I think that Aussie investors would be smart to look at global ASX dividend share ideas.
Australia has a reputation for dividend-paying shares because of the higher payout ratios as well as the bonus of franking credits.
However, if you focus on businesses that are mainly based in Australia (and New Zealand) then you're missing out on the rest of the world economy.
Here are three ASX dividend share ideas to get income diversification from global sources:
Pacific Current Group Ltd (ASX: PAC)
Pacific is a global boutique asset management business which takes stakes in asset managers and helps them grow.
It has a portfolio of 15 specialist boutiques in Australia, India, Luxembourg, the US, and the UK.
Pacific's underlying funds under management (FUM) has been growing at a strong rate recently. In FY20, asset manager GQG grew its own FUM from US$25.1 billion to US$44.6 billion. Carlisle and Victory Park also grew by 31% and 19% respectively.
Excluding boutiques sold and acquired during the year, Pacific's FUM grew by 52% to $93.3 billion.
I count Pacific as a great ASX dividend share because the underlying earnings growth is helping its dividend. FY20 underlying earnings per share (EPS) went up by 18% to $0.44, helping the annual dividend jump by 40% to $0.35 per share.
At the current Pacific Current Group share price it offers a trailing grossed-up dividend yield of 8%.
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
This is a listed investment company (LIC) operated by Paul Moore and his investment team at PM Capital. The purpose of a LIC is to invest in other shares, make investment gains and then the LIC can pay dividends from those investment profits.
PM Capital Global Opportunities Fund looks to invest in good businesses at a good price which are being valued differently to their long term intrinsic value and will return to their 'correct' value over time.
At the moment some the holdings in its portfolio include Cairn Homes, Bank of America, Visa, MGM China Holdings, KKR & Co, Siemens and Freeport-McMoRan.
Its portfolio is invested in businesses right around the world. At the end of September 2020, around 60% of the portfolio was invested in businesses listed in the US, 29% in Europe, 6% in Asia (excluding Japan) and 5% in the UK. Remember that the underlying earnings of those holdings are mostly global, not just from one country.
I think, at the current PM Capital Global Opportunities Fund share price, it's a global ASX dividend share to consider because it offers a grossed-up dividend yield of 6.3%. It has increased its dividend each year since 2016. It's also valued at a 16% discount to the pre-tax net tangible assets (NTA) at 9 October 2020.
Magellan Global Trust (ASX: MGG)
This is a listed investment trust (LIT) which aims to invest in the best businesses in the world.
It targets companies that can consistently exploit competitive advantages and earn good returns on capital.
Looking at its holdings, some of the businesses to make it into Magellan Global Trust's portfolio are: Alibaba, Alphabet, Atmos Energy, Eversource Energy, Microsoft, Tencent, Facebook, Facebook, Visa, Mastercard and Reckitt Benckiser.
The portfolio is a combination of both defensive and 'growth' businesses. It has worked well. After fees, the trust has delivered annual outperformance of an average of 1.35% per annum compared to the MSCI World Net Total Return Index (AUD) since inception in October 2017.
I think it's a solid idea as an ASX dividend share because it aims for a distribution yield of 4%. That handily beats what you can get from the bank at the moment. The distribution should grow as Magellan Global Trust's net asset value (NAV) increases over time.
There are also some other top dividend ideas on the ASX worth looking into.
