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3 leading ASX dividend shares to buy for income

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The Reserve Bank of Australia (RBA) recently cut the official interest rate down to 0.1%. In this article are some leading ASX dividend shares to buy for income.

These three ideas have been rated as buys by the Motley Fool Dividend Investor service.

Let’s get straight to it:

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second biggest funeral business in Australia and New Zealand. According to ABS stats, death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.

The funeral business recently declared a fully franked full year dividend of 10 cents per share for FY20, which equates to a grossed-up dividend yield of 4.7% at the current Propel share price.

The ASX dividend share recently gave a trading update for the first quarter of FY21 which said that there was total funeral volume growth on the prior corresponding period, the average revenue per funeral displayed growth on FY20 (within its target range of 2% to 4%) and operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew 18%.

That was on top of FY20’s growth which saw pro forma operating net profit after tax (NPAT) increasing by 8.4% and statutory operating net profit growing by 6.5%.

The company is now only expecting COVID-19 related impacts in isolated hot spots. Propel still believes growth will come from a growing and ageing population. Acquisition completed during, and since, FY20 will also help. New acquisitions could also occur.

Service Stream Limited (ASX: SSM)

Service Stream is an ASX dividend share involved in the design, construction, operation and maintenance of important networks like telecommunications and other utilities.

The NBN is its biggest customer and it recently won a contract extension. Service Stream management is working to diversify its earnings away from telecommunications.

In FY20, Service Stream paid an annual dividend per share of 9 cents, equating to a grossed-up dividend yield of 5.6% at the current Service Stream share price. In FY20 it increased revenue by 9% and EBITDA from operations went up 15.9%.

Service Stream is expecting its FY21 earnings to remain resilient, supported by long-term contracts. Continued demand is expanded across critical infrastructure networks where it will try to secure more organic growth.

The ASX dividend share will be particularly focused on winning additional work from the NBN’s recent $4.5 billion network upgrade.

Service Stream is also looking for acquisition opportunities. However, the company is expecting the FY21 result to be weighted towards the second half because of COVID-19 impacts in the first half where works were slowed and new projects delayed.

Brickworks Limited (ASX: BKW)

Brickworks has four different divisions. It has an Australian building products division where it’s the market leader for bricks, but it also sells other things like masonry, roofing, paving and precast.

The company also has an American building products division that it acquired in recent years. Brickworks is already the market leader in the north east of the US and it’s working to increase efficiencies there.

The ASX dividend share owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

It also owns 50% of an industrial property trust along with Goodman Group (ASX: GMG). This trust is steadily growing its net rental profit. This trust will soon count Amazon and Coles Group Ltd (ASX: COL) as paying tenants as two large, high-tech distribution warehouses are being built for them.

Brickworks’ dividend hasn’t been cut for over 40 years. The dividend is purely funded by the dividends from Soul Patts and the profit from the property trust.

At the current Brickworks share price it has a trailing grossed-up dividend yield of 4.6%.

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Returns As of 15th February 2021

Motley Fool contributor Tristan Harrison owns shares of 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. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Propel Funeral Partners Ltd and Service Stream 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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