I'm always on the lookout for good dividend shares for my portfolio.
In Australia we have the unique benefit of franking credits, which increases the income return for us as long-term investors. In most other countries investors lose company tax to the tax office permanently.
With the ASX at all-time highs it's hard to find good value dividend shares. So that's why the below three ASX shares would be my dividend picks right now:
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
Worries about franking credits still seem to be hurting the value of some listed investment companies (LICs). PM Capital Global is a LIC that looks across the world for investment opportunities. It's currently trading at a 14% discount to the net tangible assets (NTA) value at 10 January 2020. When you combine that with the fact that PM Capital Global thinks its holdings are undervalued, it's an attractive combination.
Being able to invest anywhere in the world gives great investment flexibility and should mean the investment team can continue to find good value opportunities.
It offers a diverse group of holdings including Visa, Bank of America, KKR & Co, Cairn Homes, MGM China Holdings and Freeport-McMoRan Copper.
The LIC has increased its dividend each year since it started paying a dividend in 2016. It has a trailing grossed-up dividend yield of 4.25%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
I think Soul Patts is the gold standard for dividend shares on the ASX. It has been operating for around 120 years and it has paid a dividend every year in that time. Plus, it has increased its dividend each year since 2020.
How has it managed this? It's an investment conglomerate that holds large investments in a diverse range of businesses such as Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM), Magellan Financial Group Ltd (ASX: MFG), Clover Corporation Limited (ASX: CLV) and Bailador Technology Investments Ltd (ASX: BTI).
It does everything the right way. It doesn't issue shares for acquisitions, it has a very strong balance sheet, it invests for the long-term and it tries to choose uncorrelated assets. That's why it has recently invested in swimming schools and luxury retirement living.
Soul Patts currently has a grossed-up dividend yield of 3.7%.
WAM Microcap Limited (ASX: WMI)
Small cap shares have proven to be a great hunting ground for finding some of the best-performing shares. WAM Microcap is another LIC and it has performed extremely strongly since inception two and a half years ago, with its portfolio delivering gross returns of more than 20% per annum.
It's important for WAM Microcap not to get too large so that it can still effectively invest in small cap shares. That's why it's paying a steadily-growing ordinary dividend and it's also paying out special dividends too. It's paying good cashflow to investors.
Looking at just the ordinary dividends, WAM Microcap has a trailing grossed-up dividend yield of 4.3%.
Foolish takeaway
Each of these dividend shares could beat the market and deliver excellent dividends over the coming years. I'd probably choose them in order that I listed them, with PM Capital being my favourite for now because of the large discount of the share price compared to assets.
