2 strong ASX dividend shares hiding in plain sight

Here are two ASX shares that keep growing their dividend.

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Key points

  • These two ASX dividend shares continue to grow their dividends for shareholders
  • Bapcor is Australia's largest auto parts business
  • Sonic Healthcare is a global pathology and radiology business

The two ASX dividend shares we’re talking about in this article are companies that have grown their dividends for multiple years in a row.

A dividend is not guaranteed, but it can be useful to know what a business has been doing with its dividend in previous years.

Here are two businesses in defensive sectors that have decent starting dividend yields and have been growing the dividend.

Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare is a large pathology business with sizeable operations in Australia, the United States and Europe. Germany is one of the biggest profit generators in Europe for the ASX dividend share. The company also has a growing presence in radiology.

It has increased its dividend every year for approximately a decade. Indeed, the board has a ‘progressive dividend’ policy.

In the last result, the FY22 half-year result, Sonic Healthcare grew its interim dividend by a further 11% to 40 cents per share.

The company is using the income generated from COVID-19 testing to make acquisitions to boost the scale of the business.

But it’s not as though COVID-19 testing has finished. Sonic is expecting routine COVID testing, screening programs, variant testing, whole-genome sequencing, and antibody tests to continue.

For example, on 15 May 2022 Victoria reported that 17,397 PCR tests saw 2,968 positive cases. New South Wales reported a total of 29,633 PCR tests. However, not all of these are going through the ASX dividend share of course.

At the current Sonic Healthcare share price, including franking credits, the company has a grossed-up dividend yield of approximately 3.5%.

Bapcor Ltd (ASX: BAP)

Bapcor is an auto parts company that generates earnings through a wide number of businesses.

Its trade businesses include Burson Auto Parts, Precision Automotive Equipment and BNT. Bapcor has a number of specialist wholesale businesses including AAD, Bearing Wholesalers, Baxters, MTQ, Truckline and WANO. Then it has retailers such as Autobarn and Autopro. Bapcor’s service businesses include Midas, ABS, Shock Shop and Battery Town.

Bapcor has grown its dividend for the last several years since listing. Despite all of the COVID-19 impacts, the ASX dividend share has kept giving bigger shareholder payouts.

In FY20, the ASX share grew the annual dividend by 2.9% to 17.5 cents per share. Then, in FY21, Bapcor increased the full-year dividend by 14.3% to 20 cents per share. In the FY22 half-year result, the interim dividend was increased by another 11.1% to 10 cents per share.

The most recent result, for the six months to 31 December 2021, was affected by lockdowns. However, the second quarter saw a material improvement as COVID restrictions eased, according to Bapcor.

The company has long-term targets to add hundreds of locations to its Australian network. It is also working on becoming more efficient, which could lead to better profit margins. The ASX dividend share also wants to grow in Asia through its own Burson network as well as the investment in Tye Soon.

Bapcor has a grossed-up dividend yield of 4.8% at the current Bapcor share price.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Bapcor and Sonic Healthcare 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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