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2 ASX dividend shares that keep growing their dividend every year

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There are a few ASX dividend shares that keep increasing their dividend every year for investors.

COVID-19 caused a lot of businesses to cut or maintain their dividends because of the enormous financial impacts and uncertainty.

But a few kept increasing, like these two:

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). It owns a diversified portfolio of farms across cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

Its farms are diversified across climate conditions and geographically.

The ASX dividend share has a goal of increasing its distribution by 4% every year for investors. It has been successful with this goal. Rural Funds grew the distribution by 4% in 2020, unfazed by COVID-19 impacts.

The farmland REIT is able to generate growth in two main ways. Its farms have rental increases built into the contracts, either a fixed 2.5% annual increase or CPI inflation growth, plus market reviews.

Rural Funds can also grow the value and rental potential of its farms thanks to productivity investments at the farms. For example, at its cattle properties it has been investing in more water access points.

At the current Rural Funds share price it has an expected FY22 distribution yield of around 5%, based on the 11.73 cents per units forecast by management.

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

This ASX dividend share is also called Soul Patts. It’s an investment conglomerate that has been operating for over a century.

Soul Patts started as a pharmacy business, but it’s now invested in a wide array of sectors and businesses.

In terms of the listed investments, some of its biggest positions include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI), Milton Corporation Limited (ASX: MLT), Pengana International Equities Ltd (ASX: PIA) and Pengana Capital Group Ltd (ASX: PCG).

But that’s not all. Soul Patts also has a portfolio of private businesses. It’s invested in resources, agriculture, swimming schools, financial services and a business called Ampcontrol.

The ASX dividend share funds its dividend payouts to shareholders from the investment income it receives from its portfolio, after paying for its operating expenses. It can then re-invest the rest into new opportunities to grow its cashflow further.

The investment team within Soul Patts can pursue any investment opportunity in any sector, listed or unlisted.

It tries to invest in a contrarian way and have a portfolio of largely uncorrelated assets which are defensive. For example, it recently tried to acquire aged care operator Regis Healthcare Ltd (ASX: REG) when the share price was a lot lower.

At the current Soul Patts share price, it has a grossed-up dividend yield of 2.6%.

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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, and Washington H. Soul Pattinson and Company 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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