It’s very tough to get any sort of income from the bank these days with the RBA just reducing Australia’s interest rate to 1%. ASX dividend shares could be the answer.
You may still be able to get an interest rate starting with a 2.% from your bank, but even a million dollars in the bank wouldn’t make you very much.
The only thing to do might be to invest in ASX dividend shares like these two:
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) which invests in the larger businesses on the ASX, The LIC structure allows WAM Leaders to make profit from dividends received and capital gains and then pay a growing stream of fully franked dividends.
Since inception in May 2016 to the end of May 2019, WAM Leaders has produced an average return per year of 11.5% before fees and expenses, essentially being the gross return, outperforming the ASX 200 Accumulation Index by 1%.
WAM Leaders has used some of that profit to pay a growing dividend, it currently has a fully franked dividend of 4.7%. It seems to be trading at a little discount to its underlying asset value (called the net tangible assets (NTA) per share)
Naos Emerging Opportunities Company Ltd (ASX: NCC)
This is another LIC, but it invests in some of the smallest shares on the ASX, it looks at businesses with market capitalisations under $250 million.
The small end of the market has been fairly rough for small cap value managers over the past year or two, but Naos Emerging Opportunities still has a performance (after expenses, before fees) of generating average returns of 11.15% per year since February 2013.
Again, it has used this performance to pay a steadily growing dividend since FY13. At the moment it has a fully franked dividend yield of 7.8%. It is trading at a discount to the underlying NTA per share.
Summary
Both of these dividend shares could be interesting ideas to invest in, particularly the Naos LIC for its large dividend yield and small cap focus.
There are other options for dividends as well, such as the reliable and proven ASX businesses revealed in the free report below.
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