ASX shares can help you build a diversified dividend portfolio.
In this coronavirus era, finding those shares that can grow or even just maintain their dividend is very valuable.
Just look at shares like National Australia Bank Ltd (ASX: NAB), Sydney Airport Holdings Pty Ltd (ASX: SUD) and Woodside Petroleum Limited (ASX: WPL). They were all thought of as dividend shares, but I didn't think their industries meant they could be considered as defensive. The coronavirus is an extreme scenario, but they're all paying less dividends than normal now (or nothing).
I think there's only a select group of dividend shares that can keep paying good dividends during this period.
Here are two ASX shares to build a diversified dividend portfolio:
Brickworks Limited (ASX: BKW)
Brickworks has one of the best reliability records on the ASX. It's a great ASX dividend share. It hasn't decreased its dividend in over four decades.
It's one of Australia's largest building products businesses. It sells bricks, paving, stone, masonry, roofing, precast and so on. Construction may be in for a tough time over the next year, but the longer-term looks promising.
Brickworks has also cleverly expanded into the US through three targeted acquisitions that has propelled it to be the market leader in the north east of the US. The company will be bringing its excellent productivity to the US which should boost margins there.
But the Brickworks dividend is supported by its other divisions – the 'investments' and quality industrial property trust. The cashflow from these investments to Brickworks is steadily growing and should help support Brickworks' dividend until the country gets back to normal.
Brickworks currently has a grossed-up dividend yield of 6.1%.
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is a listed investment company (LIC) which invests in the funds of ASX-focused fund managers. But Future Generation doesn't charge any management fees, nor do the underlying fund managers. They work for free so that Future Generation can donate 1% of its net assets to youth charities each year.
The LIC's investment performance has been solid since inception. The underlying diversification is strong with all of those different fund portfolios, and the good returns have helped pay for a growing dividend over the past few years. I think it's a solid ASX dividend share.
Using the trailing dividends, Future Generation currently has a grossed-up dividend yield of 7.9%.
Foolish takeaway
Both of these ASX dividend shares have very attractive dividend yields with good growth credentials. At the current prices I'd probably go for Brickworks because of its defensive cashflow from its other assets which will be able to support the dividend through this period. But I'm looking to buy more Future Generation shares for my portfolio too.
