ASX dividend shares are always an interesting option when it comes to investing. They can provide cash flow to investors just when it’s needed in this world of low interest rates.
But not every business is worth owning simply because it pays a dividend. But I like the look of these two ASX dividend shares:
Future Generation Investment Company Ltd (ASX: FGX)
This could be one of the best listed investment companies (LICs) for diversification.
Most LICs just own a portfolio of shares. But this LIC owns a portfolio of funds that are invested in ASX shares. The funds that it’s invested in are managed by some of the best Australian fund managers, including Bennelong, Wilson Asset Management and L1 Capital.
Despite having such a diversified portfolio, which helps it fall less when markets decline, the Future Generation portfolio has delivered gross investment performance of 2% per year better than its benchmark since it started in September 2014.
Those fund managers work for free so that Future Generation can donate 1% of its net assets each year to youth charities. The idea of Future Generation is a noble cause.
Future Generation uses some of its investment profits to pay a growing dividend for investors. The ASX dividend share has increased its dividend every year since 2015.
In the latest result (FY21) it grew its annual dividend by 15.4% to $0.06 per share. Including the franking credits, Future Generation now offers a dividend yield of 6.25%.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare may be one of the most defensive ASX dividend shares around.
It offers pathology and imaging services. The pathology segment has a worldwide presence in ANZ, Europe and North America.
People don’t choose when they get sick and, most of the time, I’d imagine economic downturns wouldn’t affect that demand either. So, Sonic Healthcare has pretty defensive earnings, in my opinion.
The ASX dividend share has been, and is still, involved in the effort to stop the spread of COVID-19. It has processed many millions of PCR tests, which has been a boom for the company’s profit and cash flow. It’s still expecting to see a base amount of COVID-19 tests, even if it’s not as much as 2021.
But it hasn’t just squandered that cash away in one-off shareholder payments. It has made acquisitions to permanently increase the size of the business, such as Canberra Imaging Group.
Sonic says that it has a progressive dividend policy. The half-year dividend was grown by 11% to $0.40 per share. Excluding franking credits, Sonic has a current yield of 2.7%. The Sonic share price has dropped back as mandatory testing rules have changed, but I think it is at attractive long-term value.
