ASX dividend shares that provide a good dividend yield and a high level of reliability could be excellent investments for people about to enter retirement. However, some ASX shares aren't very consistent.
There is plenty to like about the large ASX iron ore shares of BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG). These companies are increasing their exposure to decarbonisation and usually offer high dividend yields. Nonetheless, their payouts can bounce around significantly depending on what's happening with the iron ore price.
Hence, I'd rather invest in ASX dividend shares that can provide more consistent payouts, which is why I like the ones below.
GQG Partners Inc (ASX: GQG)
GQG is one of the largest listed fund managers. It's based in the US and has four main investment strategies – US shares, international shares, global shares and emerging markets.
Impressively, all of its main strategies have outperformed their respective benchmarks since inception. This level of performance organically helps the funds under management (FUM) grow and is an appealing selling point to attract more client FUM.
In its monthly update for April 2024, the company revealed net inflows of US$6.3 billion for 2024 to date, helping bring its FUM to US$142 billion.
The ASX dividend share has committed to a dividend payout ratio of 90% of distributable earnings. FUM growth is a significant input and driver of revenue and earnings, so FUM growth is integral to GQG's success.
At December 2023, the business had US$120.6 billion of FUM and it had grown over 17% to US$142 billion, suggesting further dividend growth over the 12 months. The estimates on Commsec suggest an annual dividend yield of over 7% for 2024 and more than 8% for 2025.
Woolworths Group Ltd (ASX: WOW)
Woolworths is the biggest retailer of food in Australia, with its national supermarket network. It also owns BIG W, a majority stake in PETstock, a food distribution business, and other smaller companies.
Food is obviously one of the most vital purchases a household makes. Therefore, the ASX dividend share has very defensive earnings, which we saw during 2020 and 2021 as Australia grappled with COVID-19.
Australia's population continues to grow, which is a useful tailwind for increasing overall food demand.
In the most recent quarterly update, the FY24 third quarter, Woolworths reported total sales growth of 2.8% despite 0.7% deflation in the supermarkets of shelf prices (excluding tobacco). I think this shows the ability of the business to keep growing even in tougher conditions.
Woolworths increased its annual dividend in FY23 and grew the FY24 half-year payout by 2.2%.
According to the estimate on Commsec, Woolworths is projected to pay a grossed-up dividend yield of around 5% in FY24.
