3 ASX dividend shares rated as buys

In this article are 3 ASX dividend shares that have been rated as buys by a Motley Fool service, including Rural Funds Group (ASX:RFF).

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Some ASX dividend shares have been rated as buys by the Motley Fool Dividend Investor service.

The RBA official interest rate is now just 0.1% and the share prices of some ASX dividend shares are going higher. However, the following the ASX dividend shares are rated as buys:

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a global pathology business with operations across the USA, Europe, Australia and New Zealand.

The business has performed over 11 million COVID-19 tests which is providing a lift to revenue. Despite COVID-19 impacting its operations earlier in 2020, it was still able to report revenue growth of 11% in FY20 and underlying net profit growth of 7%.

In FY20 the ASX dividend share actually maintained its final dividend, but there was a 3% increase of its interim dividend, which allowed the total FY20 dividend to increase by 1.2% to $0.85 per share.

FY21 has seen a recovery of normal pathology operations, whilst COVID-19 testing is surging. In the first quarter of FY21 it saw revenue growth of 29% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 71%.

At the current Sonic Healthcare share price it has a grossed-up dividend yield of 2.9%.

Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend share with a long dividend record. It hasn’t cut its dividend in over 40 years.

The building products business funds its dividend entirely from the cashflow received from its non-construction assets.

It has a 50% stake of an industrial property trust in partnership with Goodman Group (ASX: GMG). This trust actually has a lot of growth potential over the next couple of years. At Oakdale West in Sydney, construction of the Amazon distribution facility is well advanced and is due to be completed in September 2021. Brickworks also said that infrastructure works are also proceeding to schedule and will allow construction of the Coles Group Ltd (ASX: COL) distribution warehouse to commence early in 2021.

Once these two facilities are completed, net rental distributions will increase by over 25% and gross assets held within the property trust is expected to exceed $3 billion.

Brickworks also owns around 40% of the shares of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts itself regularly increases its dividend.

The company is reporting a promising recovery in its Australia building products segment, though the US building products business is not going as well as management hoped.

At the current Brickworks share price it offers a grossed-up dividend yield of 4.2%.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) which owns a variety of farms including cattle, almonds, vineyards, macadamias and cropping (cotton and sugar).

The ASX dividend share aims to increase its distribution by 4% per annum for unitholders. It has been successful with this goal each year since listing.

Most of the regular rental profit growth (AFFO – adjusted funds from operations) is generated from rental increases built into its contracts – either a fixed 2.5% increase or linked to CPI inflation.

It also aims to increase its rental profit (and distribution) by investing in productivity improvements at its farms. The cattle farms have been a particular focus in recent years.

Rural Funds has a weighted average lease expiry (WALE) of around 11 years, which is among the highest in the REIT sector.

At the current Rural Funds share price it has a FY21 forward distribution yield of 4.3% based on the 11.28 cents annual distribution per unit forecast for this financial year.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Sonic Healthcare 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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