Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Three top ASX dividend picks
ASX dividend shares are an essential part of all income portfolios.
Especially when the official cash rate is just 0.10%. After accounting for inflation, money kept in a bank account is earning a negative return.
Here are three ASX dividend shares I’d add to any income portfolio.
1. Commonwealth Bank of Australia (ASX: CBA)
Despite rising competition from neobanks and buy-now-pay-later, CBA is still taking market share from its peers.
Subsequently, the business achieved a cash profit of $9.5 billion over the past 12 months.
To put that number into context, today CBA could go and use that cash to buy all of:
- Pointsbet Holdings Ltd (ASX:PBH)
- Zip Co Ltd (ASX: Z1P)
- Brainchip Holdings Ltd (ASX: BRN)
- A2 Milk Company Ltd (ASX: A2M)
- Kogan.com Ltd (ASX: KGN)
And still, have change left over.
Instead of reinvesting that profit, CBA returns its back to shareholders. That’s why it’s one of the best ASX dividend shares.
At today’s price, CBA is paying a 4% fully franked dividend yield.
Bunnings and Officeworks owner Wesfarmers is one of the few conglomerates to deliver market-beating returns over the long term.
How does it continually outperform other ASX dividend shares?
The primary objective of Wesfarmers is to provide a satisfactory return to shareholders… we measure our performance by comparing Wesfarmers’ TSR (total shareholder return) against that achieved by the broader Australian market.
It might sound simple. Isn’t that the purpose of every business?
It should be. But often companies prefer buzz-word packed mission and vision statements.
At current prices, Wesfarmers is currently yielding a 3.4% fully franked dividend.
3. Deterra Royalties Ltd (ASX: DRR)
Deterra Royalties is a fancy name for what is effectively a post box.
Each quarter, BHP Group Ltd (ASX: BHP) sends it a cheque for any iron ore revenue generated over Mining Area C (MAC) in the Pilbara.
Why not just buy BHP or any other miner instead then?
Firstly, Deterra doesn’t take on as much operational risk. If costs blow out, it doesn’t impact Deterra’s revenue.
Secondly, it pays out 100% of its profit as dividends fully franked making it must have ASX dividend share.
Thirdly, MAC is expected to double its production over the next to years.
Even if the iron ore price falls, the ramp-up in production should support the dividend payment.
Finally, the business is on the look for more high-quality royalty streams.
It’s been patient so far, failing to pull the trigger on any deals.
But this also signals management is prudent with its capital allocation.
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