These ASX shares pay you to own them

Some ASX shares pay investors to own them. Here’s how that works.

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Key points

  • There aren't too many things in this world that pay you to own them
  • But ASX dividend shares certainly do
  • We look at passive income from capital in ASX shares

There aren’t too many things in this world that pay you to own them. When you buy a new car, chances are that it’s costing you money to own it. It would be a similar story with a pair of fresh kicks or a new 80-inch television. Good luck getting the money you have to pay for those goods back. But with ASX dividend shares, it’s a whole different story.

If an ASX share pays a consistent dividend, it effectively pays its owner for the privilege of holding it. It is passive income, cash from capital, not labour.

The ASX is home to many, many shares that pay dividends. In fact, most ASX shares, especially those with mature business models, have paid a dividend at least once in their history, if not most years.

Perhaps the most famous dividend payers on the share market are ASX bank shares. The big four banks have long dominated the ASX boards – both in terms of sheer size as well as dividends. Right now, Westpac Banking Corp (ASX: WBC) has a trailing yield of 4.81% on the table. That stems from the last two dividends it has paid shareholders. Those were a 58 cents per share interim dividend last June, and a 60 cents per share final payment that was doled out in November. Next month, Westpac will pay an increased interim dividend of 61 cents per share.

It pays to own ASX dividend shares…

But few ASX shares can match the dividend prowess of Washington H. Soul Pattinson and Co Ltd (ASX: SOL). Soul Patts has been around for more than a century. But today, it holds the distinction of being the only ASX share that has paid a growing dividend for more than 20 years in a row. Yes, Soul Patts has given its investors an annual dividend pay rise every year since 2000. So not only have Soul Patts shareholders had to do nothing to receive a cash payment every six months, each year since 2000 has seen them receive more cash than the year before.

Soul Patts doesn’t have the largest dividend yield on offer today at 2.41%. But there are dividend shares on the ASX right now that offer trailing yields far higher.

Super Retail Group Ltd (ASX: SUL) is the company behind famous retail names like Super Cheap Auto, Rebel and BCF. It may not have the dividend royalty status of Soul Patts. But on current pricing, this dividend payer offers a trailing yield of 8.2%. That means investors have gotten more than 8 cents in the dollar back from their investment over the past 12 months. If you include the value of the full franking credits Super Retail typically includes with its dividends, this rises to 11.7 cents in every dollar.

Motley Fool contributor Sebastian Bowen 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 Super Retail Group Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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