There are some really good ASX shares that look good value and can pay attractive dividends in the coming years.
I’m not talking about resources or financials businesses. I don’t think they are reliable enough when it comes to consistency of the dividend.
But for me, these two ASX shares fit the bill:
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is one of the leading listed investment companies (LICs).
There are a number of good factors I like to look at for LICs:
Good investment team to generate solid returns – Chris Mackay is a real quality operator for MFF. He has ably steered MFF Capital for a number of years by focusing on high-quality global businesses that have good growth prospects and only purchases them at attractive prices. He’s aligned with investors as he owns hundreds of millions of dollars of MFF Capital shares.
Good value today – There are several different ways to measure whether a LIC is good value. To keep it simple, I’m going to look at the ASX share’s pre-tax net tangible asset (NTA) value. That’s the underlying value of the LIC in dollar terms. MFF’s latest pre-tax NTA was $3.40, a 14.5% discount to the last MFF Capital share price. Buying $1 of quality shares for $0.86 seems like a great deal for me.
Holdings – Ultimately, you have to trust the investment manager’s choices are going to make good returns over the long-term. But it’s good to know what is in a LIC’s portfolio. At the end of November 2021, MFF Capital’s biggest positions were: Visa, Mastercard, Home Depot, Amazon, Alphabet and Microsoft.
Dividend income – MFF Capital has a solid dividend record. The ASX share has been maintaining or growing the dividend for a number of years. The board has set out a target for the half-year dividend to grow to $0.05 per share, resulting in a full year dividend of $0.10 per share. That’s a full year dividend yield of 4.9% including the franking credits at the current MFF Capital share price.
APA Group (ASX: APA)
APA is one of the largest infrastructure businesses on the ASX. It owns and operates a large gas pipeline around Australia. APA also owns assets relating gas storage, gas processing and energy generation from gas.
The ASX share has grown its distribution every year for over a decade and a half. That’s one of the best records on the ASX.
This ASX share is steadily growing its distribution thanks to rising cashflow thanks to inflation-linked cashflow as well as a steady stream of new projects, such as extending its pipelines to new regions.
I’m particularly interested to APA’s future which looks like it will involve investing in newer forms of energy including renewable energy generation, electricity transmission (such as the Basslink) and sending hydrogen through its pipelines to Australians.
At the current APA share price, it has a distribution yield for FY22 of 5.5%.
