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My best 3 ASX dividend shares to buy right now

Tristan Harrison
Money

I’m always on the lookout for good dividend shares for my portfolio.

In Australia we have the unique benefit of franking credits, which increases the income return for us as long-term investors. In most other countries investors lose company tax to the tax office permanently.

With the ASX at all-time highs it’s hard to find good value dividend shares. So that’s why the below three ASX shares would be my dividend picks right now:

PM Capital Global Opportunities Fund Ltd (ASX: PGF) 

Worries about franking credits still seem to be hurting the value of some listed investment companies (LICs). PM Capital Global is a LIC that looks across the world for investment opportunities. It’s currently trading at a 14% discount to the net tangible assets (NTA) value at 10 January 2020. When you combine that with the fact that PM Capital Global thinks its holdings are undervalued, it’s an attractive combination.

Being able to invest anywhere in the world gives great investment flexibility and should mean the investment team can continue to find good value opportunities.

It offers a diverse group of holdings including Visa, Bank of America, KKR & Co, Cairn Homes, MGM China Holdings and Freeport-McMoRan Copper.

The LIC has increased its dividend each year since it started paying a dividend in 2016. It has a trailing grossed-up dividend yield of 4.25%.  

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

I think Soul Patts is the gold standard for dividend shares on the ASX. It has been operating for around 120 years and it has paid a dividend every year in that time. Plus, it has increased its dividend each year since 2020.

How has it managed this? It’s an investment conglomerate that holds large investments in a diverse range of businesses such as Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM), Magellan Financial Group Ltd (ASX: MFG), Clover Corporation Limited (ASX: CLV) and Bailador Technology Investments Ltd (ASX: BTI).

It does everything the right way. It doesn’t issue shares for acquisitions, it has a very strong balance sheet, it invests for the long-term and it tries to choose uncorrelated assets. That’s why it has recently invested in swimming schools and luxury retirement living.

Soul Patts currently has a grossed-up dividend yield of 3.7%.

WAM Microcap Limited (ASX: WMI) 

Small cap shares have proven to be a great hunting ground for finding some of the best-performing shares. WAM Microcap is another LIC and it has performed extremely strongly since inception two and a half years ago, with its portfolio delivering gross returns of more than 20% per annum.

It’s important for WAM Microcap not to get too large so that it can still effectively invest in small cap shares. That’s why it’s paying a steadily-growing ordinary dividend and it’s also paying out special dividends too. It’s paying good cashflow to investors.

Looking at just the ordinary dividends, WAM Microcap has a trailing grossed-up dividend yield of 4.3%.

Foolish takeaway

Each of these dividend shares could beat the market and deliver excellent dividends over the coming years. I’d probably choose them in order that I listed them, with PM Capital being my favourite for now because of the large discount of the share price compared to assets.

The post My best 3 ASX dividend shares to buy right now appeared first on Motley Fool Australia.

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Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. 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. 2020