3 ASX dividend shares I’d buy with $3,000 today

If I had $3,000 to invest into ASX dividend shares, I’d pick the three outlined in this article including Brickworks Limited (ASX:BKW).

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If I were investing $3,000 into ASX dividend shares then I’d pick the three I’m going to tell you about this article.

I believe that it’s a great time to buy ASX dividend shares if you’re feeling an income pinch at the moment because of how low Australia’s official interest rate is. Earning less than 1% from your bank account isn’t going to do much even if you have $1 million in the bank.

Businesses can make good profits and pay out attractive dividends (or distributions) whilst also steadily growing their capital value for investors.

Here are my ASX three dividend share ideas:

Pacific Current Group Ltd (ASX: PAC)

This company is a boutique asset manager that applies its strategic resources, including capital, institutional distribution capabilities and operational investment manager partners. It has 15 boutique asset managers globally.

FY20 was a strong year. Funds under management (FUM) was $93.3 billion at 30 June 2020, an increase of 52% excluding acquisitions and sales during the year.

Underlying earnings per share (EPS) rose by 18% to $0.44. It was this strength that supported a final dividend of $0.25 per share, bringing the full year dividend to $0.35 per share – up 40% compared to FY19. That was a strong increase from the ASX dividend share. 

That full year dividend, which is only a payout ratio of 80% of underlying earnings, represents a grossed-up dividend yield of 8.4%. The company appears to be expecting more growth and more wins in FY21.

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a high-performing listed investment company (LIC). As the name may suggest, it invests in microcaps and small caps. Its hunting ground is businesses with market capitalisations under $300 million at the time of acquisition.

The benefit of LICs is that they can invest in small cap growth shares, make investment gains and then pay out a dividend from some of those investment profits. That’s exactly what the ASX dividend share has been doing. It started paying a dividend in FY18 and has grown its dividend every year since. It has also paid a special dividend each year due to its strong investment returns.

At 31 August 2020, WAM Microcap disclosed that its portfolio had returned an average return of 21.7% per annum since inception in June 2017 before expenses, fees and taxes. The investment team have been very good at finding opportunities.

Looking at the current WAM Microcap share price, it offers an ordinary grossed-up dividend yield of 5.9%. It’s trading quite closely to its net tangible assets (NTA) per share of $1.49 at the end of August 2020.

Brickworks Limited (ASX: BKW)

Brickworks is a leading diversified property business with several attractive segments. I believe it’s a great ASX dividend share. 

Its most famous division is its Australian building products division which produces a variety of different products including bricks, paving, masonry, roofing and precast. This segment is obviously going through a tough time at the moment due to COVID-19. However, I think there will be a recovery as the economy and living conditions return to normal.

The same could be said about the North American division. It’s the market leader of bricks in the north east of the US, but COVID-19 is having a material impact at the moment.

In the meantime, it’s Brickworks other assets that support the current market capitalisation and the ASX dividend share’s payments to shareholders. It owns 50% of an industrial property trust along with Goodman Group (ASX: GMG) which is shifting towards high-tech e-commerce warehouses.

Brickworks also owns around 40% of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which itself is a quality ASX dividend share and provides Brickworks with steadily growing dividends and capital growth.

Brickworks hasn’t cut its dividend for over four decades and at the current Brickworks share price it offers a grossed-up dividend yield of 4.6%.

Foolish takeaway

Each of these ASX dividend shares offer something different. Brickworks seems very robust, WAM Microcap offers good diversification along with strong total returns whilst Pacific is a bit of a left field choice for dividends, but it could keep doing well.

Wondering where you should invest $1,000 right now?

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*Returns as of August 16th 2021

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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