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3 ASX dividend shares raising their dividend like clockwork

In this era of COVID-19, it’s hard to find ASX dividend shares that are still increasing their payments to shareholders.

We have seen Ramsay Health Care Limited (ASX: RHC) end its dividend growth record which went back 20 years to 2020. The reduction of elective surgeries really took its toll.

But there are still some businesses out there that are still growing their dividends despite COVID-19.

Here are three ASX dividend shares that are raising their dividend:

Dividend share 1: APA Group (ASX: APA)

APA Group is one of the biggest infrastructure businesses on the ASX.

The business owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

The ASX dividend share generates reliable cashflow each year, which is why it was able to stick to its distribution guidance of 50 cents per unit this year, this was growth of 6.4% compared to last year. I think that’s solid in this environment.

APA has grown its distribution every year for a decade and a half. At the current APA share price, it offers a FY20 distribution yield of 4.6%.

Dividend share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This business, commonly known as Soul Patts, is one of the best dividend share ideas around in my opinion.

Soul Patts doesn’t have a huge yield, its grossed-up dividend yield for FY20 is 4.3% at the current Soul Patts share price. But it’s the consistency of the dividend growth that is particularly attractive to me about Soul Patts. It has grown its dividend every year since 2000. After Ramsay’s dividend capitulation, Soul Patts has the best dividend growth streak on the ASX.

Indeed, the ASX dividend share has actually paid some sort of dividend every year in its listed history dating back to 1903. That’s great reliability. 

The investment conglomerate is invested in a wide variety of different businesses including telecommunications, building products, property, pharmacies, swimming schools, resources and listed investment companies.

Some of its largest holdings include shares like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

Each year the portfolio sends a stream of investment income to Soul Patts. The investment house pays for its expenses and then pays out most of what’s left as a dividend. In FY19 it kept around 20% of its net operating cashflow to re-invest into more opportunities.

Not only does Soul Patts retain a fifth of its cashflow which will help grow the dividend with new investments, but its current investments will also hopefully grow their own dividends.  

Dividend share 3: Rural Funds Group (ASX: RFF)

Rural Funds is another great ASX dividend share in my opinion.

Each year the farmland real estate investment trust (REIT) aims to increase its distribution by 4% each year. It has grown the distribution every year since it started paying one in 2014.

It’s able to grow the distribution due to two key factors. The first reason is that it has built-in rental increases with all of its farm contracts. That rental indexation is either a fixed 2.5% annual increase or it’s linked to CPI inflation, with market reviews. These rental increases alone will generate pleasing distribution growth for Rural Funds.

The other main contributor for distribution growth is that Rural Funds invests in farm productivity improvements for the benefit of its tenants. Improving the farm increases future rental income, creates a good relationship with the tenant and hopefully improves the value of the farm.

I like the diversification of Rural Funds’ portfolio. It owns farms in the following sectors: cattle, cotton, almonds, vineyards and macadamias. Occasionally it will make an acquisition. 

At the current Rural Funds share price it offers a FY21 distribution yield of 5.6%.

Foolish takeaway

I think each of these ASX dividend shares can continue to grow their dividends throughout the 2020s. At the current prices I’d probably go for Soul Patts because of it how diversified it is and its ability to invest in anything, including farmland and infrastructure if it wanted to.  

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. 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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