Having a spare $130,000 to invest in an ASX dividend portfolio is probably an unlikely scenario for most readers (as well as this writer). But that doesn't mean it's not a valuable thought exercise!
Building a portfolio of ASX dividend shares typically takes years, a lot of dedication and a lot of discipline. But it's entirely achievable all the same.
So if this was my ASX investing goal, here's how I would construct a $130,000 portfolio of ASX dividend-paying shares.
Macquarie Group Ltd (ASX: MQG) – $30,000
My first $30,000 would go to Macquarie shares. Macquarie is one of the best ASX financials in the current environment, in my view. Unlike the big four ASX banks, Macquarie's earnings come from highly diversified streams, including from outside the country.
Traditional banking services like loans and mortgages only make up a small fraction of Macquarie's total business. Much more instrumental is Macquarie's well-regarded investment banking business, as well as its annuity-style asset management side, which I think are huge advantages in these uncertain times.
On current prices, Macquarie is offering a trailing dividend yield of 4.15%, which normally comes partially franked. As such, I think Macquarie is a great financial company to start off our dividend portfolio.
WAM Research Ltd (ASX: WAX) – $40,000
WAM Research is actually a listed investment company (LIC), which means it primarily invests in other ASX shares rather than operating a business. But WAM Research has proven pretty deft at this, returning an average of 13.4% per annum (before fees) since 2010.
The reason WAX shares are getting an oversize position in our hypothetical portfolio today is its massive dividend yield. On current prices, this LIC is offering a trailing yield of 7.22%, which typically comes fully franked.
Telstra Corporation Ltd (ASX: TLS) – $30,000
Telstra is a dividend stalwart and offers a compelling enough return on current prices (in my opinion anyway) to justify inclusion in a dividend portfolio.
Right out of the gate, Telstra is offering investors a fully franked 5.21% starting yield (including the special dividend Telstra pays). But I also think that the 5G network Telstra is investing heavily in right now will pay further dividends down the road (literally). I think this investment in the next-gen 5G technology will play out very well for this telco giant, but even if it doesn't, there's that healthy dividend to ease the pain!
Brickworks Limited (ASX: BKW) – $30,000
Brickworks is one of the oldest and proudest dividend shares on the ASX, in my view and well deserves a place in this dividend portfolio. Its core building materials business is a lucrative one for Brickworks, but it's also very cyclical, which can be bad news for a dividend-paying company. Luckily, Brickworks nullifies this cyclicality by investing on other revenue streams, including real estate and a cross-ownership with dividend king Washington H. Soul Pattinson & Co Ltd (ASX: SOL).
This has enabled Brickworks to pay a dividend that has either been steady or grown for over 40 years. That's some solid reliability, in my opinion. On current prices, Brickworks is offering a trailing dividend yield of 4.25%, which comes fully franked.
