In hindsight, I think 2020 will be remembered as the year of 'lost dividends' on the ASX.
Normally, most ASX blue-chip companies reward their shareholders with dividend payments periodically. But since most companies' earnings are likely to take a very nasty hit in 2020, I unfortunately think many of these payments will be either materially reduced or eliminated.
But conversely, I think a select group of ASX shares will continue to be in a position to fund strong dividends in 2020 and beyond. Here are three.
WAM Research Limited (ASX: WAX)
WAM Research is a listed investment company (LIC) that has a long history of funding large dividend payments for its investors. One significant advantage of the LIC structure is the ability to 'hoard' profits in a reserve for a rainy day. WAM Research has done just that and currently has a profit reserve of 25.2 cents per share (excluding April's final dividend of 4.9 cents per share).
As you can see, there is plenty of gas in the tank for dividend payments to continue for some time, even if the stock market doesn't do much for a year or two. And the cherry on top? A 4.9 cent per share dividend equates to a grossed-up yield of 12.05%.
SPDR S&P Global Dividend Fund (ASX: WDIV)
This exchange-traded fund tracks a basket of international dividend-paying shares that have either increased or held steady dividends for at least 10 years. For this reason, I think WDIV is a solid choice for income in today's market. Most of WDIV's holdings are in highly inelastic industries like utilities and 'sin' stocks – which means that their earnings should be relatively stable in this tough time. And that should translate into sturdy dividend payments.
On current prices, WDVI's trailing annual payouts equate to a dividend yield of 6.7%.
Coles Group Ltd (ASX: COL)
Coles is a company most Aussies would be familiar with, especially during this coronavirus crisis. Whilst I don't enjoy seeing what has happened with food shortages in our supermarkets, there's no denying is isn't hurting Coles as a business. Therefore, I think Coles is one of the best ASX dividend shares to buy in 2020. You couldn't ask for a more defensive share in today's market in my opinion.
On current prices, Coles shares are offering a grossed-up yield of 3.69% as well, which I think is still appealing in this near-zero interest rate environment.
