ASX dividend shares could be the best way to replace your term deposit if you're after reliable income.
Dividends are the best way to go for income in my opinion. Term deposits don't even offer enough to cover inflation these days. They're obviously good for short term capital protection, but are poor for long-term returns.
ASX dividend shares to replace a term deposit
APA Group (ASX: APA)
APA is one of the best dividend shares on the ASX in my opinion. It's an infrastructure giant.
APA Group owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation's natural gas usage.
It has grown its distribution every year for a decade and a half. It continues to invest in more projects that will increase operating cashflow and the ability to pay higher distributions.
Using the 50 cent per unit guidance, it has a distribution yield of 4.5%.
Brickworks Limited (ASX: BKW)
Brickworks is another high quality ASX dividend share. It hasn't decreased its dividend for over 40 years. That's a very reliable dividend record.
In normal times the company manufactures and sells a wide variety of building products in Australia. Bricks, paving, roofing, precast and so on. It recently expanded into the US by buying three different brickmakers. It's now a market leader in the north east of the US.
But the coronavirus is really disrupting things. At the moment what's holding the Brickworks dividend up is its other assets – being its 'investment' division and the industrial property trust. These two asset segments fundamentally support the Brickworks market capitalisation and dividend with their defensive cashflow.
It currently has a grossed-up dividend yield of 6.3%.
Duxton Water Ltd (ASX: D2O)
Duxton Water is a newer dividend share to the ASX, but I think it could build a long-term reputation as one.
As the name might suggest, it owns water entitlements. It leases out that water to agricultural businesses across various food sectors. As time goes on, more water is being used by high-value crops like almonds that have higher water usage and can support higher water prices over the long-term.
The recent dry weather has been horrible for farmers, but it has led to higher water prices.
The Board have forecast the next 12 months of dividends will amount to 5.9 cents per share, it offers a grossed-up dividend yield of 6.5%.
Foolish takeaway
All of these dividend shares could provide solid income for the next decade. I think Brickworks would probably be my choice because of the diversification that it offers and it's at a low share price due to the worries about short-term construction.
