There are plenty of ASX dividend shares that are paying big dividends for investors.
The last year has been difficult for people who rely on income. Interest rates from the bank are almost at nothing. Plenty of dividends were cut during 2020 because of COVID-19 impacts on both profit and the balance sheet.
But there are some ASX dividend shares that kept increasing payouts and still have high yields:
WAM Microcap Limited (ASX: WMI)
WAM Microcap is a listed investment company (LIC) that aims to invest in the smaller, more exciting ASX shares on the Australian Stock Exchange.
It’s run by the portfolio managers at Wilson Asset Management. They’re very good at what they do. According to WAM, WAM Microcap’s portfolio has delivered an average return per year of 25% per year since it started in June 2017. But that’s before fees, expenses and taxes – the net returns of WAM Microcap are lower than the headline return predominantly due to management fees and performance fees.
Income taxes are paid, but these can then be attached to dividends as franking credits, so that’s not much of a negative in my opinion.
The strength of WAM Microcap’s performance has been much better than the fees charged.
The ASX dividend share has paid a normal dividend and a special dividend in each year since it listed.
The WAM Microcap dividend yield is currently 4.1%, fully franked. Any special dividends are on top of that yield.
Rural Funds Group (ASX: RFF)
Rural Funds has a goal of increasing its distribution to investors by 4% each year. It’s a very attractive agricultural real estate investment trust (REIT) in my opinion.
I really like that goal because it’s comfortably higher than inflation, but it’s not too high that it’s unrealistic or it makes management take unnecessary risks to achieve the goal.
A lot of the increase is funded by annual increases at the farms, which are largely a fixed 2.5% annual increase or CPI inflation growth. There are also market reviews at some farms that can learn to rental increases too.
The ASX dividend share is also going through an investment period where it’s improving farms and also switching some land to another food type that will generate more rent over the longer-term.
At the latest Rural Funds share price it offers investors a distribution yield of 4.9% for FY22. Remember, that’s just the starting yield and the payout will grow by 4% each year. Hopefully the Rural Funds asset value will continue to grow over the long-term too as it improves farms and makes smart acquisitions.
