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Bank dividends deferred. Where should retirees get dividends?

Retiree dividends are in short supply at the moment after banks like Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) deferred their dividends. Where should retirees get dividends now?

I think it was the right decision by ANZ and Westpac. We just don’t know how painful things are going to be over the rest of 2020 due to the coronavirus. What happens if international travel remains virtually non-existent for almost the rest of the year? What if unemployment remains higher than expected for longer?

Banks have already taken a lot of pain by offering payment holidays. They can’t be that generous forever. Deferral doesn’t mean necessarily mean cancelled. But bank shareholders may have to wait for some time before receiving that cash, if a dividend is declared for retirees at all.

I don’t think we can rely on bank for dividends any more. 

Where can retirees get dividends instead?

I think there are several ASX dividend shares that can provide reliable dividends throughout this period. Here are some ideas:

Brickworks Limited (ASX: BKW) has a grossed-up dividend yield of 6.3%. Its dividend is quite safe thanks to its reliable, defensive non-construction assets. It has a great long-term record. 

Rural Funds Group (ASX: RFF) has a FY21 distribution yield of 5.9%. Its distribution is quite safe because agriculture is one of the least affected industries, plus it has contracted rental growth.

WAM Research Limited (ASX: WAX) has an annualised grossed-up dividend yield of 11.5%. A solid dividend is likely to continue because it has built up a lot of profit, it has a good cash balance and it has a high-quality investment team at the listed investment company (LIC).

Duxton Water Ltd (ASX: D2O) has a forward grossed-up dividend yield of 6.4%. Its dividend is fairly secure thanks to the fact that it leases out water, which locks in income for the short-to-medium term. This has provided visibility for the board to forecast growing dividends over the next 12 months.

Foolish takeaway

Out of the four I think Brickworks is by far my favourite for reliable retiree dividends. Its dividend is funded by regular cashflow from its assets and the share price is down heavily with investors worried about the construction industry. The dividend hasn’t decreased its dividend in over 40 years – that’s a very impressive record that isn’t likely to end soon.

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Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Brickworks and RURALFUNDS STAPLED. The Motley Fool Australia has recommended 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.