Whilst Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has the longest dividend growth record, there are other businesses that also have a long-term record of dividend growth.
These are businesses that are growing organically and also regularly doing things with excess capital like making acquisitions and/or doing share buybacks.
Here are two ASX dividend shares that may be able to grow their dividends in the coming years:
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare has grown its ordinary dividend for several years in a row. It operates in the healthcare space, specifically in areas like pathology and imaging. These are areas that tend to see fairly consistent demand year to year.
The company has stated that it is operating a progressive dividend policy. In FY21 alone it grew the annual dividend by 7%, with an 8% increase of the final dividend.
Sonic Healthcare has operations in numerous countries including the USA, Germany, Australia, the UK, Ireland and Switzerland.
The company has been doing a high level of COVID-19 PCR and serology tests, with the Delta variant leading to a higher level of testing. Sonic also believes that there are increasing opportunities for commercial COVID-19 testing (such as travel testing and others).
Sonic has seen its profit surge since the onset of COVID because of all the testing, whilst utilising existing infrastructure, leading to operating leverage. FY21 net profit grew by 149% to $1.3 billion.
The ASX dividend share is expecting demand for COVID PCR testing to continue into the foreseeable future. Management said that geographical diversification is providing increased opportunities for expansion, and risk mitigation. The base business is “increasingly resilient” to pandemic waves, with “strong” underlying drivers of demand for healthcare services.
At the current Sonic Healthcare share price, it has a partially franked dividend yield of 2.25%.
Amcor CDI (ASX: AMC)
Amcor describes itself as a global leader in developing and producing packaging for food, beverage, pharmaceutical, medical, home and personal care, and other products. It operates across 230 sites, around 47,000 employees, operating in more than 40 countries.
The company has been steadily growing its earnings and dividends over the last 10 years.
Amcor has acquired the Bemis business in the US. It achieved $75 million of cost synergies in FY21 and expects the total to exceed the original $180 million by at least 10%.
In FY21, the business grew its dividend from US$0.46 per share to US$0.47 per share, an increase of 2.2%. The last financial year also saw US$350 million of shares repurchased in FY21, which equated to approximately 2% of outstanding shares.
The ASX dividend share has been growing its profit margins, helping its profit grow quicker than revenue. FY21 net sales rose 3% to US$12.86 billion, earnings before interest and tax (EBIT) grew 8% to US$1.5 billion, whilst net income rose 13% to US$1 billion.
Amcor is expecting another “strong year” in FY22. It’s expecting to grow its adjusted earnings per share (EPS) by between 7% to 11%.
The Amcor CEO Ron Delia said:
Amcor is now better positioned strategically than ever with global scale, strong innovation capabilities and greater exposure to more attractive, higher growth end markets like healthcare and protein which offer more potential for differentiation and growth.