The recent reduction in interest rates from the Reserve Bank of Australia (RBA) has once again highlighted the appeal of ASX dividend shares for those investors seeking regular investment income. At the new cash rate of 0.1%, there really are few alternatives.
Whilst some investors might seek the safety of cash and term deposits (complete with government guarantee), the reality is that an interest rate of 1% (if you’re lucky) isn’t going to help you build wealth or provide a decent income.
Here’s a closer look at 2 ASX dividend shares that have been recommended by Motley Fool analysts.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is one of the most diversified companies on the ASX. It owns a massive portfolio of businesses, ranging from Bunnings and Officeworks to Kmart and Target. It also owns mines, chemical manufacturing plants, Kleenheat Gas, and a clothing line, amongst other things. Wesfarmers also still retains a ~5% stake in Coles Group Ltd (ASX: COL).
Wesfarmers has a long history on the ASX – a history that includes a long streak of dividend payments. This company has paid 2 dividends every year since at least 1985 (when Wesfarmers’ online records go back to). Its two most recent payouts came in at 75 and 95 cents per share, respectively (the latter including an 18 cents per share special dividend). That gives Wesfarmers a trailing dividend yield of 3.6% on current prices, or 5.14% grossed-up with full franking credits.
Wesfarmers is currently a recommendation of the Motley Fool’s Everlasting Income service.
Washington H. Soul Pattinson & Co Ltd (ASX: SOL)
Soul Patts is another ASX company that’s very old and highly diversified. But instead of owning a portfolio of underlying businesses, this company instead owns a portfolio of ASX shares within it. Some of the businesses Soul Patts has large stakes in right now include Brickworks Ltd (ASX: BKW), TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC). It also owns a portfolio of unlisted assets, such as property.
Soul Patts also has the rare distinction of having a record of 20 straight years of annual dividend increases – a record unmatched on the ASX today. Its last two dividend payments came in at 25 cents and 35 cents a share, respectively. That gives this company a trailing dividend yield of 2.2% on current prices, or 3.14% grossed-up with full franking.
Soul Patts is a current recommendation of the Motley Fool’s Dividend Investor service, as well as Everlasting Income alongside Wesfarmers.
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*Returns as of February 15th 2021
Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. 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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