ASX dividend shares could be the way to rescue your income hopes. The ultra low interest rates by the RBA (and elsewhere) are causing havoc for income-seekers.
If people are invested in cash or bonds for cash then it's hardly earning anything any more. How are you supposed to live on a return of less than 1%? That's less than (normal) inflation!
Unprecedented times call for unprecedented measures. I don't blame the RBA for doing whatever it can to help the situation. But people wanting income are left short changed.
I think that ASX dividend shares are the answer. Here are two ideas:
WAM Research Limited (ASX: WAX)
WAM Research is a listed investment company (LIC) which invests in undervalued small and medium businesses.
I think WAM Research is a great ASX dividend share because it has increased its dividend every year since the GFC and it currently offers a grossed-up dividend yield of 11% at the time of writing.
I believe it's able to pay such a big dividend because of two reasons. The first reason is that it's able turn capital gains and dividends received into a smoothed dividend for shareholders. The second and most important reason is that its investment returns have been very strong over the past decade.
In these uncertain times I think it's reassuring knowing that WAM Research usually carries a good amount of cash in its portfolio.
Brickworks Limited (ASX: BKW)
I think Brickworks is a great ASX dividend share, it currently has a grossed-up dividend yield of 6.3%. The latest result saw a 6% increase of the dividend.
Brickworks is a diversified property business which has a number of attractive segments: Australian building products, US building products, 'investments' and an industrial property trust.
I believe it's this mix of assets that has allowed Brickworks to grow or maintain its dividend every year for over 40 years. That income is entirely supported by its investments and property trust, it doesn't need the building products to be generating profit to maintain (and slowly grow) the dividend. The properties in the property trust will slowly increase their rental income.
ASX dividend share takeaway
Share prices will always be volatile, but I think dividends from ASX shares can provide that steady cashflow into your bank account that assets like bonds just can't match right. At the current prices I'd probably go for Brickworks because it's trading at an attractive discount to its asset value.
