2 ASX dividend shares that keep giving investors pay rises

Here are two ASX dividend shares that have been proving a good source of income for investors.

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Key points

  • Both of these ASX dividend shares continue to grow their dividends
  • APA is a large energy infrastructure business that owns a large gas pipeline
  • Soul Pattinson is a diversified investment house

Some ASX dividend shares have created a long-term record of consecutive annual dividend increases.

Businesses that keep growing their dividend may be attractive for investors looking for sources of income that may be able to keep up with inflation.

Here are two ASX dividend shares that could be interesting for income:

APA Group (ASX: APA)

APA is a large energy infrastructure business with a major gas pipeline network around Australia.

It also has assets relating to gas storage, gas energy generation, gas processing, solar farms, and wind farms.

The business has grown its distribution every year for more than the past decade and a half.

In FY22 it’s expecting to grow the annual distribution by another 3.9% to 53 cents per share. That would bring the distribution yield to 4.6% per security at the current APA share price of $11.56.

The business is steadily expanding its portfolio of projects. For example, it’s investing around $250 million of capital on the Kurri Kurri lateral pipeline to the Hunter power project with the ability to deliver blended hydrogen to the receipt station.

Another example is the $40 million of capital it’s investing in the Gruyere hybrid energy microgrid which is a combined gas, renewable energy, and battery storage solution.

It is steadily growing its cash flow. Nearly all of APA Group’s contracts have income linked to inflation, which is elevated right now.

APA’s cash flow is funding the rising distribution from the ASX dividend share. In the FY22 half-year result, APA’s free cash flow rose by 22.6% to $515.1 million.

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

Soul Pattinson is a large investment house that has been operating for more than a century.

It has a portfolio of various ASX shares and private businesses.

Some of the largest positions in the portfolio include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), and Commonwealth Bank of Australia (ASX: CBA).

Some of the private businesses it’s invested in include Ampcontrol, swimming schools, financial services, agriculture, resources, and luxury retirement living.

The ASX dividend share pays out part of its annual cash flow each year, which comes from its portfolio’s dividends and distributions. The company said its dividend payout ratio in the first half of FY22 was 57.32% as a percentage of regular operating cash flows.

Soul Pattinson has grown its annual dividend every year since 2000. This is the longest dividend growth streak on the ASX.

At the current Soul Pattinson share price of $27.81, it has a grossed-up dividend yield of 3.3%.

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended APA Group, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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