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3 ASX dividend growth shares to buy for long-term income

ASX dividend shares like Commonwealth Bank of Australia (ASX: CBA) and Coles Group Ltd (ASX: COL) are well-known for their attractive up-front yields. Buying CommBank, Coles or Westpac Banking Corp (ASX: WBC) shares today will result in a hefty return on your investment in the form of dividends within 6 months of your purchase.

I like to think more long-term though, and I’m not too confident that Commonwealth Bank, Westpac or Coles’ dividends have that much of a runway left to offer inflation-beating income growth.

Instead, here are 3 ASX dividend growth shares that I would much rather own.

CSL Limited (ASX: CSL)

Most investors know CSL as the healthcare growth engine that doesn’t seem to stop climbing in value (as it happens, it reached $300 a share for the first time ever this morning).

But CSL also has a small but growing dividend that has caught my eye. On today’s prices, this dividend is worth a paltry 0.76% yield – based on last year’s US$1.85 per share payout. Since the company started paying a dividend in 2013, it has been growing at an average compound annual growth rate (CAGR) of around 15%.

I don’t expect CSL’s earnings growth to slow down anytime soon, so this is a stock I would love to own for dividend income down the road.

Altium Limited (ASX: ALU)

Investors may know Altium from its prestigious WAAAX club membership, but this company is another high-flying growth share paying a small but growing dividend. Altium makes software that helps electrical engineers design printed circuit boards – an essential component of most electronic devices.

Since this is hardly a sunset industry, I fully expect Altium’s earnings and dividend growth to continue into the 2020s and beyond. Its dividend has already grown from 12 cents per share in 2014 to 34 cents last year. I like that trajectory!

Ramsay Health Care Limited (ASX: RHC)

They say that past performance is no indication of future returns. But seeing as Ramsay has managed to increase its dividend every year since 2000, I’m almost tempted to call an exception. A true dividend growth stock, Ramsay runs a large network of private hospitals in Australia and has been expanding into Asian and European markets in recent years too.

I think healthcare is one of the best bets for future growth on the ASX today – none of us are getting any younger. Thus, I’m confident that Ramsay will continue to create value for its shareholders well into the future and keep its impressive dividend streak alive and well.

Foolish takeaway

Whilst I don’t discount the value that mature dividend payers can bring to retirees and other income investors, I’m much more excited about these 3 dividend growth shares for my own portfolio. Who knows, maybe we’ll be discussing one of these companies for their yield with the same reverence as CommBank in 20 years’ time!

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Altium. 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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