There are some ASX dividend shares that have a reputation for paying out income to shareholders each year.
It’s harder to make money from bank accounts these days because of how low the official interest rate from the Reserve Bank of Australia (RBA) has gone. It’s now down to just 0.25%.
Here are three businesses that could be considerations for their dividends:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is the ASX dividend share with the longest dividend record in Australia. It has grown its dividend in consecutive years going back to 2000 including during COVID-19. The company was formed in 1903, so it’s one of the oldest companies in Australia.
How has it managed that record streak, which goes back before the GFC?
The company has a diversified portfolio of different assets. Some of the key holdings in Soul Patts’ portfolio are: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).
Soul Patts also has unlisted holdings like agriculture, resources and swimming schools.
The portfolio of assets provides Soul Patts with annual cashflow in the form of dividends, distributions and interest. There are defensive businesses within the portfolio, which pay consistent dividends to Soul Patts.
Soul Patts was recently unsuccessful at trying to acquire Regis Healthcare Ltd (ASX: REG), though it shows the type of contrarian approach that management try to take with opportunities.
At the current Soul Patts share price it has a grossed-up dividend yield of 3.1%.
Pacific Current Group Ltd (ASX: PAC)
Pacific Current is a business that takes investment stakes in global fund managers and then helps them grow either with funding or expertise.
Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”
In FY20 the ASX dividend share grew its dividend by 40% to $0.35 per share with funds under management (FUM) going up 62% to $93 billion. In the three months to 30 September 2020 it saw its FUM rise another 14% to $106.4 billion.
According to Commsec, the Pacific Current share price is valued at under 10x FY22’s estimated earnings.
APA Group (ASX: APA)
APA owns a large 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 and delivers half the nation’s natural gas usage.
The infrastructure ASX dividend share has grown its distribution every year for a decade and a half. It recently decided to increase the annualised distribution from 50 cents per unit to 51 cents per unit.
APA continues to invest in new projects which should unlock more operating cashflow as they are completed.
At the current APA share price it has a distribution yield of 5.4%.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.