The ASX dividend share space has seen its fair share of volatility over the last few weeks, so this could be the right time to invest. They’re much more appealing to me than a term deposit for a few different reasons.
The recent jump in inflation is certainly leading to expectations of a rise in interest rates. The prospects are good for Aussies interested in term deposits.
However, despite that, I think it’s an even better time to look at ASX dividend shares.
I’m expecting inflation to reduce in the future back to a more normal a level, even if that takes a while, which could mean the lower share prices (and higher yield) today are worth jumping on whilst they’re still available.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
One of the main reasons why I prefer ASX dividend shares over term deposits is because of the organic growth that businesses can deliver.
Companies have the ability to grow their earnings over time, meaning that they can deliver growing dividend payments (offsetting inflation) and achieve capital growth.
I think Soul Patts is one of the best examples of this because the business has increased its dividend each year for the past 28 years in a row. There is no other company on the ASX with that history of dividend increases.
The only organic way a term deposit delivers any material income growth is when the RBA cash rate goes up. But interest rates can go down too, as we saw in 2025, hurting the interest rate on offer.
Dividend growth is not guaranteed, but I like the odds of this ASX dividend share hiking its payout this year and next year.
It has been able to deliver such consistent growth because of how it operates. It’s an investment conglomerate that owns a portfolio of ASX shares, international shares, private businesses, property and credit.
The company has deliberately built its asset base to be defensive and provide resilient cash flow, while also having growth potential. As it receives its portfolio’s investment cash flow (mainly dividends), it enables Soul Patts to pay a higher dividend each year and retain a minority of that money to reinvest in more opportunities.
It currently has a grossed-up dividend yield of 3.6%, including franking credits. The somewhat low yield is partly a function of it having a very sustainable dividend payout ratio.
WCM Global Growth Ltd (ASX: WQG)
For investors looking for an ASX dividend share that can provide a stronger yield than a term deposit, I’d definitely look at this option.
It’s a listed investment company (LIC) â its job is to invest in other shares on behalf of shareholders to generate good investment returns.
The LIC looks across the globe for opportunities, so it’s a great option for Australians looking for diversification. Its ideas come from across the world, including the Americas, Europe and Asia, as well as various sectors.
WCM Global Growth wants to find businesses with expanding economic moats (or improving competitive advantages) and these businesses must have a culture that supports a strengthening of the competitive advantages.
As a LIC, the business is able to decide on the level of dividends it wants to pay to shareholders. The ASX dividend share has been steadily increasing its payout over the last several years and it has guided that its quarterly dividend will continue rising each quarter over the next year.
The LIC’s guidance for the next four dividends to be declared comes to a grossed-up dividend yield of 7.7%, including franking credits, at the time of writing. I expect the payout will continue rising for the foreseeable future.
The post Forget term deposits! I’d buy these ASX dividend shares instead! appeared first on The Motley Fool Australia.
Should you invest $1,000 in Washington H. Soul Pattinson and Company Limited right now?
Before you buy Washington H. Soul Pattinson and Company Limited shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Washington H. Soul Pattinson and Company Limited wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 20 Feb 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- What is Morgans saying about these massively popular ASX 200 stocks?
- 2 ASX dividend shares I’m betting on big-time to fund my retirement
- 3 top ASX dividend share buys for passive income in April
- 21 ASX shares going ex-dividend over the school holidays
- 1 ASX dividend share and 1 ASX growth stock to buy in April
Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited and Wcm Global Growth. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.