Finding good-quality ASX dividend shares for income in 2020 has become something of a sport. This year, the normal ASX dividend paradigm has been turned on its head.
The ASX banks which were the kings of the ASX divided hill are now its paupers. Dividend aristocrat, Ramsay Health Care Limited (ASX: RHC) has suspended its dividends – ending a 20-year streak of dividend growth. Shares like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) which used to be regarded as the safest income providers on the ASX are now struggling to tell investors how much to expect this year.
Considering all of these factors, I think we need to look outside the box for income in 2020. So here are 2 ASX dividend shares that I would consider if I were seeking top-quality income this year.
SPDR S&P Global Dividend Fund (ASX: WDIV)
This exchange-traded fund (ETF) invests in a basket of global shares that are screened for dividend reliability. In order to make the cut, WDIV’s holdings need to have either grown, or at least maintained their dividend payments over the past 10 years. As such, I think this is a great option for a diversified income investment in 2020.
Some of this ETF’s top holdings include Freenet AG, Enagas, Japan Tobacco and our own AGL Energy Limited (ASX: AGL). It’s also fairly well balanced across many different countries (19 in total). WDIV currently offers a trailing dividend yield of 6.13%.
Rio Tinto Limited (ASX: RIO)
I think the ASX resources sector is one of the best avenues to explore for ASX dividend shares in 2020. Most commodity prices have held up remarkably well across the board during the coronavirus pandemic – especially iron ore. And that’s primarily what mining giant Rio Tinto is in the business of extracting. Rio has iron ore mines all over the world, as well as several other smaller operations for diamonds, copper and gold.
With iron ore prices now comfortably sitting at multi-year highs above US$100 per tonne, Rio looks set to be able to fund generous dividend payments to its shareholders this year. On current prices, Rio shares are offering a trailing dividend yield of 5.66%, or 8.09% grossed-up. I wouldn’t be too surprised if Rio tops this trailing yield in 2020. Especially if iron ore continues to stay near its current levels.
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Returns As of 6th October 2020
Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited and SPDR S&P Global Dividend Fund. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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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