Buying ASX dividend shares for income used to be a lot easier than it is today. With the coronavirus pandemic still ongoing, it’s been an especially challenging year for many ASX dividend shares to cough up their usual streams of income. Luckily, this hasn’t affected every dividend payer on the ASX, so here are 3 ASX dividend shares that I would happily buy today for income:
Coles Group Ltd (ASX: COL)
Coles is my first income pick. It’s a business we’d probably all be familiar with as Australia’s second-largest grocer and supermarket. I particularly like Coles’ defensive nature in this light – as we all saw back in March, companies that sell household essentials do just fine in all kinds of economic weather. That in turn lends great stability and reliability to Coles’ dividend in my view. Although it’s not the largest yield you can get on the ASX today, Coles’ fully franked, trailing yield of 3.26% on current prices isn’t a bad deal. Especially if you consider that interest rates are at virtually zero.
Fortescue Metals Group Limited (ASX: FMG)
Fortescue is another dividend payer that I think is worthy of consideration today. Iron ore miners like Fortescue (in contrast to Coles) are not normally the steadiest dividend payers due to the cyclicality of the iron price over time. Even so, I think Fortescue runs so tight a ship that it is able to pay out generous dividends under most pricing scenarios.
And since iron ore has been relatively expensive in 2020 so far (holding well over US$100 a tonne for most of the year), Fortescue shares aren’t a bad option today, even at their relatively high price. On current pricing, Fortescue is offering up a whopping trailing dividend yield of 10.51%, which also comes fully franked. Even if Fortescue cuts this dividend in half next year, it’s still a worthwhile income stock. As such, I think this company is a buy today for income investors.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Our final dividend share today is actually an exchange-traded fund (ETF). VHY aims to hold a basket of the ASX’s best and most robust dividend-paying shares. You’ll find BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES) and the big four banks in its top holdings, as well as Coles and Fortescue incidentally. What’s great about an ETF like VHY is that it periodically rebalances its holdings to reflect the dividend environment of the time.
As such, you can easily buy this ETF and ‘put it in the bottom drawer’, knowing that it will automatically weed out dividend underperformers. VHY offers a trailing dividend yield of 5% on current prices. Unlike most ASX shares, it also pays out its distributions quarterly – an attractive quality for many investors.
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Returns As of 6th October 2020
Motley Fool contributor Sebastian Bowen owns shares of Vanguard Australian Shares High Yield Etf. The Motley Fool Australia owns shares of 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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