You may have seen some coverage of the gold price recently. Gold spiked to US$1,600 an ounce on the back of the recent tensions in the Middle East yesterday and I'm sure many investors would have taken note.
But gold pays no yield and actually costs you money to hold in most cases. Thus, in this era of record low interest rates, I would much rather have ASX dividend-paying shares in my investing portfolio than lumps of yellow metal.
So here's how I would spend $10,000 on dividend shares today.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is one of the most diversified businesses on the ASX. This giant conglomerate owns the Bunnings network of hardware stores, as well as the Kmart and Target discount chains for one. It also owns chemical and fertiliser producers, a work-gear clothing line, some mining interests and retains a 15% stake in Coles Group Ltd (ASX: COL). Its most recent acquisition has been Kidman Resources, a lithium producer.
Such a robust and diverse portfolio of interests gives me great confidence in this ASX company – and the reliability of its earnings and dividends throughout the economic cycle.
Speaking of dividends, Wesfarmers is boasting a trailing yield of 4.11% on current prices. Although this might change in 2020 due to the conclusion of the Coles divestment, I still think it will prove to be a formidable dividend stock in this new decade and beyond.
Australia and New Zealand Banking Group (ASX: ANZ)
The ANZ share price has been absolutely punished over the past 4 months, falling from around $28.70 to today's level of $24.88. Just before Christmas, you could have picked up some ANZ shares for just $24.22!
The catalyst for this drop seems to have been the bank's decision to reduce the level of franking credits that came with ANZ's 2019 final dividend from 100% to 70%. The general woes of the ASX banking sector and the regulatory issues facing its brothers-in-arms Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) probably didn't help either.
Still, ANZ shares offer a starting yield of 6.44% today – which grosses up to 8.78% even with the partial franking. That's a hard yield to turn down in this low-interest rate world, and thus I think ANZ is a top buy for dividend income today.
Foolish takeaway
If I had $10,000 to spend, these 2 dividend shares would be on the top of my list to buy for ASX income today. Unlike gold, you would receive hefty dividends and franking credits every 6 months just from holding these 2 shares.
