When I look at ASX dividend shares, I usually place prospective candidates in one of two camps. The first is the stocks that are likely to pay up big today, but maybe not so much tomorrow. The second is those that will (hopefully) reward investors tomorrow, although they don't pay up big today.
I think for someone who is still in the 'accumulation of wealth' phase, a healthy mix can be a good thing.
So here are 3 of my favourite ASX dividend shares to buy this month – one from the first camp, one from the second and a third that covers both.
Coles Group Ltd (ASX: COL)
Coles falls more in the first camp of my dividend share classification. As Australia's second largest supermarket chain, I think it's fairly safe to say most of Coles' growth is behind it these days. But still, it has a watertight, robust business, millions of loyal customers and a strong brand. The company's plans to automate and tighten up their supply chains is impressive, which should leave plenty of room for some modest dividend growth over the next few years (especially if Coles sticks with its policy of paying out 80–90% of earnings).
Today, Coles shares offer a trailing dividend yield of 3.36% (4.8% grossed-up with full franking) – which is a pretty decent return in my view.
Cleanaway Waste Management Ltd (ASX: CWY)
Cleanaway Waste falls firmly in the second camp of dividend shares. On the surface, the company's current dividend yield offering of 1.62% doesn't seem that impressive (you get that from a bank account). But it's the rate of this dividend's growth that has me excited about this stock.
Cleanaway actually announced its half-year results this morning – as well as a 21.2% lift for its interim dividend. Since its earnings per share were also up 15.2%, I think this company has lots of room to continue raising its payout at a healthy rate. If you buy Cleanaway shares today, I'm very confident your yield on cost will be a lot higher that 1.62% in a few years' time.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
This exchange traded fund (ETF) holds a basket of 64 dividend paying ASX companies, which makes it a great diversified income buy in my view. Its holdings are more skewed towards higher-yielding stocks, with heavy weightings in names like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS), but it also holds some dividend growth stocks like JB Hi-Fi Ltd (ASX: JBH) and Magellan Financial Group Ltd (ASX: MFG).
In this way, I think this ETF would be a great addition for income seeking investors. Why not get the best of both worlds?
