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3 ASX dividend shares giving investors payrises like clockwork

In this era of low interest rates, I think it’s important to find good dividend shares that can pay us bigger dividends year after year.

I’m not sure how safe large blue chips like Commonwealth Bank of Australia (ASX: CBA) are these days. The Australian economy isn’t as strong as it was and there are plenty of technology companies that want to take some of CBA’s earnings.

If I were looking for shares that were going to pay me growing dividends, I’d want to think about these top shares:

Future Generation Investment Company Ltd (ASX: FGX) 

This is a special listed investment company (LIC) with a difference. It just invests in other Australian ASX-focused fund managers but those managers don’t charge any management fees or performance fees. This allows Future Generation to donate 1% of its net assets to youth charities each year.

One of the main aims of Future Generation is to grow its dividend each year, which it has done so since starting the dividend river in 2015. Some of its largest fund manager allocations are to Bennelong, Regal, Paradice and Eley Griffiths.

It recently increased its dividend again, which puts its forward grossed-up dividend yield at 6.1%.

Bapcor Ltd (ASX: BAP) 

Bapcor is the leading auto parts business in Australasia with its Burson, Autobarn and other specialist wholesale chains around Australia and New Zealand.

Auto parts is a pretty defensive industry and one that could keep growing profit even during a recession if people delaying buying a new car. Bapcor’s profit and dividend have grown impressively since FY15.

Expansion into Asia could lead to years of solid growth if Burson is able to win decent market share in Thailand and perhaps other Asian countries from there.

Bapcor currently offers a grossed-up dividend yield of 3.8%.

Rural Funds Group (ASX: RFF) 

Rural Funds is my favourite real estate investment trust (REIT). It has faced (and still faces) a short seller attack but it has managed to defend itself quite successfully, so I think it could be worth a closer look – particularly at this lower price.

It has rental increases built into all of its contracts with large tenants which are based on either CPI inflation or a fixed 2.5% increase. This allows management to predict that the distribution to shareholders can grow by 4% a year for the foreseeable future.

It has guided that the FY20 distribution will be 10.85 cents per share, equating to a distribution yield of around 5.5% at the current price.

Foolish takeaway

Each of these shares offers a pleasing starting distribution yield with a high chance of dividend growth for years to come. At the current prices I’d want to go for the Future Generation LIC because it’s trading at a discount to its underlying assets, but all three could be good buys.

Other dividend shares to consider for your portfolio are these top ASX shares which are known for regularly growing payments to shareholders.

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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Bapcor and RURALFUNDS STAPLED. 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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