These 2 ASX dividend shares are worth looking at in May 2021. Both of them offer very defensive income, including Brickworks (ASX:BKW).
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The two ASX dividend shares in this article provide solid income every year, including through the difficult COVID-19 times of 2020.
Not every business was able to maintain or grow the dividend during 2020. Indeed, plenty of businesses cut the dividend – 银行及金融 - 澳洲联邦银行 (ASX: CBA) and Transurban Group (ASX: TCL) are just two examples.
These two ASX dividend shares may be able to offer reliable income in these uncertain times:
Brickworks Limited (ASX: BKW)
Brickworks has one of the most enviable dividend records on the ASX. Shareholders haven’t seen a dividend cut in over 40 years.
Management have expertly guided the business through difficult times with a range of different assets and businesses which can support each other.
In the good times, Brickworks’ building products businesses can perform very well. Indeed, the Australian market is currently experiencing solid performance as the economy recovers from the impacts of the COVID-19 recession. Its subsidiaries are among the best in their respective sectors such as Austral Bricks and Bristle Roofing.
It has been the shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares that has been particularly useful for supporting the Brickworks dividends over the years. The investment conglomerate has a diversified portfolio of telecommunications, resources, property, financial services and agriculture. These investments generate cashflow and pay dividends.
The segment that could create a lot of value in the next few years is its industrial property trust with Goodman Group (ASX: GMG). Once two large warehouses are completed, including one for Amazon, it’s expected this will significantly increase the rental profit and capital value of the trust. This should be very beneficial for Brickworks.
Charter Hall Long WALE REIT (ASX: CLW)
This real estate investment trust (REIT) might be one of the most consistent dividend payers out of the whole sector. It’s able to be so reliable for investors because of its long-term rental agreements, hence the name. Its weighted average lease expiry (WALE) at the end of the first half of FY21 was 14.1 years. That provides a lot of long-term income visibility.
The ASX dividend share aims to pay out 100% of its distributable earnings each year. It’s currently expecting to generate at least 29.1 cents of operating earnings per security (EPS). That means it’s expecting to pay a yield of at least 6% in FY21.
Its tenants are some of the highest-quality ones that you could want to have. Australian government entities, Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), Coles Group Ltd (ASX: COL) and Inghams Group Ltd (ASX: ING) are some of the biggest tenants.
Charter Hall Long WALE REIT has only been listed for around four and a half years, but it has increased its distribution in each financial year since then.
It continues to diversify its portfolio. For example, it recently acquired the David Jones flagship Elizabeth Street store as well as a BP service station portfolio.
The REIT is currently rated as a buy by the broker Morgan Stanley with a price target of $5.35. The broker expects the ASX dividend share to pay a yield of 6.4% in FY22.
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Returns As of 15th February 2021
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.