Got $50,000 to invest for income? Pick these 5 ASX dividend shares

The idea of investing $50,000 for income is an important task that should be carefully thought out. You can’t just pick any ASX dividend share.

Just look at what has happened to the dividends of National Australia Bank Ltd (ASX: NAB) and Telstra Corporation Ltd (ASX: TLS). Big cuts over the past few years.

I’d only want to choose the best ASX dividend shares with rock solid income prospects:

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

Soul Patts is my favourite ASX dividend share. It has increased its dividend every year since 2000. It’s a unique income share when it comes to investing on the ASX. It has actually paid a dividend every year in its listed life going back to 1903.

It’s invested across a broad range of industries including telecommunications, pharmacies, building products and agriculture. It has already forecast an increased dividend in six months, which should bring some comfort to those who rely on dividends.

It pays the dividend out of the investment income it receives, less operating expenses, so the dividend is well funded. Some of the net cashflow is kept back to re-invest for more growth. It offers a grossed-up dividend yield of 4.5%.

WAM Microcap Limited (ASX: WMI)

It’s important to recognise that there are top ASX dividend shares outside of the ASX 20. Listed investment companies (LICs) have the ability to generate profits from capital gains made and then pay out a smoothed dividend for shareholders.

WAM Microcap invests in small shares with market capitalisations under $300 million. This hunting ground is where you can find some of the best opportunities. But you don’t need to do the work to find those ideas, you can leave it to the WAM investment team.

The LIC has been steadily growing its dividend since inception a few years ago. It currently offers a forward grossed-up dividend yield of 6.9%.

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business. I think it’s another of the best ASX dividend shares out there because it hasn’t decreased its dividend in over 40 years.

It has a high-quality group of building products businesses that supplies bricks, paving, masonry, precast, roofing and so on across Australia. It also owns a few brickmakers in the US after acquiring them recently. Long-term construction should remain a feature in the coming years.

But it’s okay that the coronavirus is causing disruption to construction right now. It can fund its reliable dividend from cashflow from the defensive industrial property trust it’s a part-owner of, as well as from its large shareholding in Soul Patts.

Brickworks currently offers a grossed-up dividend yield of 5.4%.

Rural Funds Group (ASX: RFF)

I think Rural Funds is quality ASX dividend share because of its consistent distribution growth. Management aim to increase the distribution by 4% every year.

The agricultural real estate investment trust (REIT) achieves this regular growth through contracted rental indexation and regular investing at its farms for productivity improvements for the tenant. This strategy is working particularly well with cattle farms right now.

It’s invested across a diverse array of farms including almonds, cotton, macadamias, vineyards and cattle.

It has already forecast a distribution of 11.28 cents for FY21, equating to a forward yield of 5.6%.

Future Generation Investment Company Ltd (ASX: FGX)

There are two big reasons to like Future Generation as an ASX dividend share.

The first is for its attractive grossed-up dividend yield of 7.4%. Paying a solid (and growing) dividend is one of the main aims of Future Generation. It has been steadily increasing the dividend over the past few years.

But the LIC doesn’t charge any management fees. Neither do the investment managers that Future Generation is invested in. Instead, it donates 1% of net assets each year to youth charities. I think that’s a great initiative to be a part of.

Foolish takeaway

If you don’t want to be buying or selling shares then I think the above five ASX dividend shares are great options. I’d happily invest $10,000 into each of them for long-term income. Hopefully all of them will grow (or at least maintain) the dividend during this difficult period.

More reading

• Beat low interest rates with these ASX dividend shares
• 10 top ASX growth shares to buy in June for strong returns
• How to make $1,000 a month in dividends
• 3 top ASX dividend shares to buy this June
• Why I just bought this ASX share for the long-term

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO, RURALFUNDS STAPLED, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, Telstra Limited, 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.

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