I think income investors should only focus on top ASX dividend shares if they rely on them to pay for their life expenses.
I've long said that I don't think that ASX banks are good ideas for income because of their inherent higher-risks during recessions. We're seeing that now with National Australia Bank Ltd (ASX: NAB) cutting its dividend by around two thirds. Meanwhile Australia and New Zealand Banking Group (ASX: ANZ) has deferred its dividend.
There are still good picks out there in my opinion, despite the coronavirus.
Here are some top ASX dividend shares for income investors in May
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is now the business with the best dividend record on the ASX. It has increased its dividend every year since 2000. And it has paid a dividend every year in its history, dating back to the early 1900s.
The investment conglomerate nature of the business means the overall business is diverse and it can change its holdings to new opportunities as the years go by.
Its largest holding of TPG Telecom Ltd (ASX: TPM) can provide defensive earnings whilst the country is in lockdown. The upcoming merger with Vodafone Australia is also very promising for earnings growth and higher dividends.
Soul Patts currently offers a FY20 grossed-up dividend yield of 4.7%.
Rural Funds Group (ASX: RFF)
Rural Funds aims to grow its distribution by 4% each year. It's a farmland real estate investment trust (REIT) which owns a diverse portfolio in different sectors like almonds, macadamias, cattle, cotton and vineyards.
The REIT is able to grow its distribution so well because its rental contracts have contracted growth of either a fixed 2.5% increase or linked to CPI inflation, plus market reviews.
Rural Funds has a weighted average lease expiry (WALE) of more than 10 years and it continues to invest in productivity improvements which boosts rental income further.
Based on the FY21 distribution guidance of 11.28 cents per unit, it offers a forward distribution yield of 5.8%.
Brickworks Limited (ASX: BKW)
Brickworks has one of the most consistent ASX dividend share records. It has grown or maintained its dividend every year for over 40 years.
How has it been able to do that? Well Australia has been a strong-performing economy for a very long time. There has been plenty of construction using Brickworks' building products. It sells a wide variety of different things like bricks, paving roofing, cement and so on.
But it also owns a large amount of Soul Patts shares as well as owning 50% of an industrial property trust along with Goodman Group (ASX: GMG). These two assets are providing reliable income to Brickworks during this period. Their values also back up Brickworks' market capitalisation.
Brickworks currently has a grossed-up dividend yield of 6.25%.
Duxton Water Ltd (ASX: D2O)
Duxton Water is a business that owns water entitlements and leases them out to agricultural businesses.
The recent dry conditions have caused water prices to rise significantly. But there are also more high-value, high-demand crops like almonds which are supporting a higher price.
Duxton Water has been trying to enter into more leases so that it provides certainty for both the farmers and for the company.
The Duxton Water Board are trying to steadily grow the dividend every six month. It has already forecast dividend increases for the next two half-year periods.
It now has a forward grossed-up dividend yield of 6.2%.
Foolish takeaway
I think these top ASX dividend shares are all among the most likely contenders to keep growing their dividends over the next 12 months, particularly Soul Patts – it would be my first choice for long-term dividend income.
Duxton Water is very cheap, though water values could go lower if it rains a lot over the next 12 months. Brickworks is cheap too, but I like Soul Patts' diversification more.
