2 excellent ASX dividend shares I'd buy with $3,000

Looking for passive income? I think these are two excellent ideas.

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ASX dividend shares are a great place to find strong passive income. Businesses with a high dividend yield or a history of dividend reliability can be very attractive investments for income-seekers.

We don't need a $1 million portfolio to start bringing in good amounts of cash. In fact, dividends can potentially flow from a $3,000 investment in just two stocks, which I'll outline below.

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Brickworks Limited (ASX: BKW)

Brickworks is the largest brickmaker in Australia, it's also involved in the production of paving, masonry, cement, roofing and specialised building systems. The company is a large brickmaker in the US.

This company hasn't cut its dividend for almost 50 years, which is an extraordinary record of consistency and resilience for investors. It has also increased its dividend each year since 2014, so this year, it will be a decade of growth if the payout increases.

How has a brickmaker managed to achieve this record?

I'd put it down to two of the ASX dividend share's assets – its large shareholding of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and its property holdings.

Soul Patts owns a diversified portfolio of assets which provides balance and stability to the cyclical building products earnings. Over time, Soul Patts has provided a growing dividend and capital growth for Brickworks.

Brickworks owns a lot of land, some of which is used by and connected to its building product manufacturing. It also regularly sells excess land into a joint property trust which builds large warehouses, mainly used for logistics, on the land.

Completing those warehouses unlocks rental cash flow and it results in a development profit because of an increase in the value of the land.

It has a trailing grossed-up dividend yield of 3.2%.

Healthco Healthcare and Wellness REIT (ASX: HCW)

As the name suggests, this is a real estate investment trust (REIT) that is invested in healthcare and wellness buildings. The business aims to provide exposure to a diversified portfolio underpinned by healthcare sector megatrends. It's also targeting "stable and growing distributions, long-term capital growth and positive environmental and social impact."

The tailwinds include an ageing population with higher rates of spending per person, growing government spending on health and social welfare services, and technological improvements.

The ASX dividend share's 36 properties have an occupancy rate of 99% with a weighted average lease expiry (WALE) of 12 years.

The business can grow from both rental growth and its future development pipeline – more properties means more rental profits, which can lead to bigger distributions.

It's expecting to generate 8 cents of funds from operations (FFO) (rental profit) per unit in FY24, and pay that out as a distribution, amounting to a yield of 6.25% for FY24.

Motley Fool contributor Tristan Harrison has positions in Brickworks 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 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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