I’m going to talk about two ASX dividend shares I like for investment income.
They aren’t likely to deliver a lot of capital growth because they are paying out a lot of the profit they make as dividends. The less profit a business retains, the less there is to re-invest for more growth.
Having said that, the high yield and slowly-but-steadily growing dividends are an appealing combination.
WCM Global Growth Ltd (ASX: WQG)
This is a listed investment company (LIC) which invests in a portfolio of global shares.
It’s looking for quality companies with an expanding economic moat, demonstrating a rising return on invested capital (ROIC).
WCM wants to see that the strength of the business is improving, while also having a corporate culture that cultivates an improving economic moat.
Past performance is not a guaranteed indicator of future performance, but over the past five years, the ASX dividend share’s portfolio delivered an average return per year of 14.6% (which is after fees), beating the global share market benchmark average return of 12.9% per year.
That level of return has allowed the business to pay a good dividend and also deliver growth of net tangible assets (NTA).
The next four quarterly dividends amount to a total of 7.05 cents per share, which is a dividend yield of 4.75%, or 6.8% including the franking credits.
Future Generation Global Ltd (ASX: FGG)
Future Generation is also a globally-focused LIC. I like the global share market because there are thousands of shares to invest in worldwide.
This LIC isn’t just managed by one fund manager. It’s invested in a number of global funds, and all of those fund managers work for free so that the LIC can donate 1% of its assets each year to youth mental health charities.
Some of the fund managers involved include Cooper investors, Yarra Capital Management, Munro, Holowesko Partners and WCM.
Over the past seven years, the Future Generation Global portfolio has delivered an average return per year of 9.6%. The ASX dividend share’s portfolio is very diversified, though it hasn’t performed that strongly.
For 2023, the business paid an annual dividend per share of 7.2 cents (up 2.85% year on year), which is a dividend yield of 5.7%, or 8.2% including franking credits.
