It's during times like this that a diversified dividend portfolio can really come into its own.
I've long said that I don't think shares like Australia and New Zealand Banking Group (ASX: ANZ), Transurban Group (ASX: TCL) or Woodside Petroleum Limited (ASX: WPL) can be counted on as defensive dividend ideas.
Instead, I think these dividend ideas could be good ways to diversify your dividend portfolio:
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is a special type of listed investment company (LIC). It doesn't charge any management fees or performance fees. It only invests in the funds of fund managers who invest in ASX shares. Those fund managers charge no management fees or performance fees either.
Why no fees? It's so that the LIC can donate 1% of its net assets each year to youth charities. A great initiative, particularly useful at times like this.
And what about the investments? Well, each underlying fund has its own portfolio – meaning Future Generation has great diversification. Some of the funds are long/short funds, meaning they can make money even if the market is going down.
Before the coronavirus, Future Generation was trying to slowly increase its dividend each year. It currently has a trailing grossed-up dividend yield of 8.3%. Even a 6% yield would be solid how how low interest rates are.
BetaShares FTSE 100 ETF (ASX: F100)
The UK share market has been hurt just like the rest of the global share market. However, there are plenty of high-quality global shares on the London Stock Exchange (LSE) which will get through this period.
The exchange-traded fund (ETF) is invested in 100 of the biggest businesses on the LSE like HSBC, Astrazeneca, GlaxoSmithKline, BP, British American Tobacco, Diageo, Royal Dutch Shell, Unilever and Rio Tinto. This is a diversified group.
I don't expect this ETF to pay out the same amount of dividends over the next 12 months as the past year, but with the UK government providing enormous financial support I think the UK will be able to get through this fairly well.
By 2022 I think those UK dividends could be getting back to normal, making the current price look good for future dividends.
Brickworks Limited (ASX: BKW)
Brickworks has been one of the best dividend shares over the past few decades. It has maintained or grown its dividend every year for over forty years.
It was only a week ago that Brickworks announced its half-year result and the Board increased the dividend by another 5%. This is attractive for income investors in this current environment.
How can a building products business deliver such a great, reliable dividend in times like this? It's because its diversified assets of its 'investments' and 'property trust' divisions are providing such reliable cashflow.
It also helps that Brickworks' market capitalisation is backed up by the underlying value of its non-building product businesses.
Brickworks currently has a grossed-up dividend yield of 6.2%.
Foolish takeaway
All three of these shares offer very nice diversification to a typical ASX dividend portfolio. At the current prices I'm leaning towards Brickworks and Future Generation. Brickworks looks cheap compared to its assets and has a great dividend history. But Future Generation's NTA may be able to perform quite well during this period and we may be able to buy it at a nice discount to its underlying asset value.
