S&P/ASX 200 Index (ASX: XJO) dividend shares can be great sources of income. Share prices are a lot lower at the moment because of the coronavirus, which is boosting the potential dividend yields on offer.
If you’re after income there’s not much point having cash in the bank or bonds these days. It’s probably earning less than 1%.
But ASX 200 dividend shares could be the answer. They’re large enough to be able to get through a difficult period, but small enough to have plenty of growth potential.
ASX 200 dividend share 1: Brickworks Limited (ASX: BKW)
Brickworks has a grossed-up dividend yield of 6.3%. The diversified property business has maintained or grown its dividend every year for over 40 years. That’s a great ASX 200 dividend share record.
Australia has had a strong economy for a few decades, so obviously a construction company was going to do well during that period too. The current times are difficult for Brickworks’ building products divisions in Australia and the US, but construction will return to normal in the future.
In the meantime it’s Brickworks’ other assets that can continue to fund the dividend and hold up Brickworks’ valuation. Those assets are an ‘investments’ division and a 50% stake of an industrial property trust. Very defensive with reliable pretty cashflow.
Share 2: Tassal Group Ltd (ASX: TGR)
Tassal has a trailing grossed-up dividend yield of 6.8%. The diversified fish business has both salmon farms and prawn farms under its belt now. The company is always trying to improve how it farms, improve its biomass and increase consumption of fish by the public.
Its operating earnings have been steadily growing in previous years which has supported a solid dividend.
Healthy food will continue to be important during this period, so I think Tassal is a solid alternative ASX 200 dividend share candidate to provide reliable income during this.
Share 3: Amcor Plc (ASX: AMC)
The global packaging business is one of the limited ASX 200 businesses to expect profit to increase during this coronavirus period.
Amcor has already been one of the best ASX 200 dividend shares over the best decade with regular dividend growth. It’s expected to increase its dividend again this year. It has an (analyst) projected 2021 dividend yield of just over 5%.
All three of these ASX 200 dividend shares have promising long-term potential for growth and income. At the current prices I’d probably go for Brickworks. If you take the non-construction assets at book value, you get the construction side of the business for free essentially. That sounds good to me.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited and Brickworks. 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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