2 ASX 300 shares I’d buy for long-term dividend income

Happy man holding Australian dollar notes, representing dividends.

Happy man holding Australian dollar notes, representing dividends.

These S&P/ASX 300 Index (ASX: XKO) shares are attractive ideas for dividend income right now and could be attractive for many years to come in my opinion.

I think there’s a lot more to determine how good an ASX dividend share is than simply its current dividend yield.

In times of economic uncertainty, it could be even more important that the dividend income keeps flowing because other forms of (investment) income may have come under pressure. Life expenses don’t stop just because the economy is weakening.

The two ASX 300 shares I’m about to tell you about could display very defensive characteristics over the long term.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a variety of farmland across sectors like almonds, macadamias, cattle, vineyards, cotton and sugar.

Food is obviously needed by everyone, so I believe that farmland will be an ultra-long-term asset, as it has been for centuries.

The business aims to increase its distribution each year by 4%, which is stronger than inflation in most years.

There aren’t too many ASX 300 shares that have grown their dividend income each year since 2014, but Rural Funds is one of them.

I think that its built-in rental increases and productivity investments will enable ongoing distribution growth for years to come. It’s currently investing over $20 million in planting macadamia orchards, which is putting the land to a higher and better use (according to Rural Funds).

Its FY23 distribution is forecast to be a total payment of 12.2 cents per unit, which translates into a distribution yield of 6.3%.

I think the business has a very promising future for dividend income to 2030 and beyond.

APA Group (ASX: APA)

APA says that it owns and/or manages and operates a $22 billion portfolio of gas, electricity, solar and wind assets. It has a huge network of gas pipelines around the country, delivering half of the country’s gas usage and connecting various states.

The business continues to invest in expanding its gas assets, which helps unlock more cash flow that can fund higher distributions.

APA believes that gas will play a key role in providing firming for renewables in Australia, though coal currently has a major share in Eastern Australia of around two thirds, according to APA.

A large majority of the ASX 300 share’s revenue is indexed to inflation, so APA is seeing revenue growth thanks to stronger inflation while boosting earnings and cash flow.

It has used the growing profit to pay a distribution which has increased every year for almost 20 years. It’s a pleasing combination for shareholders that APA has been able to invest in more assets and keep growing its dividend income. I think it will still be supplying energy to Australians a few decades from now.

In FY23 it’s expected to pay a distribution of 55 cents per security, which translates into a distribution yield of 5.4%.

The post 2 ASX 300 shares I’d buy for long-term dividend income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group and Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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