There are two main types of returns investors can earn from shares. Capital growth is easy to understand as the share price goes higher. Dividend payments are also an important factor to returns, in-fact the long-term data suggests that the returns are about half of the total.
Therefore, I think it would be very unwise to underestimate dividends as part of the total returns. Dividends are more consistent than profit growth and certainly more reliable than share price growth.
Some companies have the flexibility to steadily increase the dividend every year, which many companies have done since the GFC. However, there are a select few which have increased their dividends every year for over a decade.
Here are three of those dividend-increasing machines:
InvoCare Limited (ASX: IVC)
InvoCare is the largest funeral provider in Australia and New Zealand. The funeral industry is a morbid investment idea, but I think it offers good potential.
Sadly, a certain amount of people pass away each year. This means that InvoCare has a very reliable source of revenue because it has a market share of around 25% of the industry. If InvoCare keeps doing funerals throughout all economic cycles the profit and the dividend can't be negatively affected.
InvoCare has been increasing its dividend since 2006. The dividend could keep growing because the death rate in Australia is expected to slowly increase each year for the next two decades.
It's currently trading with a trailing dividend yield of 3.95%.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is one of the world's largest private hospital operators, it has operations in Australia, France, the UK and several other countries.
The ageing populations of all these countries should provide a long-term tailwind for Ramsay. Organic growth is useful, but it has been acquisitions and expansions that has driven Ramsay's profit and share price strongly over the last 15 years.
Ramsay has increased its dividend every year since 2000. There could many more years of good dividend growth to come if Ramsay expands into other countries such as China.
It's currently trading with a grossed-up dividend yield of 2.81%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts has one of the most reliable dividend histories in the world. It has paid a dividend every year for decades including through wars and various economic crashes.
The conglomerate has an impressive list of investments which should grow the profit and cashflow steadily increase over the years.
Soul Patts has increased its annual ordinary dividend every year since 2000 and currently has a grossed-up dividend yield of 4.49%.
Foolish takeaway
All three shares are some of the highest quality businesses on the ASX in my opinion. If I could only buy one today then I'd choose Ramsay, I think it's trading at the best value due to its share price reduction over the last year.
