Got money to invest for dividends? Here are 2 ASX shares that could be buys

Brickworks is one of the ASX dividend shares that could be good options.
The post Got money to invest for dividends? Here are 2 ASX shares that could be buys appeared first on The Motley Fool Australia. –

If investors are looking for options for income, then there are some ASX dividend shares that could be ideas.

Businesses that are paying out some of their profit as a dividend could be attractive for the cash returns they provide.

Some businesses are quite proud of the dividend record they have.

Here are two to consider:

Brickworks Limited (ASX: BKW)

Brickworks is a leading building products business. In Australia it has a number of products like bricks, roofing, precast, masonry and more. In the US it has become a large brickmaker in the north east of the country after a few different acquisitions including Glen Gery.

The company actually funds its dividends from two other sources of earnings. There is its large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. It also owns half of an industrial property trust with Goodman Group (ASX: GMG).

Soul Patts is an investment house that has a diversified portfolio of different names including TPG Telecom Ltd (ASX: TPG), Australian Pharmaceutical Industries Ltd (ASX: API), New Hope Corporation Limited (ASX: NHC), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

Brickworks likes Soul Patts for its defensive earnings and growing dividends. They are both ASX dividend shares.

The industrial property trust has a growing property portfolio of assets that are important for e-commerce or logistics. Two of the newest projects are for Amazon and Coles Group Ltd (ASX: COL). When those two assets are finished, Brickworks is expecting growth of both rental income and the valuation.

Those assets fund the stability and growth of the Brickworks dividend. It hasn’t cut its dividend for more than 40 years.

At the current Brickworks share price, it has a grossed-up dividend yield of 3.5%.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is one of the largest retailers in Australia and New Zealand, with networks of both JB Hi-Fi and The Good Guys stores.

The business has experienced a lot of growth since the onset of COVID-19 as customers looked for products to learn, work and be entertained at home.

It’s currently rated as a buy by the broker Credit Suisse.

JB Hi-Fi saw total sales increase by 12.6% to $8.9 billion, with online sales rising by 78.1% to $1.1 billion.

The ASX dividend share benefited from gross profit margin improvement as well as a reduction in the cost of doing business in percentage terms. That helped total earnings before interest and tax (EBIT) increase by 53.8% to $743.1 million. Earnings per share (EPS) rose 67.5% to 440.8 cents. That funded a 51.9% increase of the annual dividend to 287 cents.  

Whilst sales have fallen a bit in the first few weeks of FY22, JB Hi-Fi is still seeing heightened customer demand and strong sales growth compared to FY20.

Credit Suisse is expecting a reduction of the FY22 dividend compared to FY21, but larger than FY20’s dividend. Looking at the FY22 projections, JB Hi-Fi is valued at 14x FY22’s estimated earnings with a forecast grossed-up dividend yield of 6.5%.

The post Got money to invest for dividends? Here are 2 ASX shares that could be buys appeared first on The Motley Fool Australia.

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More reading

5 things to watch on the ASX 200 on Friday

How have ASX retail shares performed during the August 2021 earnings season?

ASX 200 edges higher, Soul Patts (ASX:SOL) falls, Hansen (ASX:HSN) declines
Here’s why the Brickworks (ASX:BKW) share price is lifting on Monday
‘Price makers’: 2 ASX shares to protect against inflation

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks, COLESGROUP DEF SET, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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