There are ASX shares that have kept growing the dividend in recent years and may have the potential to keep increasing the payment.
The below businesses managed to grow the dividend during the COVID-affected year of 2020 and are experiencing high levels of demand, which could lead to rising profit and a bigger dividend in the future.
Bapcor Ltd (ASX: BAP)
Bapcor is the biggest automotive parts business in Australia. In FY20 the business grew its annual dividend by 2.9% to 17.5 cents thanks to an increase of the interim dividend and a final dividend that was maintained.
In the FY21 half-year result, Bapcor's board decided to increase the interim dividend by a further 12.5% to 9 cents per share.
The latest dividend increase was funded by a large increase in profitability. Half-year net profit after tax (NPAT) grew by 49.7% to $67.7 million and pro forma earnings per share (EPS) went up 28.9% to 20.7 cents.
Bapcor said that result was driven by growth in revenue, operating leverage and profitability in all business segments. It's also continuing to progress major projects that will underpin the company's future success.
One of those projects by the ASX share is the construction of a new large distribution centre in Victoria which will see 13 locations consolidate into one. The retail segment has already successfully transitioned there. It's expecting an operating expenditure benefit of $10 million in FY23 and a reduction in working capital of $8 million thanks to this change.
The warehouse is 50,000m2 in size and uses 'goods to person (GTP) technology'. GTP picks 600 lines per hour, compared to 600 lines per day previously. It also comes with improved freight efficiencies, carbon emission reductions and energy utilisation.
It's looking at the potential to do this type of consolidation in Queensland as well.
Growth in Asia is another promising area. It recently acquired a 25% stake of Tye Soon which has auto parts operations in a number of countries including Singapore, Malaysia, Australia, South Korea, Thailand and Hong Kong.
It currently has a grossed-up dividend yield of 3.4%.
Brickworks Limited (ASX: BKW)
Brickworks is a diversified property business. It has a number of building products businesses, as well as a 50% stake in an industrial property trust and it owns almost 40% of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
It's the property trust and Soul Patts shares that drive the Brickworks dividend higher, as the payout is funded from the distributions and dividends from those two assets.
In FY20 Brickworks increased its dividend by 4% to $0.59 per share. That included a 3% increase of the final dividend to $0.39 per share.
In the FY21 interim result, the ASX share increased the half-year dividend by a further 5% to $0.21 per share.
The industrial property trust is benefiting from the significant increase in demand for logistics.
Brickworks managing director Lindsay Partridge said:
The COVID-19 pandemic has only accelerated industry trends towards online shopping and this is fuelling demand for our prime industrial property. We are seeing increasing interest from our customers for more advanced, high-value facilities. An example of this trend is the state-of-the-art Amazon facility, currently under construction and due to be completed in September.
The business is seeing a recovery in both the Australian and US construction markets.
Brickworks is expecting further cashflow growth as property trust facilities are completed that results in gross rent within the trust increasing by over 40%, with significant further land remaining for development.
At the current Brickworks share price, it has a grossed-up dividend yield of 4.1%.
