3 ASX dividend shares to diversify your income

There are some ASX dividend shares out there that would be great options to diversify your income away from the typical dividend share ideas.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I think there are some great ASX dividend shares. You may want to find different sources of income from the typical dividend shares people go for.

This doesn't mean shares like Australia and New Zealand Banking Group (ASX: ANZ) or Sydney Airport Holdings Pty Ltd (ASX: SYD). Who knows if they will even pay something during 2020 because of the coronavirus?

I think the below ASX dividend shares could be great, diversified options for income:

Duxton Water Ltd (ASX: D2O)

Duxton Water is a company that owns water entitlements. It then leases them out to agricultural businesses. It has a portfolio of water from different entitlement regions, it's trying to progressively lease out more of them.

This increased earnings visibility has allowed management to forecast that the Duxton Water dividend can grow every six months for the next two years. After that it may depend on how much rain there has been (or not).

The company is currently trading at a sizeable discount to its net tangible assets (NTA). The forward grossed-up dividend yield amounts to 6.25%.

Brickworks Limited (ASX: BKW)

Brickworks is one of the best ASX dividend shares in my opinion. It hasn't decreased its dividend for more than four decades.

The business is split into three key segments.

The first segment is its large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which owns a diversified and growing portfolio of businesses in different industries. Soul Patts continues to grow its dividend for all shareholders, including Brickworks.

The second segment is its 50% stake of an industrial property trust, the co-partner is Goodman Group (ASX: GMG). This trust is generating reliable cashflow, long-term capital growth and there are more projects which will be completed in the coming years.

The third segment is the diversified building products businesses in Australia and the US. Construction is going to have a tough time this year, but I think there's a good turnaround story here.

What's the yield for the ASX dividend share? It currently offers a grossed-up yield of 5.8%.

BetaShares FTSE 100 ETF (ASX: F100)

There are plenty of shares listed on the London Stock Exchange which offer defensive earnings and a good yield. I'm thinking about shares like Tesco, GlaxoSmithKline, Unilever, BHP, Rio Tinto, National Grid and Vodafone.

The UK share market has been hit just like every other share market. This has boosted the dividend yield for ASX investors. At the end of April 2020 it had an underlying trailing dividend yield of 5.86%. The yield has fallen with the rising share prices, but the yield will still be fairly attractive for the long term even if there are a few dividend reductions this year.

It could be a good idea to get international income diversification. 

Which ASX dividend share to buy today?

Each of these ASX dividend shares have attractive futures with solid starting yields. At the current prices I'd probably go for Brickworks, it's trading at a big discount to its asset value, has a great dividend record and it could be a good contrarian pick with the worries about the construction industry.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended DUXTON FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Dividend Shares

A boy hold money and dressed in business suit next to money bags on a desk, indicating a dividends windfall
⏸️ Dividend Shares

The Accent (ASX:AX1) dividend has lifted by 22%

The company will reward shareholders with an increased dividend...

Read more »

a woman sits in the driver's seat of a car with her arm resting on the door with a small smile on her face, looking out of the car.
⏸️ Dividend Shares

Carsales (ASX:CAR) share price records a modest rise on dividend slash

Australia's largest online automotive and marine classifieds business notches a conservative share price rise on its latest report.

Read more »

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
Bank Shares

ASX 200 bank shares to follow suit after CBA dividend hike: expert

Dividend investors rejoice! This expert expects more dividends to come from ASX 200 bank shares...

Read more »

sad looking petroleum worker standing next to oil drill
Share Fallers

AGL (ASX:AGL) dividend slashed. Share price down 3% on Thursday

More headwinds for the energy giant as its dividend is now in the spotlight.

Read more »

A girl looks through a microscope at money.
⏸️ Dividend Shares

The ANZ (ASX:ANZ) share price has only gained 10% in 5 years. But have the dividends paid off?

We do the math to see if it has been worth investing in ANZ shares over the long term...

Read more »

man laying on his couch with bundles of money and extremely ecstatic about high dividend returns
⏸️ Dividend Shares

The NAB (ASX:NAB) share price is flat 5 years on. But have the dividends paid off?

We calculate if it has been worth investing in NAB shares over the long run...

Read more »

two children dressed in business attire with joyous, wide-mouthed expressions count money at a desk covered in cash and sacks of money either side.
⏸️ Dividend Shares

Top-10 ASX dividend share delivers market-thumping share price gains

The Holy Grail for income stocks is to return strong capital gains as well

Read more »

happy woman looking at her laptop with notes of money coming out representing financial success and a rising share price and dividend yield
⏸️ Dividend Shares

Mining shares in the ASX 200 might unearth US$26b worth of dividends

Are shareholders about to dig some dividends?

Read more »