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2 strong ASX dividend shares I’d buy in August 2021

Buying ASX dividend shares could be a really good way to boost income in August 2021.

Plenty of businesses have a good track record of generating profit and then paying out a portion of that as a dividend.

Some ASX dividend shares have much better yields than what you can get from a bank:

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is one of the largest listed investment companies (LICs) on the ASX. It has a market capitalisation of around $1.7 billion.

The idea of this LIC is to invest in global shares that have good growth prospects and were bought at compelling valuations.

You’ve probably heard of many of the biggest holdings in the portfolio such as Visa, Mastercard, Amazon, Microsoft, Alphabet (Google) and Home Depot.

MFF’s portfolio performance has been solid since the GFC, handily outperforming the ASX.

The MFF board have committed to steadily growing the dividend over time. In the latest result, just released, it grew its half-yearly dividend from 3 cents to 3.5 cents per share.

LICs can use the investment profits they make, including capital gains, to pay for good and growing dividends.

The board has set a goal of increasing the half-year dividend to 5 cents per share. That equates to an annual fully franked dividend yield of around 3.3%.

It also helps that the MFF Capital share price is valued at an attractive discount of more than 10% to the underlying portfolio value (the net tangible assets – NTA).

Brickworks Limited (ASX: BKW)

Brickworks is one of the leading ASX dividend shares around in my opinion.

It doesn’t have the biggest yield and it’s not as though it’s rapidly increasing the dividend.

But it has really built a reputation for being very reliable. It hasn’t cut its dividend in over 40 years!

The company has a number of high-quality building product businesses in Australia. Some of them are among the leading players in their categories like bricks, roofing, paving and masonry.

It has been operating for decades and has proven it knows what it takes to do well. Hopefully it can take that strength and and clever strategies to the US, which is a huge market.

Brickworks currently has a market leading position in some parts of the US. Further geographic expansion and/or product diversification would be very helpful for earnings over time in my opinion.

But the ASX dividend share has a great dividend track record due to other parts of the business.

A few decades ago it entered into a cross-ownership structure with Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) to ensure they could prevent corporate raiders. That relationship has endured ever since.

Brickworks owns around 40% of WHSP, the investment house. WHSP has a diversified portfolio in a number of different areas including telecommunications, resources, financial services, healthcare, agriculture, property, private equity and so on.

WHSP is famous for increasing its dividend every year to investors. Brickworks has really benefited from that steady and growing flow of dividends, allowing to pay its own solid dividend.

The property trust is becoming a very important part of the picture too. That’s the joint venture between Brickworks and Goodman Group (ASX: GMG).

This trust, that Brickworks owns half of, is building high-quality properties that businesses need in the 2020s for their logistics and supply chain needs.

Amazon will be one of the tenants for the trust once a mega warehouse is finished. The current pipeline of property projects is expected to significantly increase the value and net rental profit of the trust.

After those are completed, there is yet more land that is waiting to be built on.

I’m expecting dividend growth for a number of years from Brickworks because of WHSP and the property trust. The building products profit is just a bonus.

At the current Brickworks share price it has a fully franked dividend yield of around 2.5%.

It’s also trading at an attractive discount to its NTA.

Summary thoughts

Both of these ASX dividend shares look good for solid, reliable and growing dividends over the next few years.

If I had to pick one I’d go for MFF because of the faster expected dividend growth rate and the diversified global portfolio it has, where it can change its positions when it wants to. Whereas Brickworks is largely fixed in its current business divisions.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

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At the time of publishing, Jaz owns shares of MFF Capital and WHSP.
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