If you want income then you should replace your term deposit ASX dividend shares.
Term deposits were earning more than 5% not too long ago. But those days are long gone. Term deposits are obviously still a good idea if you're looking for capital protection. But eating into your capital to pay for your life expenses because the interest rate is so low isn't a good prospect!
Shares come with risks of course. There are plenty of shares I wouldn't suggest because of how unstable the dividend may be. I'd only go for ASX dividend shares that may be able to offer very reliable dividends during this coronavirus period:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
'Soul Patts' is one of the best ASX dividend shares out there, perhaps the best, for dividend reliability. How does the dividend record stack up? It has increased its dividend every year since 2000. It has paid a dividend every year since listing in 1903. That's a great record!
The investment conglomerate owns shares that are likely to keep paying the dividend (and hopefully growing it) during this period. Shares like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW) are two of the biggest sources of investment income for Soul Patts. Both of those shares increased the dividend in the recent results.
I think Soul Patts could be the best 'set and forget' individual ASX dividend share because its investments will evolve over time to focus on growing opportunities. It currently offers a grossed-up dividend yield of 4.7%.
Rural Funds Group (ASX: RFF)
Rural Funds is an agricultural real estate investment trust (REIT) that owns a variety of farm types including cattle, cotton, vineyards, almonds and macadamias.
I think it's a great ASX dividend share for two key reasons. The first is that it aims to increase its distribution by 4% a year. I think this is attractive because it's comfortably more than inflation. The second reason I like Rural Funds is that its forecast FY21 distribution yield is 5.9%. I think that's a solid yield in this environment.
The contracted rental indexation and strategy of investing into its farms for productivity improvements are powerful forces for growing the distribution.
Rural Funds' distribution is funded by the cash net rental profit. Around 20% of that rental profit is currently being re-invested for more growth.
APA Group (ASX: APA)
APA Group is another ASX dividend share that has a very strong income growth record for investors. It has increased its distribution every year for a decade and a half.
I'll tell you what APA Group is. It 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.
The infrastructure giant's distribution is entirely funded by its cashflow. That cashflow is steadily growing over the years as new projects and investments come online. APA Group is looking for new opportunities both in Australia and in the US. It has already reconfirmed the annual distribution guidance for FY20 of 50 cents per unit, translating to a distribution yield of 4.5% today.
Foolish takeaway
I believe each of these income ideas are great picks for long-term dividends. I'd be comfortable owning them for many years and I think they'll provide growing income compared to a term deposit, with a much better starting yield. At the current share prices I'd definitely choose Soul Patts first.
