I think that the two ASX dividend shares in this article are definitely worth thinking about for income.
In my opinion, it’s important to be picky about which investment one picks for income.
COVID-19 showed large reductions of dividends for some of the ASX’s most popular dividend stocks such as Transurban Group (ASX: TCL), Westpac Banking Corp (ASX: WBC) and Sydney Airport Hoodings Pty Ltd (ASX: SYD).
However, I reckon these two ASX dividend shares are better long-term value and can grow the dividend more over time:
Rural Funds Group (ASX: RFF)
I believe that Rural Funds is one of the most attractive real estate investment trusts (REITs) out there.
I’m not a fan of office or shopping centre properties. But farmland could have a very promising future. We all need to eat and drink, so the ongoing demand for farmland is unlikely to change. Climate change and a growing population could increase that demand further.
Rural Funds owns a variety of different farms including almond, macadamia, vineyards and cattle.
There is slow and steady rental growth included in its contracts with tenants. This helps management commit to the goal of growing its distribution by 4% annually.
That consistent distribution growth makes this ASX dividend share very attractive in my opinion.
In FY22 it is expecting to pay a distribution of 11.73 cents per unit. That translates to a forward distribution yield of 4.3% at the current Rural Funds share price.
WCM Global Growth Ltd (ASX: WQG)
This is a leading listed investment company (LIC) that is managed by the investment team of WCM which is based in California.
LICs pay dividends from the investment returns they make.
I think this ASX dividend share is very good at investing. Its portfolio has achieved after-fees returns of 21.4% per year over the last three years, though past performance is no guarantee of future performance.
There are two key factors that add to WCM’s investment style.
The first is that it’s looking for businesses that are growing their economic moat. It’s about the direction of the competitive advantage, not how large it currently is.
Second, WCM is looking for a culture that supports that economic moat direction. WCM believes culture is a big part of making the best businesses.
I think those two elements are a strong combination.
In terms of the dividend, it’s expecting to pay a dividend per share of 2.75 cents per share in six months and 3 cents per share in 12 months. That means the next year of dividends amounts to a fully franked yield of 3.6%, or 5.1% including the franking credits.
Some of the businesses it owns includes Stryker Corporation, Shopify, West Pharmaceutical Services and LVMH (Moet Hennessy Louis Vuitton).
In my opinion, this is a compelling, high-quality LIC with a good portfolio and a growing dividend.