Do you have some money to invest into ASX dividend shares? There are three ideas in this article.
The official Reserve Bank of Australia (RBA) interest rate is now just 0.1%. That means the interest return from the bank is less than the rate of inflation.
With that in mind, here are three ASX dividend shares:
Brickworks Limited (ASX: BKW)
Brickworks is biggest brickmaker in Australia and it’s one of the biggest building products businesses in the country. Aside from bricks, it sells things like masonry, paving, roofing and precast.
It is also the leading brickmaker in the north east of the US after making some acquisitions such as Glen Gery.
Brickworks funds its dividend purely from the cashflow of its investments. It has two main asset segments.
The first segment is its large holding of Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares which it has held for decades. Soul Patts is an investment conglomerate with a diversified portfolio in many sectors. It is invested in telecommunications, building products, property, resources, financial services, agriculture and swimming schools.
Soul Patts itself is an ASX dividend share with a history of growing dividends going back to 2000. Soul Patts pays Brickworks a growing dividend from its investment income.
The other asset that Brickworks owns is half of an industrial property trust joint venture alongside Goodman Group (ASX: GMG).
Industrial properties are in higher demand because of logistics and and e-commerce demands. Brickworks is benefiting from this as the trust is building large distribution warehouses for Coles Group Ltd (ASX: COL) and Amazon. This is expected to send the gross asset value of the trust above $3 billion and increase the rental distributions from the trust by at least 25%.
At the current Brickworks share price it offers a trailing grossed-up dividend yield of 4.25%.
APA Group (ASX: APA)
APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.
APA has been one of the most consistent ASX dividend shares. It has been increasing its distribution every year since before the GFC.
The infrastructure giant recently announced that it is going to invest in and construct new pipelines in WA to connect emerging gas fields in the Perth Basin to the resource rich Goldfields region. This new Northern Goldfields Interconnect (NGI) will connect to APA’s Goldfields Gas Pipeline (GGP). APA also expects that this could encourage nearby miners to want to connect to it which could unlock another stage of pipelines.
APA continues to invest in new projects which may unlock more growth of the cashflow and fund higher distributions.
At the current APA share price it offers a trailing distribution yield of 4.9%.
Bapcor Ltd (ASX: BAP)
Auto parts business is an ASX dividend share that is a popular holding of Wilson Asset Management. It’s a holding of both listed investment companies (LICs) WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).
A recent trading update by Bapcor showed that in the first three months of FY21 (the first quarter), overall revenue went up by 27% with retail revenue growing by 47% and specialist wholesale revenue rising by 45%.
WAM says that Bapcor is benefiting from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. The fund manager believes it has a strong balance sheet and it’s well placed to make earnings-accretive acquisitions.
Bapcor has been steadily increasing its dividend over the past several years, including during the COVID-19-affected FY20. At the current Bapcor share price, it has a trailing grossed-up dividend yield of 3.5%.