2 ASX dividend shares I’d buy for passive income

ASX dividend shares could be the answer if investors are looking for investment income.

Interest rates are rising, but they are still low. After a drop in the ASX share market, a number of potential dividend options now have higher prospective dividend yields.

A high yield alone may not necessarily be enough to be a good dividend option. What happens if the business regularly cuts its dividend? That’s not very useful for income reliability.

But, the below two ASX dividend shares have continued to grow their dividends.

Brickworks Limited (ASX: BKW)

Brickworks is one of the older businesses on the ASX. It has been operating for more than half a century.

I think it’s an interesting business. While the name and heritage is all about its building product operations, the attraction for me is its dividends also come from other assets.

Brickworks can point to the fact that its normal dividend has been maintained or increased every year since 1976.

One of the main assets is its large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. It’s an old investment house that owns a large portfolio of different investments across various sectors including telecommunications, resources, property, agriculture, and financial services.

Soul Pattinson has been paying a steadily-growing dividend, which Brickworks is benefiting from.

Brickworks also has a property segment through a joint venture with Goodman Group (ASX: GMG). Brickworks divests excess land into this joint venture where industrial buildings are built on that land. The ASX dividend share has enough land for a few years of building projects before those industrial estates are full.

At the current Brickworks share price, it has a grossed-up dividend yield of 4.2%. I think it’s a solid starting yield.

Charter Hall Long WALE REIT (ASX: CLW)

This is a real estate investment trust (REIT), as the name might suggest.

It owns properties across a variety of sectors including office, industrial, retail, agri-logistics, and telecommunication exchanges.

What links all of those properties is that they all have long lease contracts, leading to the ASX dividend share having a long weighted average lease (WALE) expiry of around 12 years. I think this provides attractive rental visibility and stability for investors.

The business has been achieving distribution growth for investors. As of the FY22 first half, 46% of its leases were inflation-linked (which is currently running high) and 54% of leases were fixed with an average fixed increase of 3.1%.

The property portfolio is worth approximately $7 billion, spread across around 550 properties. The occupancy rate is 99.9%, so almost every property is being fully utilised.

The ASX dividend share is expecting to generate FY22 operating earnings per security (EPS) of at least 30.5 cents, representing growth of at least 4.5%. With a distribution payout ratio of 100%, that would equate to a distribution yield of 6.2% in FY22.

The post 2 ASX dividend shares I’d buy for passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and 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.

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