ASX dividend shares can be a great buy for investors wanting to create income from their portfolio.
I’d want to focus on shares that can be reliable dividend payers through good times and bad, while also paying a pleasing dividend yield.
With that in mind, let’s look at two great contenders.
Future Generation Australia Ltd (ASX: FGX)
Future Generation Australia is a listed investment company (LIC) that allows investors to invest in a portfolio of more than 400 shares. That’s a lot of underlying diversification!
I like how Future Generation Australia’s portfolio is invested in a variety of large and small ASX shares, which is another form of diversification thanks to the goal of the fund managers involved to deliver good returns with a variety of ideas. It’s the investment returns generated by the fund managers that help pay for the dividends.
One of the best reasons to like this ASX dividend share is how it donates 1% of its net assets each year to youth charities. That’s why it’s called ‘Future Generation’.
On the dividend side of things, the business has hiked its annual pay every year since 2015, which is a better record than many of the large ASX shares.
Future Generation plans to pay an annual dividend of $0.076 per share, which equates into a dividend yield of 8%, including the pleasing bonus of franking credits.
This ASX dividend share can provide a great mix of dividends and diversification for investors.
Coles Group Ltd (ASX: COL)
Coles is one of the biggest businesses on the ASX, with its hundreds of supermarkets around Australia. It also has a liquor division, which gives the business earnings diversification.
Food is always in demand, so the business has a high level of defensive earnings compared to many other businesses. That defensive nature means the business is capable of providing a more resilient dividend than many other sectors.
Coles has grown its annual payout each year this decade – not many ASX blue-chip shares can say that. I think Coles’ annual dividend can continue to grow thanks to a growing national population and Coles’ investments to make itself more efficient with advanced warehouses.
Using the last two dividends declared by the business, Coles has a dividend yield of 4.3%, including the pleasing bonus of franking credits.
