ASX dividend shares could be the answer for income-seeking people who want to boost their investment income.
Many companies are able to pay a dividend and invest in their businesses for more growth over the long term.
However, dividends are definitely not guaranteed. Share prices can up and down during periods of volatility. Profit can also move quite a bit year to year, depending on what's happening in the economy and what's happening within the company.
I like that with that cash dividend payments, we can decide to do whatever we want with the money. We can take up a dividend reinvestment plan (DRP), use the cash to invest in other ASX shares, save it, or spend it.
Let's have a look at a couple of ideas that could be attractive for dividends in the next few years.
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Accent Group Ltd (ASX: AX1)
Accent is one of the leading footwear retailers in Australia. It sells brands it owns as well as ones where it acts as the distributor.
Some of the brands it's responsible for include CAT, Dr Martens, Glue Store, Hoka, Henleys, Nude Lucy, Skechers, The Athlete's Foot, and Vans.
Let's look at the potential dividends for the next couple of financial years, according to estimates on CMC Markets.
In FY22, which has already finished (but the final dividend hasn't been declared), Accent is expected to pay an annual dividend of 5 cents per share. That translates into a potential grossed-up dividend yield of 5.4%.
Accent is expected to achieve dividend growth in FY23 and FY24.
In FY23, the business is expected to pay an annual dividend per share of 9.2 cents, translating into a grossed-up dividend yield of 10%.
In FY24, the ASX dividend share is expected to pay a dividend of 11.2 cents per share. That would be a grossed-up dividend yield of 12.2%.
The business is hoping to grow its profit through store rollouts for different brands, grow its online sales, work with quality brands, and so on.
I think longer-term dividend growth and profit growth could make it an attractive option at this price.
Duxton Water Ltd (ASX: D2O)
Duxton Water is a pretty unique business on the ASX. It owns a portfolio of water entitlements which it can then provide to Australian farmers. Water leases can be for various lengths of time, including for the long term as well as forward allocation contracts and spot allocation supply.
The business says that 67% of its permanent water value is leased to Australian farming businesses. That accounts for 86% of the company's high-security portfolio. The weighted average lease expiry is 1.8 years, or 4.9 years including renewal options.
Duxton Water recently paid its tenth consecutive and increasing dividend to shareholders of 3.2 cents per share. It's also paying a dividend every six months.
The ASX dividend share said "with the company's high percentage of leased entitlements and visible revenue streams", it is able to provide growing dividends.
It's expecting to pay dividends of 6.7 cents per share for FY22 (which, for Duxton, is based on the calendar year) and 7.1 cents per share in FY23.
That means the 2022 grossed-up dividend yield is expected to be 5.7% while, in 2023, the grossed-up dividend yield is expected to be 6%.
I like this business as it provides interesting diversification, a good yield, and growing income.
