2 ASX dividend shares that could provide steady income in retirement

Brickworks is one of the ASX dividend shares that may be able to provide reliable dividend income.

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There are some ASX dividend shares that may be able to provide consistent dividend income in retirement.

Not every business that pays a dividend has been steady with the income payments. There are a number of businesses that cut their payments to shareholders during the COVID-hit 2020 year such as Westpac Banking Corp (ASX: WBC), Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

But there were some ASX dividend shares that maintained, and even grew, their payments during FY20 and FY21.

Brickworks Limited (ASX: BKW)

Brickworks is one of the older businesses on the ASX. It has been listed for decades.

The company’s normal dividend has been maintained or increased every year since 1976. That makes 45 years since the last decrease.

Whilst it is known for its building products divisions, management aim for its investments and property trust to fund the growing dividend from the ASX dividend share.

The ‘investments’ is its substantial shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), the investment conglomerate. This investment dates back to 1968. Brickworks says that the stake in WHSP has delivered outstanding returns, steadily increasing dividends and diversification.

Soul Patts recently merged with the listed investment company (LIC) Milton, which will provide increased scale, diversification and liquidity to pursue additional investment opportunities.

Brickworks also owns 50% of an industrial property trust with gross assets of more than $2.5 billion and a long development pipeline. Brickworks’ latest share of the net asset value of the property trust is $911 million.

The completion of pre-committed developments over the next two years will result in an uplift of around 60% in rent and leased asset value from the current value.

In an investor presentation, the ASX dividend share recently said:

We are proud of our long history of dividend growth, and the stability this provides to our shareholders.

At the current Brickworks share price, it has a grossed-up dividend yield of 3.6%.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). The business owns a diverse and growing portfolio of assets. It is invested in cattle, almonds, macadamias, vineyards and cropping (cotton and sugar).

Not only is Rural Funds benefiting from the steady rental income that those farms are paying to the business, but it has a tactic of identifying properties that have the potential to be improved as Rural Funds re-invests some of its rental profit each year.

Making the farms more productive increases the value of them for the ASX dividend share as well as increasing the rental income potential.

Most of Rural Funds’ farms are leased to large, high-quality tenants that are more reliable for making rental payments, even in leaner economic times.

The business has a goal of growing the distribution for investors by 4% per annum.

In FY22, Rural Funds has provided guidance of distribution growth of 4% to 11.73 cents per unit. That translates to a forward distribution yield of 4.2%.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks and RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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