I think that there are ASX 200 (ASX: XJO) shares that would be good for dividend income.
ASX 200 shares are large enough that they can provide shareholders with good income whilst also investing for growth.
Not every business pays a dividend, but the ones that do can become solid income ideas.
These two could be good options:
Magellan Financial Group Ltd (ASX: MFG)
Magellan is one of the largest fund managers in Australia.
It predominately runs a global equity portfolio for investors and targets global blue chips such as Microsoft, Alphabet, Yum! Brands and Alibaba.
The funds it manages – currently around $110 billion – generates a strong level of management fees each year for Magellan. Funds management is actually very profitable. It doesn’t cost much to manage $90 billion compared to $100 billion, so a lot of the new funds under management (FUM) fees goes straight to the profit before tax profit line.
Magellan is exploring a number of ways to grow profit further. Its new retirement product called FuturePay could attract further FUM. Its investments like Guzman y Gomez could be excellent long-term investments. Magellan continues to grow FUM of its core strategies as well.
Based on CommSec’s numbers for the 2022 financial year, Magellan is expected to pay a partially franked dividend yield of 4.8% and it’s valued at 19 times the estimated earnings.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP might be the best ASX 200 dividend share when it comes to consistent dividends. This business has grown its dividend every year since 2000. That’s a really strong record considering there have been two global recessions in that time.
The reason why it has been able to be so reliable is that it has a diversified portfolio across a number of different sectors including telecommunications, real estate, building products, resources, agriculture, financial services, swimming schools and pharmaceuticals. Two key investments are TPG Telecom Ltd (ASX: TPG) and Brickworks Limited (ASX: BKW).
This defensively-focused and largely uncorrelated portfolio provides an attractive level of cashflow to WHSP each year, allowing the business to keep growing the dividend and re-invest for more growth.
The WHSP share price has risen strongly over the last year, but I think investors looking for a stable and growing dividend can sleep easier with this business in the portfolio.
WHSP currently offers a fully franked dividend yield of 1.95%.
There are also other ASX dividend shares that could be worth looking into.
