The Motley Fool

Top ASX dividend shares to buy in August 2020

Along with our Top ASX Stock Picks for August, 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…

Kate O’Brien: AGL Energy Limited (ASX: AGL)

For a side of certainty with my dividends, I would be looking to AGL Energy. The company operates Australia’s largest energy portfolio, generating gas and electricity and selling it to end users. While COVID-19 may have shut down industries across Victoria, it can’t turn off demand for energy. This provides a degree of reliability for AGL’s earnings. AGL targets a dividend payout ratio of 75% and has predicted full year profits in the upper half of its guidance range. At the time of writing, the AGL share price is yielding 6.52% and is still around 20% down from its 2020 high. 

Motley Fool contributor Kate O’Brien does not own shares in AGL Energy Limited. 

Chris Chitty: Fortescue Metals Group Limited (ASX: FMG)

Fortescue Metals Group has seen significant success recently as a result of a surging iron ore price. Not only is this company offering potential earnings growth, it has a trailing dividend yield of 5.44% fully franked (at the time of writing). In the financial year to 30 June 2020, Fortescue Metals shipped over 178 million tonnes of iron ore with C1 cash costs of just US$12.94, this is against a current iron ore spot price of more than US$100 per tonne. With China hungry for iron ore as it builds up its infrastructure, I believe Fortescue is in a great position to continue paying large dividends.

Motley Fool contributor Chris Chitty does not own shares in Fortescue Metals Group Limited.

Toby Thomas: Charter Hall Long WALE REIT (ASX: CLW)

I’ve been keeping an eye on this real estate investment trust (REIT) for a while now, and think it could be a dividend harvester for a long time to come. Last week, the property trust announced its full-year results for FY20, which included a 5.2% rise in operating earnings and statutory profit of $122 million. The REIT currently pays out an annual dividend yield of around 5.8%, and is highly attractive for its average lease duration spanning a whopping 14 years. That provides long-term security for shareholders, who have the peace of mind knowing that blue-chip tenants such as  Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), BP and Coles Group Ltd (ASX: COL) will continue to pay rent for the foreseeable future.

Motley Fool contributor Toby Thomas does not own shares in Charter Hall Long WALE REIT, Woolworths Group Ltd, Telstra Corporation Ltd or Coles Group Ltd.

Lloyd Prout: CSL Limited (ASX: CSL)

CSL is the largest company on the ASX, but it definitely isn’t the cheapest at approximately 46x earnings (at the time of writing). But, with around a 1% dividend yield and currently trading approximately 18% below its February highs, I think the CSL share price provides long-term investors a great total return opportunity.

CSL’s plasma collections have been impacted by COVID-19, but over the long term the business should recover and the company should continue to grow earnings at a double-digit rate. The company also has a relatively low payout ratio of under 50%, providing room to grow the dividend even if earnings are flat.

Motley Fool contributor Lloyd Prout does not own shares in CSL Limited and expresses his own opinion.

Tristan Harrison: PM Capital Global Opportunities Fund Ltd (ASX: PGF) 

PM Capital Global Opportunities Fund is a listed investment company (LIC) that invests in international shares which are usually unloved by the market.  

It currently has a grossed-up dividend yield of around 6.1%, at the time of writing, and it has grown its dividend each year since 2016 when it started paying one. It has an outlook of growing dividends.  

The LIC has diversified holdings like KKR & Co Inc, Visa Inc, Siemens AG and Freeport-McMoRan Inc. It’s also trading very cheaply – its share price is trading at around a 19% discount to the 31 July 2020 net tangible assets (NTA). I think it’s a good way to diversify your income stream.  

Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. 

Daryl Mather: Charter Hall Retail REIT (ASX: CQR)

The Charter Hall Retail REIT is focused on shopping centres like several other REITs. However, it is focused on neighbourhood and sub-regional centres. For example, the company owns a shopping centre in Albany, WA as well as Townsville, QLD. These centres are anchored by supermarkets and typically contain non-discretionary stores like chemists.

I think the market has misjudged the impact of coronavirus on these assets. The REIT currently has a trailing 12-month dividend yield of around 6.2%. Its share price is down 24.24% year to date (at the time of writing) and it has a market capitalisation that is about 76% of its net tangible assets.

Motley Fool contributor Daryl Mather does not own any shares of Charter Hall Retail REIT.

Brendon Lau: Amcor PLC (ASX: AMC)

The global packaging group may sound like an unexciting income share with a yield between 4%-5%, but unexciting is exactly what income investors need right now. Amcor’s earnings are expected to be relatively stable during the COVID-19 mayhem given its large exposure to the consumer staples and medical industries. This means it’s unlikely to cut its dividend. What’s more, unlike most other ASX 200 shares, Amcor pays its dividend quarterly.

Motley Fool contributor Brendon Lau does not own shares of Amcor PLC. 

Glenn Leese: Platinum Asset Management Ltd (ASX: PTM)

Platinum Asset Management is a pooled investment sponsor. Essentially, it provides services to hedge and mutual funds by helping with launches and management. Platinum also invests in the share market directly, applying a value investing strategy across consumer, health care and technology sectors. With the current state of the world, these sectors are excellent targets.

For more than 10 years, Platinum has delivered a stable and increasing dividend. The yield has nearly doubled since 2009, from 3.6% up to 6.99% at the time of writing, making it my top dividend stock pick.

