2 defensive ASX dividend shares offering reliable income

The ASX share market is seeing a lot more volatility this year. Reliable ASX dividend shares could be attractive to investors seeking stability.

There are some businesses that can have quite variable cash flows during economic cycles. However, there are also other options that share seeing consistent and growing cash flow, like these two:

APA Group (ASX: APA)

APA Group is one of the largest infrastructure businesses on the ASX, particularly with Sydney Airport’s recent departure from the ASX due to its takeover.

It is a large owner of energy infrastructure. APA says it is Australia’s leading gas transportation company with interests in more than 15,000 km of natural gas pipeline infrastructure across Australia, wind farms, gas-fired power generation, and gas storage facilities. It supplies half of Australia’s natural gas usage.

The business generates its annual cash flow from that portfolio of energy assets. As it completes more projects, its cash flow can grow. That rising cash flow is what funds the growing distribution.

The ASX dividend share’s distribution has grown every year for more than a decade and a half.

APA Group is expecting to grow its FY22 annual distribution by another 3.9% to 53 cents per security. That puts the FY22 dividend yield at 5.1% at the current APA share price.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT). It specialises in owning and leasing agricultural properties.

It owns a diversified portfolio spread across several sectors including cattle, vineyards, almonds, macadamias, and cropping (sugar and cotton).

The business benefits from organic rental income growth every year. Some of its contracts are based on fixed rental increases, while others are linked to CPI inflation. Some contracts also have periodic market reviews.

This ASX dividend share also invests in productivity at its farms for the benefit of its tenants, which aims to increase the value of the farms and also grow the rental potential.

It has a tenant base full of major operators including Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE), Olam, JBS, and Australian Agricultural Company Ltd (ASX: AAC).

Rural Funds aims to grow its distribution by at least 4% per year for investors. It has been successful with this strategy since listing several years ago.

The REIT has guided that the FY22 distribution will be $11.73 per security, representing a 4% increase compared to FY21. That translates into a distribution yield of 4% at the current Rural Funds share price.

The post 2 defensive ASX dividend shares offering reliable income appeared first on The Motley Fool Australia.

More reading

• Why did the APA (ASX:APA) share price just ink a new 52-week high?
• The APA (ASX:APA) share price is up $1 in 7 years. Have the dividends been worth it?
• Here are 2 ASX dividend shares with attractive yields
• Are analyst upgrades on the way for APA (ASX:APA) shares?
• 2 ASX dividend shares with attractive yields

Motley Fool contributor Tristan Harrison owns RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended APA Group and RURALFUNDS STAPLED. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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