Dividend investors should put these 2 top ASX shares on the watchlist

There are some high-quality ASX dividend shares that could be worth a spot on the watchlist.

| More on:
Older woman looks concerned as she counts cash notes

Image source: Getty Images

Key points

  • The two ASX dividend shares in this article are ones with long records of dividend growth
  • Investment conglomerate Soul Pattinson has been increasing its dividend annually for more than two decades
  • Gas infrastructure giant APA has been growing its distribution for many years and continues to invest for growth

Income-seeking investors may want to put some high-quality ASX dividend shares on the watchlist.

These are businesses with decent yields and long track records of dividend growth for investors. Recent share price declines may have made them more attractive.

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

Soul Pattinson is the business with the longest running dividend growth record. The annual dividend increases stretch back more than 20 years.

There are a few key positions that have generated a lot of growth and cashflow for the investment conglomerate. Those three key positions are TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC).

However, it has a number of other assets and investments that are helping such as Round Oak, Tuas Ltd (ASX: TUA), Apex Healthcare and Pengana Capital Group Ltd (ASX: PCG).

Soul Pattinson continues to invest in new opportunities. Agriculture has been a recent focus of the investment team. The merger with the old listed investment company (LIC) Milton gives the portfolio more diversification and additional liquidity for future investments.

The ASX dividend share said that with its new large caps investments from Milton, it plans to partially sell them down over time to fund further investments in private markets, global equities, property, structure yield and ‘real assets’.

At the current Soul Pattinson share price, it has a trailing grossed-up dividend yield of 3.1%.

APA Group (ASX: APA)

APA is the owner of a very large amount of gas pipeline infrastructure across Australia. Its pipeline actually spans 15,000km. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA supplies half of the nation’s natural gas usage.

The ASX dividend share has been looking for acquisition opportunities in both Australia and the USA. It sees a number of growth areas with renewable energy generation, electricity transmission and hydrogen.

It has grown its distribution every year for a decade and a half. In FY22 it’s expecting to increase the distribution again by another 4% to 53 cents per unit. That translates to an expected forward distribution yield of 5.4%.

APA management says that its portfolio and organic growth pipeline gives it confidence about the capacity for growth. Its organic growth pipeline now exceeds $1.3 billion.

It has its first hydrogen project is underway which is targeted at enabling the conversion of a section of the Parmelia Gas Pipeline in Western Australia into Australia’s first 100% hydrogen-ready transmission pipeline. If successful, it would create a “significant opportunity” for the development of a hydrogen hub in the Kwinana Industrial precinct near Perth.

Should you invest $1,000 in APA Group right now?

Before you consider APA Group, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and APA Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended APA Group, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom 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

A woman gives a side eye look with her lips pursed as though she might be saying ooh at something she's hearing or learning for the first time.
Dividend Investing

3 ASX shares you might be surprised to learn pay dividends

Here are 3 ASX dividend shares you may never have heard of...

Read more »

Four ASX dividend shares investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces wondering what the APA share price will do today and how big the APA dividend yield will be in 2022
ETFs

Does the ETFS Battery Tech & Lithium ETF (ACDC) pay dividends?

We take a closer look at this exchange-traded fund...

Read more »

Five people in an office high five each other.
Dividend Investing

Here are the best performing dividend shares in the ASX All Ords so far in 2022

Who ever said you couldn't get dividends and share price growth?

Read more »

Close-up photo of a back jean pocket with Australian dollar bills in it and a hand reaching in to collect the notes
Dividend Investing

2 top ASX dividend shares analysts are tipping as buys this month

These dividend shares could be quality options for investors...

Read more »

Happy woman holding $50 Australian notes.
Dividend Investing

2 ASX dividend shares with yields above 5%

GQG Partners is one of the ASX shares offering a large dividend yield.

Read more »

Man looks upset as he holds an empty wallet.
Consumer Staples & Discretionary Shares

Why are the dividends from Woolworths shares still so small?

Rivals Coles and Metcash offer much more impressive dividend yields. How come?

Read more »

A female CSL investor looking happy holds a big fan of Australian cash notes in her hand representing strong dividends being paid to her
Dividend Investing

Experts name 2 cheap dividend shares to buy now

These dividend shares could be in the buy zone...

Read more »

Calculator on top of Australian 4100 notes and next to Australian gold coins.
Dividend Investing

How big is the BHP dividend yield going to be in 2022 and 2023?

BHP is forecast to pay a large dividend over the next year. How large will the dividend yield be?

Read more »