It's ASX dividend shares that really come into their own in a financial world where interest rates are close to 0%,.
The coronavirus has completely turned things upside down for many industries. Lots of retail businesses are completely shut, apart from some online sales. There are negative oil prices. Travel is almost completely shut down. We find ourselves in a crazy situation.
It's only those reliable dividend shares that can provide safety. Even the great Ramsay Health Care Limited (ASX: RHC) has had to do the unthinkable with its dividend.
Here are some quality ASX dividend shares to buy with yields over 5%:
Brickworks Limited (ASX: BKW)
I think the building products business has one of the best dividend records on the ASX. It has increased or maintained its dividend every year for over forty years.
In normal economic conditions it offers products in Australia from several impressive building product categories. I also like the recent expansion into the US through acquisitions.
The construction industry is likely to go through a troubling time in the shorter-term. But, Brickworks' other assets give me confidence that the dividend can be maintained. It's the 'investments' division and industrial property trust which back up Brickworks' valuation. Those segments are also providing the cashflow to pay the dividend during these times.
Brickworks currently has a grossed-up dividend yield of 6.8%.
Rural Funds Group (ASX: RFF)
Rural Funds is my favourite real estate investment trust (REIT), it's the only one I feel comfortable owning in my portfolio.
It's a farmland REIT which owns a diverse portfolio of different properties including almonds, macadamias, cattle, cotton and vineyards.
It aims to grow the distribution to unitholders by 4% each year. It has been successful with this strategy since listing several years ago. The contracted rental indexation and productivity investments are strong drivers of higher rental profit. This then supports higher distributions to unitholders.
Rural Funds owns an attractive amount of water entitlements for its tenants to use in drier times.
It recently reaffirmed its guidance (again) and currently offers a FY21 distribution yield of 5.9%.
WAM Research Limited (ASX: WAX)
WAM Research is one of my favourite listed investment companies (LICs) for dividends. It has grown its dividend every year since the GFC.
The job of a LIC is to invested in other shares on behalf of shareholders. I think it does a great job of this by identifying the best small cap and mid cap opportunities.
I believe it's a reasonably defensive LIC for two key reasons.
The first is that it has a diverse portfolio, it owns dozens of shares in different industries. The second thing I'll refer to is that it normally has a high cash balance for protection and opportunities. At the end of March 2020, just over 40% of the portfolio was cash.
It currently has an annualised grossed-up dividend yield of 12.2%. Even if the dividend was halved (which I don't expect), it would still have a dividend yield above 6%.
Foolish takeaway
I think Brickworks is the best value of the three. It has fallen heavily over the past couple of months, but I believe it's backed up by some very defensive assets. WAM Research may generate the most dividends over time. But, there may not be much capital growth because most of the long-term gains from WAM Research are paid out as dividends each year.
