The ASX dividend share space has seen its fair share of volatility over the last few weeks, so this could be the right time to invest. ASX dividend shares are much more appealing to me than a term deposit for a few different reasons.
The recent jump in inflation is certainly leading to expectations of a rise in interest rates. The prospects are good for Aussies interested in term deposits.
However, despite that, I think it's an even better time to look at ASX dividend shares.
I'm expecting inflation to reduce in the future back to a more normal level, even if that takes a while, which could mean the lower share prices (and higher yield) today are worth jumping on whilst they're still available.
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Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
One of the main reasons I prefer ASX dividend shares to term deposits is the organic growth that businesses can deliver.
Companies can grow their earnings over time, enabling them to deliver rising dividend payments (offsetting inflation) and achieve capital growth.
I think Soul Patts is one of the best examples of this because the business has increased its dividend each year for the past 28 years in a row. There is no other company on the ASX with that history of dividend increases.
The only organic way a term deposit delivers any material income growth is when the RBA cash rate goes up. But interest rates can go down too, as we saw in 2025, hurting the interest rate on offer.
Dividend growth is not guaranteed, but I like the odds of this ASX dividend share hiking its payout this year and next year.
It has been able to deliver such consistent growth because of how it operates. It's an investment conglomerate that owns a portfolio of ASX shares, international shares, private businesses, property, and credit.
The company has deliberately built its asset base to be defensive and provide resilient cash flow, while also having growth potential. As it receives its portfolio's investment cash flow (mainly dividends), it enables Soul Patts to pay a higher dividend each year and retain a minority of that money to reinvest in more opportunities.
It currently has a grossed-up dividend yield of 3.6%, including franking credits. The somewhat low yield is partly a function of it having a very sustainable dividend payout ratio.
WCM Global Growth Ltd (ASX: WQG)
For investors looking for an ASX dividend share that can provide a stronger yield than a term deposit, I'd definitely look at this option.
It's a listed investment company (LIC) – its job is to invest in other shares on behalf of shareholders to generate good investment returns.
The LIC looks across the globe for opportunities, so it's a great option for Australians looking for diversification. Its ideas come from across the world, including the Americas, Europe, and Asia, as well as various sectors.
WCM Global Growth wants to find businesses with expanding economic moats (or improving competitive advantages), and these businesses must have a culture that supports a strengthening of the competitive advantages.
As a LIC, the business is able to decide on the level of dividends it wants to pay to shareholders. The ASX dividend share has been steadily increasing its payout over the last several years, and it has guided that its quarterly dividend will continue rising each quarter over the next year.
The LIC's guidance for the next four dividends to be declared comes to a grossed-up dividend yield of 7.7%, including franking credits, at the time of writing. I expect the payout will continue rising for the foreseeable future.
