In this era of low interest rates and low inflation it's getting harder to find businesses generating consistent earnings growth and dependable dividend growth.
It's generally quite hard for a business to grow a lot faster than the economy for a long period of time. However, population growth and inflation combined are enough to deliver solid returns from shares like Wesfarmers Ltd (ASX: WES).
But there are a few shares on the ASX that have been growing their ordinary dividends and earnings consistently over the past two decades:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts could be the best dividend growth share on the ASX. It has paid a dividend in every single year of its existence dating back over a century. It has increased its ordinary dividend each year since 2000.
It has been able to deliver such excellent dividend reliability because it owns a variety of shares that mostly generate uncorrelated earnings to the Australia economy.
Soul Patts funds its dividends just from the dividends and other income it receives (net of costs), it doesn't rely on cashing out the capital growth it creates.
It currently has a grossed-up dividend yield of 3.7%.
Ramsay Health Care Limited (ASX: RHC)
Ramsay has an excellent tailwind thanks to the ageing populations of Australia and Europe.
The large private hospital operator has grown its dividend every year since 2000. It only pays out a portion of its annual profit, keeping the rest to re-invest into new hospitals or expanding existing ones.
Thanks to a pretty consistent level of demand for healthcare services, Ramsay's core profit manages to grow year after year.
Ramsay has a grossed-up dividend yield of 3.1%.
ARB Corporation Limited (ASX: ARB)
You may not think that a 4WD accessories business would be one of the most reliable shares on the ASX for dividends and earnings, but that's exactly what ARB has done this century.
ARB has consistently grown its dividend over the past two decades and its profit after tax has gone up each year too. Since FY15 the slowest year of net profit growth was 3.6%, solidly outperforming inflation. Even during the GFC ARB was able to give shareholders a growing dividend.
It currently has a grossed-up dividend yield of 3.3%.
Foolish takeaway
At the current prices I'd definitely choose Soul Patts. It has the highest dividend yield and it's the most diversified, meaning it could be the most adaptable and keep growing the dividend.
