ASX dividend shares could be the answer to boosting income in this low interest rate environment.
Interest rates are expected to rise. But even a 1% rise from where things are today would still end up being a low interest rate for people wanting to earn some money from cash in the bank.
ASX dividend shares have the capability of producing a higher yield and also delivering growth.
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Brickworks Limited (ASX: BKW)
Brickworks is one of the ASX dividend shares with the longest-running streaks of reliability. It hasn't cut its dividend for at least four decades. In-fact, that streak is getting pretty close to five decades.
Using the last 12 months of dividends, the Brickworks grossed-up dividend yield is 3.9%. That yield has been boosted for prospective investors. The Brickworks share price dropped by around 8% over the last month.
The business is well known for its building products divisions in Australia (and the US). It's Australia's biggest brickmaker and also has strong market positions in other areas like masonry and roofing.
But other segments fund the dividend. One is its investment division, which has been providing earnings stability and growing dividends for decades.
The other division is the industrial property trust which it owns 50% with partner Goodman Group (ASX: GMG) owning the other half.
This property trust has a long pipeline of projects that it's working on. It is expecting significant development profits. In the second half of FY22 it's expecting to complete developments in Sydney and Brisbane which will add to its rental profit and boost the cashflow which funds dividends.
The ASX dividend share has lengthened its development pipeline by announcing the release of 75 hectares of land at Oakdale East in Sydney. There is "unprecedented" demand for industrial development as more companies look for e-commerce and logistics facilities.
Rural Funds Group (ASX: RFF)
Rural Funds is a growing real estate investment trust (REIT) in the agricultural landlord space.
It owns a portfolio of different farm types including cattle, almonds, macadamias, vineyards and cropping (sugar and cotton).
The business aims to grow its distribution by 4% per annum. It has been successful with this objective every year since it listed several years ago.
Organic growth of distributions is funded by contracted rental increases (linked to CPI inflation or a fixed annual increase) as well as productivity improvement investments. Rural Funds puts some money towards improving its farms to make them more productive for the tenant, produce more rental income and theoretically increase the value of the land.
It has a number of large tenants including Olam, JBS, Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).
Rural Funds has provided distribution guidance of 11.73 cents per unit in FY22. That translates into a distribution yield of 3.9% from the ASX dividend share.
