2 ASX dividend shares that could provide steady passive income

The two ASX dividend shares in this article might be able to provide investors with steady passive income. One example is APA Group (ASX:APA).

| More on:
Dividend stocks represented by paper sign saying dividends next to roll of cash

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There is a group of ASX dividend shares that have been increasing the dividend for shareholders for many years in a row.

COVID-19 didn’t stop the income increases for investors. The underlying profit and cashflow were high enough that it meant the businesses could continue to grow the payouts for investors.

These two ASX dividend shares have managed to keep growing the dividend payout:

APA Group (ASX: APA)

APA describes itself as a leading Australian energy infrastructure business. Its gas transmission pipelines span every state on mainland Australia, delivering approximately half of the nation’s gas usage.

The infrastructure energy business has direct management and operational control over its assets and the majority of its investments. Not only does it own a large amount of gas pipelines around Australia, it’s also one of the largest owners and operators of renewable power generation assets, with wind and solar projects across Western Australia, South Australia and Queensland.

APA recently announced its first hybrid energy microgrid at the Gruyere Gold Mine in Western Australia, combining solar energy with battery energy storage.

The ASX dividend share has increased its distribution every year for a decade and a half. New projects generate more cashflow, which provides the funding for higher distributions.

APA recently announced it had reached a final investment decision (FID) to commence expansion of transportation capacity on its East Coast grid, linking Queensland with southern markets by approximately 25% for a total investment of $270 million.

At the current APA share price, it has a distribution yield of 5.5%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is another ASX dividend share that has been increasing the payout to shareholders, every year since 2013.

The company has built a global portfolio of pathology businesses. Around 40% of revenue is being generated in Europe and the UK, another 25% in the US and the rest coming from Australia (and a very small contribution from New Zealand).

Long-term profit growth has helped send the dividend higher and higher.

FY19 saw the ASX dividend share’s net profit rise 15.6% and the dividend increased 3.7% to $0.84. FY20 saw underlying net profit growth of 6.5% with the full year dividend rising 1.2% to $0.85. The HY21 result showed net profit growth of 166%, with a steady 6% increase of the half-year dividend to $0.36 per share.

Why was the HY21 result so strong? It has seen significant revenue and earnings contribution from COVID-19 testing, leveraging existing infrastructure. More than 18 million COVID-19 PCR tests have been performed. It has seen margin improvements in both laboratory and imaging operations.

Management said that the volumes and quality of testing it has been able to achieve in such a short timeframe was a result of investments it has made over the years. That includes specimen collection facilities, courier networks, laboratories and other facilities, equipment, IT management, staff and supply chains. At the current Sonic share price it has a partially franked dividend yield of 2.5%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

Three colleagues stare at a computer screen with serious looks on their faces.
Dividend Investing

‘Exciting’ ASX 200 dividend share expected to deliver material returns: expert

Investors seeking income stocks need to do more than simply look at what the companies paid out over the past…

Read more »

A man wearing glasses and a purple vest holds his hand to his chin and wonders
Resources Shares

Are Fortescue shares a buy for income or are they a dividend trap?

Are Fortescue shares a 15.5% dividend trap right now?

Read more »

businessman handing $100 note to another in supermarket aisle representing woolworths share price
Dividend Investing

Guess how much Woolworths shares have paid in dividends over the last 5 years

Those who have been invested in Woolworths shares over the last half-decade can pat themselves on the back.

Read more »

Broker looking at the share price on her laptop with green and red points in the background.
Dividend Investing

Brokers name 2 ASX dividend shares to buy

Brokers have named these dividend shares as buys...

Read more »

Happy young man and woman throwing dividend cash into air in front of orange background
Dividend Investing

Time is running out to secure the Rio Tinto dividend. Here’s what you need to do

Investors have until the market close on Wednesday to lock in Rio Tinto's latest dividend.

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Dividend Investing

Here’s the Whitehaven Coal dividend forecast through to 2024

Will Whitehaven Coal pay big dividends to investors?

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

Analysts say these ASX dividend shares are top buys

These dividend shares have been named as buys by analysts...

Read more »

Three people leaping in celebration against a blue sky.
Dividend Investing

Own Westpac shares? This broker expects the bank’s dividends to surge 10% by FY23  

Morgan Stanley sees blue skies ahead for the Westpac dividend.

Read more »