. Perhaps it would just be a small technical recession of two small negative quarters, but there’s also a chance it could cause a bit more pain.
During this period I can understand why investors would want to make sure they keep receiving their dividend income. Here are three ASX dividend shares that could provide reliable dividend income:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts could be described as the king of dividends on the ASX. It has increased its dividend every year since 2000 and it has paid a dividend every year since inception in 1903.
The investment conglomerate has already informed investors that it will be increasing its dividend for the interim and full year result in FY20. That’s attractive reliability.
It funds its dividends to shareholders from its net regular cashflow, which is investment income minus operating expenses. The FY20 cashflow is expected to be similar to FY19, which had room to spare for higher dividends.
Its largest investment is telco TPG Telecom Ltd (ASX: TPM), which may be one of the least affected large caps during this outbreak and can keep providing reliable dividend income.
It has a forward grossed-up dividend yield of 4.3%.
Rural Funds Group (ASX: RFF)
Rural Funds has a goal of increasing its distribution to unitholders by 4% each year. It has already forecast a 4% rise for FY21 to 11.28 cents per share, which translates to a distribution yield of 6.2% today.
The farmland real estate investment trust (REIT) has a diversified farm portfolio of almonds, macadamias, cattle, vineyards and cotton. The diversification is helpful with the farms spread across different states and climactic conditions.
The built-in rental indexation and regular productivity investments mean that Rural Funds’ rental income can keep growing and therefore the distributions can grow too, even during the outbreak.
It hasn’t been listed as long as the other two ideas in this article, but it has increased its distribution each year since it started paying a distribution. Over time its record will keep growing.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is another ASX business which has increased its dividend each year since 2000. The private hospital operator has done an excellent job of growing over the past two decades through acquisitions and organically increasing its hospital network size in Australia and Europe.
Before COVID-19 came along you could point to long-term tailwinds thanks to the ageing populations of Australia and Europe. It remains uncertain what the effect of many coronavirus patients going to a Ramsay hospital would be, but it’s clear that Ramsay won’t be economically hit like airlines and travel agents are.
It currently has a grossed-up dividend yield of 3.5%.
All three of these shares have decent start yields, particularly when compared to savings accounts. My preferred pick at the moment would be Soul Patts due to its long-term success, diversification and the likely discount to its asset value.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended 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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