These 3 ASX shares hold top spot as my favourite dividend deliverers

I went looking for income from shares. These are my preferred picks.

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Key points

  • I’m a fan of ASX dividend shares that offer a solid and growing dividends
  • Soul Pattinson and Brickworks both have long dividend records
  • WAM Microcap is an investment company that searches for small-cap opportunities

The investment style of my portfolio is to own ASX dividend shares. As I've previously written about, every one of my holdings pays a dividend.

I'm a fan of the green energy initiatives of Fortescue Metals Group Limited (ASX: FMG) and the company's big dividend, though the dividend is not consistent enough to be one of my top picks.

I also like what Altium Limited (ASX: ALU) is doing with its core and newer software offerings relating to electronics. The business has an impressive dividend growth streak going on, though the dividend yield isn't big enough to really count as an ASX dividend share.

But, these three are my favourites in the portfolio:

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Soul Pattinson is one of the oldest investment businesses in Australia.

It started off as a pharmacy business, however, it has since made many investments in companies like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), and Macquarie Group Ltd (ASX: MQG).

One of the main things that I like about this ASX dividend share is that the annual dividend has been increased every year since 2000.

The company has managed to do this by building a portfolio of defensive investments that can produce reliable cash flow, funding the dividend even in difficult times like the GFC and COVID-19.

The portfolio also continues to become more diversified. It reinvests the retained cash flow into more opportunities each year.

In FY22, it grew its annual dividend by 16.1% to 72 cents per share. That works out to a grossed-up dividend yield of 3.75%.

WAM Microcap Limited (ASX: WMI)

I don't normally write about listed investment companies (LICs) but, for my own portfolio, I think this one makes sense.

There are hundreds of companies outside the S&P/ASX 200 Index (ASX: XJO). I wanted exposure to the small-cap ASX share space, but I think I'd need a lot of hours to research the many smaller opportunities properly. So, I'm happy to delegate the hunt for investments to others.

I think the Wilson Asset Management investment team has done well at finding small-cap ASX shares. The LIC structure allows WAM Microcap to turn investment returns into large and growing dividends, making it an ASX dividend share.

The ordinary FY22 dividend grew by 25% to 10 cents per share. That equates to a grossed-up dividend yield of 9.5%.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX dividend share that has a long history.

It has maintained or grown its dividend every year for more than 40 years. I like that type of stability for my dividend income.

I think it has a number of good assets, which also makes it attractive to me.

For starters, it has a long-term cross-holding of Soul Pattinson shares. Soul Pattinson owns Brickworks shares and Brickworks owns 26.1% of Soul Pattinson.

As I've already discussed, Soul Pattinson is a resilient business that pays a growing dividend. So, that is a good source of cash flow to fund the majority of the Brickworks dividend.

The other key element of the Brickworks business that I like is the industrial property trust that it operates along with Goodman Group (ASX: GMG). Impressive warehouses are being built on excess Brickworks land that has been sold into the trust.

The trust continues to complete projects which, in turn, is increasing the value of the trust and generates development profits for the business. Brickworks' 50% share was worth $1.54 billion at 31 July 2022.

At the end of FY22, the ASX dividend share had an inferred asset backing of $33.15 per share. As such, I think that the Brickworks share price is valued at an attractive discount to the underlying value of its assets.

The FY22 annual dividend was grown by 3% to 63 cents per share. That equates to a grossed-up dividend yield of 4%. Added to that, I think the company's expanding US brickmaking business is also promising.

Motley Fool contributor Tristan Harrison has positions in Altium, Brickworks, Fortescue Metals Group Limited, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom Limited. 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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