In November 2021, I’d be very interested to buy the ASX dividend shares I’m going to cover in this article.
I think that dividends are a great way for investors to increase their investment income considering how low interest rates are.
ASX dividend shares that have a history of paying higher yields to investors could be interesting, like these two:
Magellan Financial Group Ltd (ASX: MFG)
Magellan is an interesting business. It generates the core part of its profit by managing over $110 billion of funds.
Ignoring performance fees, Magellan has been steadily growing its underlying management profit over the years. The fund manager says its profit is driven by the direction of its funds under management (FUM), which continues to experience volatility in the short-term but the long-term trend has been growth. Magellan’s ‘ordinary profit’ dividend was increased by 8% in FY21 to 199.7 cents per share.
There are a number of other areas that the company thinks it can grow – its cheaper Core exchange-traded fund (ETF) segment, ESG investing, its retirement product (FuturePay) and Australian shares.
I’m also excited by the profit growth prospects of Barrenjoey and Guzman y Gomez, which both have long-term growth plans.
In terms of the dividend, CommSec is expecting Magellan to pay a dividend of $2.50. which translates to a partially franked dividend yield of 7% for the ASX dividend share.
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is one of my favoured diversified ways to invest into ASX shares. It’s a listed investment company (LIC) that in some ways is very different to a normal LIC. It invests in a portfolio of funds of some of the best fund managers that invest in ASX shares. Names include Bennelong, Paradice, Regal, Eley Griffiths, L1 Capital, Sandon Capital and Wilson Asset Management.
All of these fund managers work for free so that Future Generation can donate 1% of its net assets each year to youth-related charities.
Future Generation’s portfolio of ASX share funds has outperformed the ASX All Ordinaries Accumulation Index by an average of 1.9% per year over the last three years.
LICs like Future Generation can use some of the investment returns they make to pay a (growing) dividend to shareholders, which is exactly what this LIC is doing. The ASX dividend share has increased the dividend each year since 2015.
At the moment, Future Generation has a fully franked 4.2% dividend yield, or 6% with franking credits.
