The ASX dividend share game has changed in 2020 – markedly so. This time last year, we were likely discussing which ASX banks had the largest dividend yield, or how safe Transurban Group's (ASX: TCL) payouts are.
Fast forward to 2020 and we're now asking which ASX bank will pay a dividend this year, or how low Transurban's payouts will be.
So here are 3 ASX shares that I think are great choices for strong dividend income within this new paradigm.
The resources dividend giant
BHP Group Ltd (ASX: BHP) is an ASX mining behemoth. It would be our largest ASX company if it wasn't for its multiple listings across London and New York. BHP has massive global operations across 4 key commodities: copper, oil, iron ore and coal. It's this diverse earnings base that I think lends strength to BHP by enabling it to balance commodity pricing swings in any one area.
On current prices, BHP is offering a trailing dividend yield of 5.97% – or 8.53% grossed-up with full franking. I think this dividend is well funded today, and could even increase if iron ore prices stay above US$100 a tonne for an extended time. Either way, I think BHP is a top contender for a strong dividend in 2020.
The listed investment company
WAM Capital Limited (ASX: WAM) is a listed investment company (LIC) that has been around since 1999. Since that time, it has handily delivered investors outperforming returns, which stand at an average of 15.7% per annum. WAM's focus is normally on growth-orientated, mid-cap ASX shares, which are bought when the company identifies a 'growth catalyst'.
On current prices, WAM shares are offering a dividend yield of 8.42%, 12.03% grossed up with full franking. However, this LIC's profit reserves are looking a little bare. It's possible this dividend won't be maintained at its current level moving forward.
The dark horse ASX bank
Commonwealth Bank of Australia (ASX: CBA) is our final dividend pick – and a long-shot. I, for one, don't have massive expectations on the bank's final dividend for 2020, due to be paid in September. However, I also don't think CBA will follow its banking compatriots Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) and ditch the dividend entirely.
Although the ASX banking sector is facing a number of headwinds as a whole, CommBank is unquestionably our strongest bank and therefore the most likely to return to its former glory as a dividend kingpin, in my view. Thus, I think on current pricing, you could be picking up a great deal for a long-term dividend share winner.
