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2 of my favourite ASX 200 shares for compound growth and income

ASX dividend shares

Investing in the sharemarket for dividends makes so much sense to me. One of the best ways to achieve great long-term results is to simply buy good dividend paying companies and continually reinvest your dividends.

This way your ownership and income will compound and ideally, you’ll end up with a very large sum indeed.

Here are 2 companies I own which I expect will have solid returns and continue to pay increasing dividends over time.

Wesfarmers Ltd (ASX: WES)

After recently spinning off Coles Group Ltd (ASX: COL), Wesfarmers will be looking to reinvest capital into higher growth opportunities. If the company can keep the momentum going at Bunnings and Kmart, this can more than offset any weakness at Target.

We’ll have to wait and see whether Wesfarmers finds any acquisitions or uses for the cash it is now sitting on. Either way, I think management will do what’s best for shareholders and continue to steer the ship in the right direction.

Management has flagged that the dividend policy will remain the same, so shareholders can still expect a solid level of income from Wesfarmers going forward. I like the conglomerate structure and think this is one of the better dividend shares on the ASX to own.

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

Like Wesfarmers, this is another conglomerate which owns a range of businesses. This gives Soul Patts diversification so it isn’t overly reliant on the earnings of one business to succeed. In other words, with stakes in the building, telecommunications, mining, and financial services, it has multiple ways to win.

After a solid run-up in the share price, Soul Patts no longer looks cheap like it once did. But shareholders are likely to keep receiving that very reliable income stream.

The dividend has been increased every year since 2000, giving the company one of the best track records on the ASX. The only other company to match this dividend streak is Ramsay Health Care Limited (ASX: RHC).

Foolish takeaway

Both companies are diversified investment conglomerates with good management and a strong track record. Looking at each today, I think Wesfarmers is more attractively priced, but I’d be happy to buy and hold both for the long term.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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Motley Fool contributor Dave Gow owns shares of Ramsay Health Care Limited, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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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