It’s getting difficult for investors to find income these days. But there are at least two ASX dividend shares that I believe could be reliable picks for income.
If I were investing for income, one of these ideas could be a good idea:
Brickworks Limited (ASX: BKW)
Right now, Brickworks has a trailing fully franked dividend yield of 3.1%.
Brickworks is a diversified business which offers various exposures to the real estate sector. It owns a large building products business in Australia which manufactures several products including bricks, paving, masonry, precast and roofing. This side of the business is recovering and could have a solid 2021.
The American part of the business is suffering because of COVID-19 impacts to the economy and construction industry. But it could create long term growth once a vaccine is given to the population.
Brickworks funds its dividends from its more defensive assets. Its final real estate exposure is a 50% share of an industrial property trust (together with partner Goodman Group (ASX: GMG)). This trust gives Brickworks growing rental distributions and it’s expecting to grow those distributions by at least 25% once it has completed the gigantic distribution warehouses for Amazon and Coles Group Ltd (ASX: COL). The trust has steady rental growth agreements with its tenants and it’s generating capital growth.
Finally, Brickworks also owns a substantial amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which itself is one of the best ASX dividend shares around. The investment conglomerate sends a healthy proportion of its net operating cashflow (from its investments) to Brickworks each year.
Magellan Financial Group Ltd (ASX: MFG)
Today, Magellan offers a partially franked dividend yield of 3.9%.
Magellan is a leading fund manager with funds under management (FUM) that has now grown to over $100 billion. This scale means Magellan can cover all of its operating expenses, leaving most of the current profit (and profit growth) to be paid out as a dividend.
The company has various ways it can grow its profit and dividend. Its core FUM can keep rising. It could also attract other investors with its new core ETF series.
For me, there are two areas that could still significantly grow Magellan’s profit. It has a significant stake of the new investment bank called Barrenjoey where it has been signing up some of the best talent in Australia into the various roles.
Magellan also plans to launch a retirement product that could prove popular with retirees in this environment of very low interest rates and high asset prices.
There are other ASX dividend shares that could also do well in 2021 such as APA Group (ASX: APA) and Transurban Group (ASX: TCL).
