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.

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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?

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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.

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