There are some ASX dividend shares that continue to pay dividends even through all of the disruption from COVID-19 and the other impacts.
Not every business was able to continue to keep paying dividends during 2020. But these two did keep paying, and increased their payments:
Brickworks Limited (ASX: BKW)
Brickworks is a diversified property business that has several segments.
It has an Australian building products division that manufactures and sells things like bricks, paving, masonry, precast and roofing. Brickworks said that FY21 first quarter earnings were well ahead of the prior corresponding period with a "solid" pipeline of work for the remainder of FY21 with help from government stimulus measures. The major capital projects are on schedule.
Brickworks also has a building products division in North America after acquiring three businesses, being Glen Gery, Redland Brick and Sioux City Brick. The company says that it has market leadership across the north east, Midwest and mid-Atlantic regions. In the first quarter of FY21, sales in North America were below expectations with significant COVID-19 uncertainty. However, management are expecting improved earnings once conditions normalise.
The ASX dividend share is looking to its joint venture property trust with Goodman Group (ASX: GMG). Earnings for Brickworks are derived from selling surplus operational land into the trust at market value, then Goodman funds the infrastructure works to create serviced land ready for development.
Once a lease pre-commitment is secured, the serviced land can then be used as security, with debt funding used to cover the cost of constructing the facilities. With this relationship, Brickworks gets access to Goodman's development expertise and network of customers, and Goodman gets access to Brickworks' prime industrial land.
The trust recently secured a lease pre-commitment for 20 years with Amazon at Oakdale West in Sydney. This is the second major pre-commitment secured at the site, after the first one by Coles Group Ltd (ASX: COL). Brickworks said that securing Amazon's tenancy demonstrates how it's well positioned to benefit from the ongoing e-commerce revolution with the development an example of the increasing complexity of facilities in response to the growing need for automation and innovation from customers.
When the two facilities are complete, it will grow the gross assets of the trust to more than $3 billion and it will also increase the net rental distributions by more than 25% to the ASX dividend share. The Amazon and Coles facilities will cover less than 40% of the available area at Oakdale West, providing significant further growth opportunities for the trust over the next five years.
Brickworks also owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts itself is a consistent ASX dividend share. Soul Patts is invested across a variety of industries including telecommunications, building products, resources, financial services, listed investment companies (LICs) and agriculture.
The investment income alone from the property trust and Soul Patts shares funds the Brickworks dividend. Brickworks hasn't cut its dividend for over 40 years.
Brickworks currently has a grossed-up dividend yield of 4.4%.
Pacific Current Group Ltd (ASX: PAC)
Pacific Current is a business that aims to invest in exceptional investment managers to help them grow with Pacific's expertise and funding.
Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: "The stock's really cheap. It is on nine times earnings. It's growing earnings at double digits, so more than 10% a year. It's paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can't be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one."
In FY20, Pacific Current grew its dividend per share by 40% to $0.35. The ASX dividend share funded this with an 18% increase in underlying earnings per share (EPS) to $0.51. Funds under management (FUM) grew by 62% to $93 million with GQG delivering most of the growth and representing most of the existing FUM.
In the first quarter of FY21, the FUM went up 14% to $106.4 billion. Again, the vast majority of FUM growth during the period came from fund manager GQG.
Pacific Current is now trading at 11x FY21's estimated earnings and has a trailing grossed-up dividend yield of 8.1%.
