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Top ASX dividend shares to buy in July 2020

Crown sitting on top of a pile of dividend cash
Image source: Getty Images

Along with our Top ASX Stock Picks for July, we also asked our Foolish writers to pick their favourite ASX dividend shares to buy this month.

Here is what the team have come up with…

Matthew Donald: BHP Group Ltd (ASX: BHP)

BHP is in a strong financial position according to its operational review for the 9 months ended 31 March 2020, released on 21 April this year.

This position is assisted by low cost operations and ability to generate solid cash flows. For this reason, I believe BHP has the means to continue paying strong dividends to its shareholders. Additionally, this is strengthened by a resilient iron ore price and strong volumes.

Furthermore, BHP’s production guidance for FY20 remains unchanged for petroleum, iron ore and metallurgical coal. Copper guidance is broadly unchanged.

Motley Fool Contributor Matthew Donald does not own any shares in BHP Group Limited.

Nikhil Gangaram: Coles Group Ltd (ASX:COL)

Coles Group is my dividend pick for July. With fears of a second wave of the coronavirus pandemic emerging, supermarkets like Coles could see a renewed surge in demand. In addition, the company’s defensive qualities could position it for greater earnings and dividend growth in 2020 and beyond.

Coles boasts a fully franked dividend yield of around 3.7% and has a favourable dividend payout ratio. The company recently paid out more than $400 million to its shareholders for its interim dividend. Coles is well positioned for future growth, recently hiring 12,000 team members and continuing to invest in its operating expenditure plans.

Motley Fool contributor Nikhil Gangaram does not own shares in Coles Group Limited.

Daryl Mather: Centuria Office REIT (ASX: COF)

Centuria Office REIT is the largest listed pure play office REIT in the country. In addition, at the time of writing it is valued at ~31% lower than the company’s net tangible assets per share.

Of all the real estate sectors, I believe office buildings are the least likely to feel a near-term impact. Office leases are long, and they are often rented to large-cap corporate clients.

Centuria Office pays a trailing 12-month dividend yield of 8.81% and I also expect a reasonable level of share price growth over the next 2–3 years.

Motley Fool contributor Daryl Mather does not own any shares of Centuria Office REIT.

Lloyd Prout: Altium Limited (ASX: ALU)

Altium may not be the most obvious dividend stock, nor is it the cheapest at 58x earnings. But, with a 1.1% dividend yield and a share price approximately 20% below its February highs, I think the company provides long-term investors a great total return opportunity.

Altium has been able to grow earnings at an impressive rate, which has allowed the company to increase its dividend at a compound annual growth rate of nearly 19% per annum since FY15. I expect more of this in the future as the company matures and dominates its industry.

Motley Fool contributor Lloyd Prout owns shares in Altium Limited and expresses his own opinion.

Phil Harpur: Wesfarmers Ltd (ASX: WES)

Wesfarmers is an ASX 20 company that you are probably familiar with.

What really appeals to me about Wesfarmers during our current challenging times is its diversification across a broad spectrum of our economy.

The group has operations in retail segments, including general merchandise and office supplies, as well as industrial segments such as energy and fertilisers. This diversification can act as a buffer to any industry-specific challenges that may arise.

Wesfarmers’ online offerings have seen increased demand during the coronavirus crisis. For the half year to early June, online sales surged by a massive 89%.

The group also pays a very attractive forward dividend yield of 3.4%, fully franked.

Motley Contributor Phil Harpur does not own shares in Wesfarmers Ltd.

Tristan Harrison: APA Group (ASX: APA)

APA Group is one of the best ASX dividend shares, in my opinion.

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 has stakes in gas storage facilities, gas-fired power stations and renewable energy generation. APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

It has grown its distribution every year for a decade and a half. At the APA share price at the time of writing, its FY20 dividend yield is around 4.6%.

Motley Fool contributor Tristan Harrison does not own shares of APA Group.

Brendon Lau: Telstra Corporation Ltd (ASX: TLS)

It won’t be easy to find relatively dependable dividend payers as we head into the profit reporting season, but I think Telstra checks most of the boxes. While management is committing to ramping up its spending on building its 5G network during the COVID-19 shutdown, the telco has sufficient firepower to keep paying a 16 cents a share dividend for FY21. That gives it a gross yield of around 6% if franking is included.

Motley Fool contributor Brendon Lau owns shares of Telstra Corporation.

Chris Chitty: Coca-Cola Amatil Ltd (ASX: CCL)

Coca-Cola Amatil is the well known bottler of Coca-Cola soft drinks and a variety of other beverages in Australasia. It has seen volume decline as a result of the coronavirus pandemic, however, it has stated that the effect on earnings before interest and tax will be contained due to cost cutting.

While the company may reduce its dividend, it has been a reliable payer of dividends over the long term and will likely maintain a solid yield. Coca-Cola Amatil has a trailing dividend yield of 5.45%, unfranked.

Motley Fool contributor Chris Chitty does not own shares in Coca-Cola Amatil Limited. 

Toby Thomas: Fortescue Metals Group Limited (ASX: FMG)

There are only three sure things in this world: death, taxes, and a hefty dividend from Aussie miners like Fortescue. Boasting an already impressive trailing annual yield of 6.45% (fully-franked), I think it’s likely that Fortescue will maintain or even increase its next distribution payment in September.

The mining juggernaut is benefitting from the price of iron ore steadfastly perched at over $100 per tonne, coupled with an extended closure to competitor Vale’s Brazilian mines due to COVID-19 lockdowns. Due to these tailwinds and China’s unrelenting demand for high-quality iron ore throughout this year, I think Fortescue is a must-have for dividend-seekers.

Motley Fool contributor Toby Thomas does not hold shares in Fortescue Metals Group.

Sebastian Bowen: Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend ‘quiet achiever’. On the surface, its 3.5% dividend yield doesn’t look too special. But this building materials manufacturer (and part-time landlord) has held or grown its shareholder payouts every year since 1976. That’s a record that few, if any, other companies can match.

As Brickworks is in an evergreen and hard-to-disrupt industry, I think this ASX dividend stalwart can keep its streak going for at least another 44 years. As such, I don’t think any ASX dividend investor will regret holding Brickworks in an income-focused portfolio for the foreseeable future.

Motley Fool contributor Sebastian Bowen does not own shares of Brickworks.

James Mickleboro: Goodman Group (ASX: GMG)

Although the shares of this owner, developer, and manager of industrial real estate don’t provide the biggest yield on the ASX, I believe it is still worth considering.

Thanks to its exposure to the ecommerce market through relationships with giants such as Amazon and DHL, I believe Goodman Group is well-positioned to grow its distribution at a strong rate for years to come. This could make it a real income star of the future.

For now, based on the latest Goodman Group share price, I estimate that it offers investors a 2.1% FY 2021 distribution yield.

Motley Fool contributor James Mickleboro does not own shares of Goodman Group.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia owns shares of and has recommended Brickworks and Telstra Limited. The Motley Fool Australia owns shares of APA Group, COLESGROUP DEF SET, and Wesfarmers 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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