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3 top ASX dividend shares to buy for 2020 and beyond

Tristan Harrison

We’re nearly into 2020 and it’s getting harder for many people to live off the income of their investments.

Many people believe that they may have to dip into their capital to fund their retirement, but I think there are some ASX shares that offer good yield and can provide reliable dividends.

Here are three of my best dividend ideas:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

I think that investment house Soul Patts is the gold standard for dividends on the ASX. It has a diversified, uncorrelated portfolio of assets that are steadily growing their earnings and dividends for Soul Patts, which has allowed it to increase its dividend every year since 2000.

Its asset base continues to diversify with investments in agriculture and luxury retirement living this year. 2020 could be a strong year for Soul Patts if the TPG Telecom Ltd (ASX: TPM) merger decision goes its way which should lead to higher dividends and a strong rise for the TPG share price, which is one of Soul Patts’ biggest positions.

I think Soul Patts is one of the most likely shares to be able to keep growing its dividend over the next decade.

It currently has a grossed-up dividend yield of 3.75%.

Magellan Global Trust (ASX: MGG) 

How can you turn Visa, MasterCard, Microsoft, Alphabet, Alibaba, LVMH and so on into dividend shares? Own a listed investment trust (LIT) that invests in shares in the world’s best growth shares but also targets a 4% distribution yield. This is what Magellan Global Trust does.

Magellan Global Trust has already created a solid record of capital growth whilst also falling less when the market drops. It’s a good all-rounder.

I think it’s a great way to diversify away from the ASX and get exposure to some of the world’s best businesses.

Rural Funds Group (ASX: RFF) 

Rural Funds is a farmland real estate investment trust (REIT) that aims to grow its distribution by 4% each year. That’s a nice growth rate when the FY20 distribution yield is 5.7% at the moment.

It has various farm types in its property portfolio including almonds, macadamias, cattle, cotton and vineyards. There are rental increases built into its contracts with market reviews too, which is a large part of why the distribution can keep rising so consistently. Rural Funds is also investing in productivity improvements for its tenants’ benefit.

Whilst Rural Funds doesn’t take on the operational risk of droughts, its farms are not located in the worst-hit areas and it owns water entitlements for its tenants to use.

Foolish takeaway

Each of these dividend shares have their merits. Rural Funds clearly has the best starting yield. However, Soul Patts is the most likely share to be around in another 50 years whilst Magellan Global Trust could generate the best total returns because of its global investment strategy.

The post 3 top ASX dividend shares to buy for 2020 and beyond appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company 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