Throughout the year, companies have slashed their dividends to protect their balance sheet in the face of COVID-19. As a result, income seeking investors have commonly ditched these blue chip ASX shares for other opportunities.
While the economy is still marred by uncertainty, it can be quite difficult to pick companies with reliable and growing dividends. So below, I have listed my 3 favourite ASX dividend shares to buy this year.
My top ASX shares to buy for dividends in 2020
Dicker Data Ltd (ASX: DDR)
Dicker Data is an Australian wholesaler and distributor of computer hardware, software and related products. Its vendors include HP Inc (NYSE: HPQ), Cisco Systems Inc. (NASDAQ: CSCO), Toshiba Corp, Lenovo Group Limited, Microsoft Corporation (NASDAQ: MSFT), AsusTek Computer Inc. and other major brands. The company services approximately 5,000 retailers which, in turn, service multiple clients ranging from small and medium-sized enterprises to large corporate businesses.
Dicker Data has delivered a robust performance during the pandemic thanks to the ongoing demand for its products and services. Since March, the Dicker Data share price has jumped from $3.90 to $7.91 at the time of writing. This represents a return of nearly 103% in the last six and half months, not including the quarterly dividends the company pays.
This year alone, Dicker Data paid out 28 cents to shareholders, with another expected dividend due in November. Surprisingly, the company has increased its dividend payments to shareholders by 50% during COVID-19, as compared to previous quarters.
The company has been growing its vendor agreements at a fast pace. In its interim results released in August, Dicker Data reported a record $1 billion in revenue. Furthermore, to supplement its future earnings, the company is building a new distribution centre. It is anticipated this will be completed at the end of the year.
Fortescue Metals Group Limited (ASX: FMG)
The world’s fourth largest iron ore producer, Fortescue has become a dominant player in the mining industry. With world-class assets located in the Pilbara region of Western Australia, the company has been booming in recent times.
Fortescue enjoys a close trade relationship with China, which has been a major consumer of the steel-making ingredient for the past decade. In September, Fortescue highlighted record earnings, with a large percentage of its profits handed down to shareholders.
In total, the company has paid out $1.76 in dividends during 2020. This reflected another record for Fortescue, and was a major boost to investors’ confidence in the company tracking strongly. At the time of writing, the Fortescue share price is up 1.52% to $16.74. This represents a decline of 14.42% from its 52-week high achieved in late August.
Looking forward, the mining outfit has poured $1.7 billion into its Eliwana Mine and Rail project. Due to completed in December this year, the huge investment is expected to produce 170 million tonnes of iron ore per year. In comparison, Fortescue shipped 178.2 million tonnes for the year ending 30 June 2020.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Listed for more than 107 years, Soul Patts (as it is commonly referred to) is the second oldest company listed on the ASX. The Australian investment house has a portfolio of ASX shares in industries such pharmaceuticals, mining, building materials, property investment, telecommunications, financial services and other equity investments.
Soul Patts’ broad asset diversification has made it resilient to economic crises. The company has awarded dividends to its shareholders for the last 40 years. Furthermore, Soul Patts has increased its dividend pay-out amounts every year since 2000. In September, the investment conglomerate announced a 35 cents per share dividend, bringing its total payment to 60 cents for its financial year.
The Soul Patts share price can be picked up for $24.21 at the time of writing. This represents an 8.32% increase over the company’s share price 12 months ago.
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Returns As of 6th October 2020
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Aaron Teboneras owns shares of Dicker Data Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia owns shares of and has recommended Brickworks, Dicker Data Limited, 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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