Motley Fool contributor Glenn Leese does not own any shares in Platinum Asset Management Ltd.

Bernd Struben: Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare Limited was established in 1987. Today, Sonic Healthcare is the world’s third largest pathology/laboratory medicine company with a market cap of around $16 billion. Based in Sydney, it operates in 8 countries.

The company has an enviable track record of growing — or at the very least maintaining — its total dividend per share payout dating all the way back to 1994.

The last interim dividend of 34 cents per share was paid on 25 March, for an annual dividend yield of 2.5%, partially franked at 30%.

Atop its reliable dividends, the Sonic Healthcare share price has gained nearly 19% year to date.

Motley Fool Contributor Bernd Struben does not own shares in Sonic Healthcare Limited.

Michael Tonon: WAM Global Ltd (ASX: WGB)

Not many companies are in the position to increase their current dividend payment, let alone announce a 100% increase. However, this is exactly what listed investment company (LIC) WAM Global has recently done.

WAM Global is an LIC which manages a diversified portfolio of global companies. With the current increase in its final dividend, it now pays shareholders a 5% fully-franked dividend (grossed up), with enough profit reserves to cover this payment for at least the next 3 years.

In addition, it has been growing its dividend rapidly since it began paying in 2019 and currently also trades at a ~12% discount to its net tangible assets (NTA) when compared to July’s before tax NTA of $2.28. 

Motley Fool contributor Michael Tonon owns shares in WAM Global Ltd. 

Matthew Donald: Charter Hall Long WALE REIT (ASX: CLW)

Charter Hall Long WALE REIT has a diversified property portfolio across industrial & logistics, office, long WALE retail, telco exchange and agri-logistics sectors. Its strong tenants, which include government, ASX-listed and multinational companies, have helped the group deliver solid full year results announced last week.

COVID-19 hasn’t had a significant impact on the business. Additionally, from FY17 it has been able to deliver an average distribution growth rate of 3% to FY20.

Going forward, due to its diverse property portfolio and quality tenants, I believe the group will be able to deliver continued distribution growth to investors.

Motley Fool contributor Matthew Donald does not own shares in Charter Hall Long WALE REIT.

Phil Harpur: JB Hi-Fi Limited (ASX: JBH) 

Electronics retailer JB Hi-Fi has continued to perform well financially, despite the challenges of the coronavirus pandemic. For the half year so far (to early June), JB Hi-Fi reported sales up 20% over the prior corresponding period. Demand has been particularly strong during the pandemic for technology products. I am particularly attracted to JB Hi-Fi as a retailer because its online channel is more developed than some of its other bricks and mortar competitors such as Harvey Norman Holdings Limited (ASX: HVN). Online sales have been booming during the crisis. JB Hi-Fi also pays a fully-franked forward dividend yield of around 3.3%.

Motley Fool contributor Phil Harpur does not own shares in JB Hi-Fi Limited or Harvey Norman Holdings Limited.

Sebastian Bowen: CSL Limited (ASX: CSL)

CSL is not normally considered a strong ASX dividend share. And fair enough too – on recent prices, you can only expect a dividend yield of around 1%. But I think CSL is an underappreciated dividend star. It has increased its payouts by an average of 15% per annum since it first started sending cash out the door in 2013. If this continues, it won’t be long until CSL is a dividend heavyweight in its own right. And investors who get in early will benefit the most. As such, I think CSL is a top dividend pick today for income down the road.

Motley Fool contributor Sebastian Bowen does not own shares in CSL Limited.

James Mickleboro: BWP Trust (ASX: BWP) 

I think that BWP Trust would be a great dividend option for investors in August. It is an REIT that invests in and manages commercial properties throughout Australia. The majority of its properties are leased to home improvement giant Bunnings Warehouse. These are high quality assets which have actually increased in value during the pandemic. This is quite the opposite to what is happening with most retail properties right now. In FY 2021, BWP intends to pay a distribution in the region of 18.3 cents per unit. This works out to be an attractive 4.6% yield based on the current BWP share price, at the time of writing.

Motley Fool contributor James Mickleboro does not own shares in BWP Trust. 

Nikhil Gangaram: Nick Scali Limited (ASX: NCK)

Nick Scali is my dividend pick for August. Despite the chaos caused by the COVID-19 pandemic, the furniture retailer recently surprised the market with its results for FY20, whilst also predicting a bumper FY21.

For the 12 months to 30 June, Nick Scali reported revenue of $262.5 million and net profit of $42.1 million. In addition, the company cited a strong order book and expects earnings to jump 50% for the first half of FY21. As a result, Nick Scali increased its final dividend by 12.5%, with the company set to pay out 22.5 cents per share.

Motley Fool contributor Nikhil Gangaram does not own shares in Nick Scali Limited.  

Daniel Ewing: AGL Energy Limited (ASX: AGL)

AGL has been hard hit by the pandemic, despite it traditionally being considered a safe haven asset. AGL operates and owns Australia’s largest energy generating portfolio. Thus, it is convenient that the public’s need for electricity is incessant. Furthermore, Victoria is having to endure a second lock down in the middle of winter. Shareholders will be hoping this causes an uptick in utility consumption that will provide a meaningful boost to earnings for the energy giant. AGL currently offers a trailing dividend of 6.52% on current prices. With franking at 80%, the yield is nothing to be scoffed at.

Motley Fool contributor Daniel Ewing does not own shares in AGL Energy Limited.

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