If you want income then you should replace your term deposit ASX dividend shares.

Term deposits were earning more than 5% not too long ago. But those days are long gone. Term deposits are obviously still a good idea if you’re looking for capital protection. But eating into your capital to pay for your life expenses because the interest rate is so low isn’t a good prospect!

Shares come with risks of course. There are plenty of shares I wouldn’t suggest because of how unstable the dividend may be. I’d only go for ASX dividend shares that may be able to offer very reliable dividends during this coronavirus period:

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

‘Soul Patts’ is one of the best ASX dividend shares out there, perhaps the best, for dividend reliability. How does the dividend record stack up? It has increased its dividend every year since 2000. It has paid a dividend every year since listing in 1903. That’s a great record!

The investment conglomerate owns shares that are likely to keep paying the dividend (and hopefully growing it) during this period. Shares like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW) are two of the biggest sources of investment income for Soul Patts. Both of those shares increased the dividend in the recent results.

I think Soul Patts could be the best ‘set and forget’ individual ASX dividend share because its investments will evolve over time to focus on growing opportunities. It currently offers a grossed-up dividend yield of 4.7%.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) that owns a variety of farm types including cattle, cotton, vineyards, almonds and macadamias.

I think it’s a great ASX dividend share for two key reasons. The first is that it aims to increase its distribution by 4% a year. I think this is attractive because it’s comfortably more than inflation. The second reason I like Rural Funds is that its forecast FY21 distribution yield is 5.9%. I think that’s a solid yield in this environment. 

The contracted rental indexation and strategy of investing into its farms for productivity improvements are powerful forces for growing the distribution.

Rural Funds’ distribution is funded by the cash net rental profit. Around 20% of that rental profit is currently being re-invested for more growth.

APA Group (ASX: APA)

APA Group is another ASX dividend share that has a very strong income growth record for investors. It has increased its distribution every year for a decade and a half.

I’ll tell you what APA Group is. It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

The infrastructure giant’s distribution is entirely funded by its cashflow. That cashflow is steadily growing over the years as new projects and investments come online. APA Group is looking for new opportunities both in Australia and in the US. It has already reconfirmed the annual distribution guidance for FY20 of 50 cents per unit, translating to a distribution yield of 4.5% today. 

Foolish takeaway

I believe each of these income ideas are great picks for long-term dividends. I’d be comfortable owning them for many years and I think they’ll provide growing income compared to a term deposit, with a much better starting yield. At the current share prices I’d definitely choose Soul Patts first.

More reading

• My ASX share for the week
• How to retire early using ASX shares
• How to reduce your work to part-time using ASX shares
• Why I would buy these quality ASX dividend shares today
• My 3 best ASX dividend shares to buy right now

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. 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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The S&P/ASX 200 (INDEXASX: XJO) finished the week up 1.8% on Monday’s opening level. This was against a backdrop of continuing trade tensions with our largest trade partner, April figures showing a 17.9% drop in April sales, and Wesfarmers Ltd (ASX: WES) announcing mass closures of Target stores nationally, and the big 3 iron ore miners rising approximately 4% under trade threats.

The ASX is clearly in a bizarre place. Like most of the world we take our lead from the US stock exchanges; which are being driven largely by the large tech shares. 

These are some of the bigger news stories in ASX 200 trading last week that went almost totally under the radar.

5 ASX 200 Winners

The Alliance Aviation Services Ltd (ASX: AQZ) share price had a truly phenomenal week, rising 27.96% over the week. On Wednesday the company retracted its suspension of guidance due to Covid-19. It announced it was on target for a profit before tax of over $40 million. The company has been buoyed by its fly-in-fly-out services to resource companies and record charter flights. Alliance was floated as a takeover target for Qantas Airways Limited (ASX: QAN) last year. 

Takeovers in general have been sparse since the start of the pandemic. The Village Roadshow Ltd (ASX: VRL) share price leapt a further 16.9% last week on the back of news about a conditional buyout offer by BGH Capital. The offer still represents a premium of 12.5% to Friday’s closing price.

Criticism of the opportunistic and predatory nature of the offer by US investor and 5% stakeholder Mittleman Brothers raised the spectre of a second offer for the embattled entertainer.

The Worley Ltd (ASX: WOR) share price was another ASX 200 winner this week. It jumped by 12.42% over last week. The rising WTI oil price combined with the announcement of two global framework agreements with BP International raised the likelihood of strong near term performance. 

The A-REIT sector was among the ASX 200 winners last week across the board. The Stockland Corporation Ltd (ASX: SGP) share price rose 11.64% over the week. A very confident Stockland CEO Mark Steinert was interviewed by the ABC on Wednesday. He discussed rising trends in foot traffic and the progress around difficulties with Premier Investments Limited (ASX: PMV). Steinert also spoke positively about the residential real estate market.

Likewise the Scentre Group (ASX: SCG) share price rose by 10.89%. Scentre announced the successful raising of AUD$2.3 billion from the US bond markets on May 20.

4 share price falls

As well as the ASX 200 winners, last week also saw a few share price falls. However, the magnitude of share price slides has been lower than what we have come to expect. 

The Austal Limited (ASX: ASB) share price fell by 9.74% over the week. Investors are still reeling from the company’s loss of a competitive tender worth US$5.5 billion to Italy’s Fincantieri (FCT.MI).

Transmission utility Ausnet Services Ltd (ASX: AST) saw its share price drop by 6.84% over the week. The company had recently announced it was looking into equity raising as one of its options to fund growth. The market is treating the share is if this process has commenced. 

Regis Resources Limited (ASX: RRL) saw its share price fall by 5.5% despite a wave of good news over the past month. 

CSL Limited (ASX: CSL) also saw its share price fall by 5.49% last week. Likely as a result of investors taking profits off the table. 

More reading

• 5 things to watch on the ASX 200 on Monday
• Why these ASX stocks will be under the spotlight on Monday
• Got $2,000? Here are 2 ASX 200 healthcare shares to buy today
• How to make a $50,000 passive income with ASX shares
• Have $500 to invest? Then buy these 5 ASX 200 shares immediately

Daryl Mather owns shares of Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and CSL Ltd. The Motley Fool Australia has recommended Scentre Group. 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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