When share markets go downward, I think it's a good time to look at ASX dividend shares. Not only are valuations cheaper, but the dividend yields also get a boost.
It's true that what interest rate investors can get from a term deposit has increased, but the dividend yields from shares are now looking even more attractive.
I wouldn't buy a business just because it has a high dividend yield. I'm looking for businesses that can hopefully grow profit over the long term, particularly ones with plans for growth.
These are two of the high-yielding shares I think could make good buys this month.
Rio Tinto Limited (ASX: RIO)
This business is one of the ASX's largest miners. It's involved with a number of different commodities including iron ore, aluminium, copper, diamonds, titanium dioxide and borates. It is also building a lithium project in South America as the business looks to build its exposure to decarbonisation resources.
Iron ore has been the key profit generator for the ASX dividend share. However, the iron ore price has been falling in recent weeks and months. There have been concerns that Chinese demand for iron ore will reduce, due to an unstable property sector and COVID-19 lockdowns, leading to a subdued iron ore price.
Since 8 June, the Rio Tinto share price has fallen by over 20%. I think it's times of commodity weakness that make the best time to buy shares in mining stocks. However, China (and its demand for iron) will essentially decide how Rio Tinto's iron ore earnings perform in the coming years.
I like the way this ASX dividend share is increasing its exposure to copper and I'm optimistic about the lithium play as well.
According to CommSec, the FY23 grossed-up dividend yield could be 12.2%.
GQG Partners Inc (ASX: GQG)
GQG is one of the largest fund managers on the ASX with a market capitalisation of over $4 billion according to the ASX.
It offers investors a number of different investment strategies including global shares, dividend income, emerging markets, and US shares.
This business continues to experience net inflows of investor money, despite all of the volatility in the share markets. In the three months to September 2022, it experienced net inflows of US$0.8 billion. It finished the quarter with US$79.2 billion of funds under management (FUM).
The vast majority of its net revenue comes from management fees (which are a percentage of assets managed), rather than performance fees. This means its revenue can be more consistent.
This ASX dividend share aims to pay out 90% of its distributable earnings to investors.
According to CommSec, GQG is predicted to pay a dividend yield of 8.25% in FY23.
