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3 ASX shares that keep growing the dividend every year

ASX dividend shares

There are a few ASX shares available to Aussie investors that keep growing the dividend every year.

In a world that is currently being heavily affected by COVID-19 and a number of other unprecedented impacts, growing dividends may seem attractive.

There’s no guarantee that an ASX dividend share will grow its dividend in any given year, but the following three have been steadily growing their dividends for a while:

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

Soul Patts is the ASX share with the longest-running dividend record right now. It has grown its dividend every year since 2000. On top of that, it has actually paid some sort of a dividend each year since it listed in 1903.

It used to just be a pharmacy business. But that was long ago. Soul Patts is now a diversified investment conglomerate that invests in various asset classes and listed businesses. Its biggest investment currently is its holding of TPG Telecom Ltd (ASX: TPG) shares, with Brickworks Limited (ASX: BKW) also being a major position.

The ASX dividend share also has investments across resources, agriculture, financial services, swimming schools and luxury retirement villages.

Each year, the company funds its increased dividend from the net operating cashflow that it receives as dividends and other income from its portfolio.

The company recently tried to acquire aged care provider Regis Healthcare Ltd (ASX: REG), but it was knocked back.

At the current Soul Patts share price it has a grossed-up dividend yield of 3%.

Rural Funds Group (ASX: RFF)

Rural Funds is a farmland landlord, operating in a real estate investment trust (REIT) structure.

It owns five different types of farms: almonds, macadamias, vineyards, cattle and cropping.

Many of its tenants are large and listed, such as Olam, JBS, Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC). These tenants are on long-term contracts, Rural Funds’ weighted average lease expiry (WALE) was 11.1 years at 31 December 2020.

The ASX dividend share aims to increase its distribution by 4% per annum for shareholders, and it has been successful with this strategy thanks to two main reasons.

The first is its structured rental growth with fixed and CPI indexation, along with market rent review mechanisms.

The other main reasons is the investing it does at its farms. This is a combination of productivity improvements as well as converting some farms to higher and better use. This strategy is expected to generate earnings growth in future years.

Rural Funds recently announced it’s forecasting a FY21 distribution of 11.73 cents, which translates to a FY22 yield of 5% at the current Rural Funds share price.

Charter Hall Long WALE REIT (ASX: CLW)

This is another REIT, except it owns a diverse portfolio of assets including telecommunication exchanges, agri-logistics, office buildings, industrial and logistics and long WALE retail.

All of its tenants are large organisations. In terms of the rental income generated, these are the largest tenants and responsible for 3% or more of the total rental income: Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Inghams Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL), David Jones, Metcash Limited (ASX: MTS), Arnott’s Group and Westpac Banking Corp (ASX: WBC).

It was one of the few REITs to increase its distribution during the COVID-19-affected year of 2020.

In the recent FY21 half-year result it reported that its operating earnings per security (OEPS) and distribution increased by 3.6%.

It’s expecting OEPS of at least 29.1 cents in FY21, which, with a 100% distribution payout yield, translates to a yield of at least 6.3%.

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Returns As of 15th February 2021

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, Telstra Limited, Treasury Wine Estates Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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