When looking for great ASX dividend shares there are a number of considerations that should be assessed, such as the company’s dividend payment history, yield, sustainability, and growth. I prefer a company that has been consistently growing its dividend, in a sustainable manner, as opposed to one simply because it currently offers a larger yield. Dividends aren’t set in stone and can be cut, leaving share holders with a significantly lower income.
With that in mind, below are 3 ASX dividend shares that have a strong history of growing dividends and I believe all are capable of continuing this growth into the future.
Transurban Group (ASX: TCL)
The first company to make our list is Australia’s largest private toll-road operator. Transurban has been increasing its dividend payment each year going back to the GFC with an implied distribution growth of 5.1% over FY19. This puts Transurban shares on a partially franked forward dividend yield of 3.86%.
Transurban’s dividend growth has been possible thanks to a number of reasons. These include its continued projects and acquisitions, average daily traffic growth of 2%, and generally linking its future toll rises to inflation. In fact, Transurban recently completed its acquisition on the remaining minority interests in the M5 motorway, taking its ownership in the asset to 100%. Transurban also has a large pipeline of projects, with 4 recently being opened and 3 due for completion during 2020.
Macquarie Group Ltd (ASX: MQG)
Australia’s 5th largest bank has a stellar dividend history. Since listing on the ASX in 1996 it has managed to grow its dividend payments at a constant annual growth rate (CAGR) of 13%, with its most recent distribution increasing 16% over the prior corresponding period. This gives the bank a partially franked yield of 3.47%.
Its current dividend payment only represents 61% of net earnings, which appears sustainable, sitting at the bottom of its stated 60–80% payout range. This is contrasted to big four bank Westpac Banking Corp (ASX: WBC), which (after cutting its last dividend payment by 15%) still sits on a payout ratio of 79%.
Washington H. Soul Pattinson & Co Ltd (ASX: SOL)
You will be hard pressed to find a more reliable dividend provider on the ASX than this conglomerate. Made up by a diversified group of listed and unlisted companies, real estate and credit this conglomerate boasts large holdings in large ASX businesses such as Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM) and New Hope Corporation Limited (ASX: NHC).
Thanks to its investments, ‘Soul Patts’ has increased its dividends at a CAGR of 12.3% every year since 2000. On top of this it has managed to pay a dividend every year since its humble beginnings in 1903. Yes, including through the wars and recessions.
Soul Patts currently offers share holders a fully franked trailing dividend yield of 2.78%.
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Motley Fool contributor Michael Tonon owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Transurban Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. 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.