ASX dividend shares could be the answer for investors who are looking for steady income in retirement.
Some businesses may be known for paying large dividend yields, but they haven't built a reputation of reliability.
That's why these two compelling investments could be top ideas:
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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson is one of the oldest businesses on the ASX. It has been a listed business since 1903 and it has paid some sort of dividend every year since then.
The investment house has held some of its largest investments for many years, including Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC).
Soul Pattinson has grown its dividend every year since 2000. It has grown the dividend through the GFC, the COVID-19 pandemic and every other problem that has happened in the last two decades.
It funds its growing dividend from its operating cashflow, after paying for operating costs. The cashflow comes from the portfolio's dividends and distributions. Some of the ASX dividend share's other investments includes Pengana Capital Ltd (ASX: PCG), Bki Investment Co Ltd (ASX: BKI), Pengana International Equities Ltd (ASX: PIA), agriculture, Round Oak and Ampcontrol.
The business is looking to increase its diversification and growth prospects by focusing on a number of investment themes including health and ageing, the energy transition, agriculture, financial services and education.
At the current Soul Pattinson share price of $30.22, it has a trailing grossed-up dividend yield of 2.9%. However, if the business grows its annual dividend per share by another 2 cents in FY22, it has a forward grossed-up dividend yield of 3%.
APA Group (ASX: APA)
APA is one of the largest energy stocks, with a market capitalisation of $11.6 billion according to the ASX.
This ASX dividend share is another one that has a long record of income growth for investors. It has increased its distribution every year for more than a decade and a half.
APA owns a vast pipeline across Australia, which transports huge quantities of gas. It supplies half of Australia's natural gas usage.
The business also has stakes in other gas-related assets and also renewable energy assets.
Indeed, last week it announced it had reached a final investment decision to build stage two of the Mica Creek Solar Farm in Mount Isa. This includes the supply of electricity for 15 years, requiring additional capital expenditure by APA of around $70 million. It comprises 44 megawatts of additional solar power generation. There is continued strong interest from customers, so it's investigating a potential expansion for a third stage.
Referencing the long-term shift to greener energy, APA has said that existing gas infrastructure may also play a critical role in supporting the delivery of 'clean molecules' to homes and businesses, such as biogas and hydrogen, which APA said are likely to be critical additions to the future energy mix.
In terms of distribution expectations, APA is guiding a 4% distribution increase in FY22 to $0.53 per security. That translates to a forward distribution yield of 5.3%.
