Saturday, August 15, 2020

A top ASX dividend share to buy next week

Crown sitting on top of a pile of dividend cash

Well, 2020 has been a disastrous year for ASX dividend shares, to say the least. Former income stalwarts like the ASX banks have slashed or even ‘deferred’ dividends entirely. And other dividend payers that investors used to regard as ‘safe’ – such as Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) – have turned out to be not so safe.

So where should investors turn? Consumer staples giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) dividends appear to be safe. But with current trailing yields of 2.67% and 2.37%, respectively, these shares will only go so far for a dividend investor.

ASX resources giants like BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) have been spots of light this year on a dark dividend horizon. But ASX resources shares are notoriously cyclical, and many dividend investors don’t like to dedicate too much of their portfolios to this sector as a result.

So where to turn for dividends in 2020?

Well, I think this ASX dividend share is a great place to start.

Enter WAM Global Ltd (ASX: WGB)

WAM Global is a listed investment company (LIC), which means it acts like an investor in its own right and buys and sells shares on behalf of its owners. This LIC is run by the reputable Wilson Asset Management and focuses on internationally listed shares beyond the ASX. Some of its current holdings include names you might know, such as EA Games, Microsoft, Tencent and Hasbro.

Wilson Asset Management has said it has modelled WAM Global on its highly successful flagship LIC WAM Capital Ltd (ASX: WAM). WAM Capital is an ASX-focused LIC that has been around since 1999. Since then, it has delivered an average return of 15.6% per annum. Today, it offers a trailing yield of around 8%.

WAM Global only started life in 2018. But since then, this LIC has been growing its shareholder payouts at an impressive rate. Just this week, WAM Global announced a final FY20 dividend of 4 cents per share, which was a 100% increase from the prior final dividend. It brings the LIC’s total dividends for the year to 7 cents per share, up 250% from the prior year. On current pricing, this would give WAM Global a trailing, grossed-up yield of 4.93%, or 5.63% if we annualise the 2020 final dividend.

Given WAM Global has already proved it can be a top ASX dividend growth share, I think it’s a great investment for 2020 and beyond.

More reading

Motley Fool contributor Sebastian Bowen owns shares of WAMGLOBAL FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Woolworths 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 post A top ASX dividend share to buy next week appeared first on Motley Fool Australia.


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