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3 alternative ASX dividend shares to boost your income

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Alternative ASX dividend shares could be a great way to boost your income during these times.

Popular ASX dividend shares like National Australia Bank Ltd (ASX: NAB), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL) have disappointed shareholders because of the coronavirus.

But alternative ASX dividend shares could be the answer. Here are three very interesting ideas:

Vitalharvest Freehold Trust (ASX: VTH)

This is an agricultural real estate investment trust (REIT) which owns berry and citrus farms in Australia. It earns fixed rental income and variable rental income from Costa Group Holdings Ltd (ASX: CGC), its tenant.

The variable rental income is a share of profit from the farms, which is an interesting time to be able to get some of the profit considering food prices are rising.

Each year Vitalharvest will pay out most (or all) of its net rental profit. The last 12 months amounts to a trailing distribution yield of 6.7%. A solid yield from the alternative ASX dividend share. The last year includes a lot of disruption, so the next 12 months could be materially better.

Duxton Water Ltd (ASX: D2O)

The water entitlement business is definitely one of those investments that could count as an alternative ASX dividend share. It’s the only share on the ASX that purely owns water entitlements.

It leases the water to farmers to ensure they get the water they need for their operations. Some of it is leased with multi-year leases, which locks in attractive water income for Duxton Water, providing good visibility.

It’s these leases that have given the Duxton Water Board the confidence to forecast that dividends can grow over the next two years with an increase every six months.

Based on the next 12 months of projected dividends, it currently has a forward grossed-up dividend yield of 6.1%.

Rural Funds Group (ASX: RFF)

Farmland is a very different asset class compared to most other investments on the ASX. Rural Funds is the biggest agricultural REIT on the ASX. It has a diverse property portfolio including cattle, almonds, vineyards, macadamias and cotton.

One of the most attractive things about Rural Funds as an alternative ASX dividend share is that it aims to increase its distribution by 4% each year. This is possible thanks to the contracted rental indexation, regular productivity investments and the occasional accretive acquisition.

Rural Funds has forecast another increase for FY21. It offers a forward distribution yield of 6%.

Which alternative ASX dividend share to buy?

Vitalharvest is an interesting idea, it may prove to be the strongest performer over the next 12 months. But for consistent dividend growth I think Rural Funds and Duxton Water would be better buys today.

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Returns As of 6th October 2020

Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO, DUXTON FPO, and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of Transurban Group. 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.

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