It’s getting harder to find good value these days, so it might be better to focus on ASX shares raising their dividends.
The best ASX businesses are at high valuations. The ASX tech sector as a whole is pretty eye-watering.
No-one has any control about what share prices do but the dividend is more certain as it’s decided by a company’s board of directors and can be paid as long as there is a profit reserve to fund it.
If you just hold a share that keeps (sustainably) increasing its dividend like clockwork then that could be a good long-term strategy. Here are three ideas:
WAM Research Limited (ASX: WAX)
This is a listed investment company (LIC) with a grossed-up dividend yield of 10.1%. It has increased its dividend every year since the GFC – which is a solid record.
It funds the dividends and the dividend growth by investing in ASX growth businesses. Over the long-term it has outperformed its ASX market benchmark whilst holding a solid level of cash.
I believe the recent underperformance will turn around soon and smaller companies could return to favour as the better growth engines for portfolios.
Ramsay Health Care Limited (ASX: RHC)
The Liberal Federal Election win has brightened the near-term prospects for one of the world’s largest private hospital operators.
It still faces private health affordability issues, however the ageing population demographics favour Ramsay in Australia and Europe. That’s why its pipeline of hospital projects is attractive to capture that growth with higher patient numbers.
Ramsay has increased its dividend every year since 2000 and currently has a grossed-up dividend yield of 3%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is another investment business, except it has been operating for over a century and it has paid a dividend every year in that time. It has perhaps been the most reliable reliable dividend share in the history of the ASX.
It doesn’t come with an ongoing annual management fee like a regular LIC and it invests for the long-term in leaders in their respective industries such as Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and TPG Telecom Ltd (ASX: TPM).
Soul Patts has increased its annual ordinary dividend every year since 2000 and continues to target dividend growth for shareholders.
It currently has a grossed-up dividend yield of 3.6%.
Each of the above businesses could be great ideas for dividend growth. I think Soul Patts is the one most likely to be able to keep increasing its dividend over the long-term because of its lower dividend yield, diversified investments and long-term focus.
Other businesses with a reputation for dividend growth are these leading ASX dividend shares.
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks and 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.