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3 ASX dividend shares for every income portfolio

ASX dividend shares are an essential part of all income portfolios.

Especially when the official cash rate is just 0.10%. After accounting for inflation, money kept in a bank account is earning a negative return.

Here are three ASX dividend shares I’d add to any income portfolio.

1. Commonwealth Bank of Australia (ASX: CBA)

Despite rising competition from neobanks and buy-now-pay-later, CBA is still taking market share from its peers.

Subsequently, the business achieved a cash profit of $9.5 billion over the past 12 months.

To put that number into context, today CBA could go and use that cash to buy all of:

And still, have change left over.

Instead of reinvesting that profit, CBA returns its back to shareholders. That’s why it’s one of the best ASX dividend shares.

At today’s price, CBA is paying a 4% fully franked dividend yield.

2. Wesfarmers Ltd (ASX: WES)

Bunnings and Officeworks owner Wesfarmers is one of the few conglomerates to deliver market-beating returns over the long term.

Source: WES FY21 annual report
Source: WES 2021 Annual Report

How does it continually outperform other ASX dividend shares?

The primary objective of Wesfarmers is to provide a satisfactory return to shareholders… we measure our performance by comparing Wesfarmers’ TSR (total shareholder return) against that achieved by the broader Australian market.

It might sound simple. Isn’t that the purpose of every business?

It should be. But often companies prefer buzz-word packed mission and vision statements.

At current prices, Wesfarmers is currently yielding a 3.4% fully franked dividend.

3. Deterra Royalties Ltd (ASX: DRR)

Deterra Royalties is a fancy name for what is effectively a post box.

Each quarter, BHP Group Ltd (ASX: BHP) sends it a cheque for any iron ore revenue generated over Mining Area C (MAC) in the Pilbara.

Why not just buy BHP or any other miner instead then?

Firstly, Deterra doesn’t take on as much operational risk. If costs blow out, it doesn’t impact Deterra’s revenue.

Secondly, it pays out 100% of its profit as dividends fully franked making it must have ASX dividend share.

Thirdly, MAC is expected to double its production over the next to years.

Even if the iron ore price falls, the ramp-up in production should support the dividend payment.

Finally, the business is on the look for more high-quality royalty streams.

It’s been patient so far, failing to pull the trigger on any deals.

But this also signals management is prudent with its capital allocation.

$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.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report — or get it emailed to you — for FREE by CLICKING HERE NOW or the button below.

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Lachlan does not have a financial or commercial interest in any of the companies or funds mentioned.
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