Set for life: 5 ASX dividend shares I’d invest in if I ever had a million-dollar windfall

Receiving $1 million would be an incredible windfall. Not only would I instantly become a millionaire, but I think I’d be able to invest it in ASX dividend shares so that I could live off the investment income for the rest of my life.

Some businesses have built a strong track record of paying dividends to investors. I’d utilise some of these to protect and grow my pot of gold.

I’d want to choose a mixture of defensive ASX shares and growth shares. I’m still quite young, relatively speaking, so I don’t need to choose high-yielding picks for every choice.

With that in mind, these are five of the ASX dividend share names I’d go for:

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns farmland. I’ll point out that farmland has been a useful asset for (at least) hundreds of years. I think that will continue for the rest of my lifetime – we all need food after all.

It owns a diversified portfolio across a number of farming categories including cattle, vineyards, almonds, macadamias, and cropping (sugar and cotton).

The business has an objective of growing its distribution by 4% each year. This offers solid income growth in my opinion.

It’s expecting to pay a total distribution of 12.2 cents per unit in FY23, which translates into a forward distribution yield of 5%.

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

This ASX dividend share holds the record for the longest run of consecutive annual dividend growth, going back to 2000.

It owns a portfolio of investments in businesses and assets across a range of assets like telecommunications, building products, agriculture, resources, financial services, swimming schools, and many other industrial businesses.

The business pays out a majority of its cash flow as dividends each year but retains some of the money to reinvest in more opportunities.

It currently has a grossed-up dividend yield of 3.75%, excluding the special dividend.

Charter Hall Long WALE REIT (ASX: CLW)

This is another REIT, but its main focus is owning quality properties with a long lease expiry. Its weighted average lease expiry, or WALE, was 12 years at the last disclosure.

It’s invested in various things like telecommunication exchanges leased to Telstra Corporation Ltd (ASX: TLS), Bunnings Warehouse properties leased to Wesfarmers Ltd (ASX: WES), and BP petrol stations.

The rental income is growing, particularly the contracts linked to CPI inflation.  These have a 6.3% weighted average forecast increase in FY23.

It’s expecting to pay a distribution of 28 cents per unit in FY23, translating into a forward yield of almost 7%.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)

This is an exchange-traded fund (ETF) that looks to invest in the 25 highest-yielding ASX dividend shares that meet Morningstar’s required criteria, which combines a company’s economic moat and its ‘distance to default’ measures.

An economic moat refers to a company’s competitive advantages. In other words, they are good at what they do and are expected to be resilient against competitors trying to displace them.

Its portfolio can change, but at the moment its biggest three holdings are IPH Ltd (ASX: IPH), Ansell Limited (ASX: ANN), and National Australia Bank Ltd (ASX: NAB).

The ETF passes the dividends it receives to investors.

Bailador Technology Investments Ltd (ASX: BTI)

My final pick is Bailador which invests in unlisted technology businesses that have good growth potential with global addressable markets. It’s looking for tech businesses at the ‘expansion stage’, where they have already been running for two to six years and are generating revenue internationally.

I think the businesses that Bailador invests in have very promising futures.

Some of its investments from years ago have gone on to list on the ASX. It still owns stakes in Straker Translations Ltd (ASX: STG) and Siteminder Ltd (ASX: SDR).

The business has a dividend policy of paying 4% of its pre-tax net tangible assets per annum, paid semi-annually. In other words, it will pay a 2% dividend yield on its NTA every six months.

At 30 September 2022, the pre-tax NTA was $1.75. That implies the dividend would be 7 cents per share and the forward grossed-up dividend yield would be 7.7% if the NTA didn’t change.

The post Set for life: 5 ASX dividend shares I’d invest in if I ever had a million-dollar windfall appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments Limited, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments Limited, SiteMinder Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended IPH Ltd. The Motley Fool Australia has positions in and has recommended RURALFUNDS STAPLED, Telstra Corporation Limited, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd., Bailador Technology Investments Limited, IPH Ltd, and Straker Translations. 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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