ASX dividend shares could be the best way to generate income from an investment.
Interest rates are very low, so that rules out a lot of other investments as income options – the yields are too low.
These two ASX dividend shares may be a good way to boost income levels:
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC).
Its target is to invest in ASX blue chip shares on behalf of shareholders.
LICs pay dividends from profit from investment gains. That means they can turn some of the capital growth into dividends.
WAM Leaders has grown its dividend every year since it started paying one in 2017.
Those dividends by the ASX dividend share are being funded by solid investment performance. At 31 July 2021, WAM Leaders said that its portfolio performance since inception in May 2016 (before fees, taxes and expense) was an average return per year of 14.9%. That’s more than 4% better per year than the ASX 200 Accumulation Index.
Some of WAM Leaders’ biggest holdings at the end of July were BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX; CBA), Challenger Ltd (ASX: CGF) and Scentre Group (ASX: SCG).
WAM Leaders plans to pay an annual dividend of 8 cents per share in FY22. That’s a 14.3% increase on the FY21 payment. It announced that in the FY21 result.
A dividend of 8 cents per share represents a fully franked dividend yield of 5.5%.
Pengana Capital Group Ltd (ASX: PCG)
Pengana is an interesting fund manager in my opinion. It offers a variety of investment strategies such as ASX shares, international shares and private equity.
I think fund managers can make very good dividend investments. They have relatively low costs compared to many other sectors.
It doesn’t cost much to manage an extra $100 million of funds. It can be done by the same team of people. So as funds under management (FUM) rises, a fund manager can become increasingly profitable.
If a fund manager pays out a high level of its profit out as a dividend each year, then they can be excellent ASX dividend shares.
Pengana is seeing steady growth of its FUM. At the end of July 2021, it had $4.03 billion of FUM. That is an increase of 12% since the FY21 half-year result at December 2021. That’s not the biggest growth number you’re going to see this reporting season, but it’s solid for the underlying growth and profitability of Pengana.
If Pengana were to grow its FY21 dividend by 25% from $0.08 per share to $0.10 per share, then that would translate to a fully franked dividend yield of 5.2%.
