In my view, choosing dividend stocks has never been more important. With yields from other forms of investments reaching record lows, income investors and retirees are in a bit of a tight corner at the moment, with things likely to get worse before they get better. Together with the S&P/ASX 200 (INDEXASX: XJO) reaching record highs, it is a dangerous time to be deploying your cash into the market if you don’t have the right stocks.
Here are three ASX dividend shares that I think would be great options for both present and future income.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care is Australia’s largest provider of private hospital care and owns or operates more than 220 hospitals across Australia and New Zealand, as well as the United Kingdom, France, Indonesia and Malaysia.
Ramsay has consistently delivered strong growth numbers and has a reputation for quality care at a reasonable cost. It has used this reputation to grow its business steadily over the past few decades and its dividend along with it. Ramsay is one of the best dividend payers on the ASX, having increased its payout every year since 2000, and is currently yielding 1.99%.
Woolworths Group Ltd (ASX: WOW)
Woolworths is the largest supermarket chain in the country, with almost 1,000 stores Australia-wide. I like Woolworths as a dividend stock due to its defensive earnings base and strong branding moat – Woolworths has been able to hold its market share in the face of Coles Group Ltd (ASX: COL) and other competitors like Aldi.
Woolworths recently announced plans to spin off its drinks and pubs business, which, depending on the demerger mechanism, may result in existing shareholders being issued with new shares in another dividend-paying company down the road. Woolworths is yielding 2.71% on current prices.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) that invests in some of the largest dividend-paying companies on the ASX that it believes may be mispriced by the market. Some of its top holdings (as of 31 May) include Brambles Limited (ASX: BXB), Wesfarmers Ltd (ASX: WES) and Aristocrat Leisure Limited (ASX: ALL). WAM Leaders is currently paying a 4.65% dividend (6.64% grossed-up).
Any of these companies would make a fantastic addition to a dividend portfolio and I would be very comfortable holding all of these companies for many years to come. Since prices are expensive at current times, averaging in a position in a quality company may be the best strategy going forward.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019