There are a number of ASX dividend shares that managed to achieve dividend growth during the COVID-19 pandemic period.
Investors in those businesses certainly may have appreciated that level of consistency.
Dividends are not term deposits. They can be reduced or cut entirely if the board thinks that's the best course for the business.
However, some ASX dividend shares that managed to keep growing their dividends have resilient business models and industries, and they could be interesting to look at in this new era of uncertainty.
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Sonic Healthcare Ltd (ASX: SHL)
Sonic is a large pathology business in Australia and in other Western countries. It has operations in Australia, the US, Germany, Switzerland, Belgium, and New Zealand.
Pathology is a vital part of the healthcare sector. People don't decide to get sick based on economic cycles so demand is quite resilient in my opinion. And, obviously, staying alive and healthy is important to people — I think it's likely that people will prioritise going to Sonic over other activities.
This business received a huge boost in earnings from COVID-19 testing. But, it has used those earnings to make acquisitions to fuel the future revenue of its base business, such as Canberra Medical Imaging.
In FY19, the base business generated $6.5 billion in revenue and in FY22, the base revenue grew to $6.9 billion.
In FY20, the ASX dividend share grew the dividend by 1.2% to 85 cents per share; in FY21, the dividend grew by another 7.1% to 91 cents per share, and finally, in FY22, it increased the dividend by 10% to $1 per share.
It has a trailing grossed-up dividend yield of 4.3%.
Coles Group Ltd (ASX: COL)
The supermarket giant saw a mixed performance for its businesses during the COVID years of FY20 to FY22.
Coles Express, the petrol station division, suffered as people's overall mobility was reduced due to various COVID impacts, particularly lockdowns.
But the supermarkets (and liquor shops) saw elevated demand. Obviously, people still need to eat. And some of that discretionary spending money had to go somewhere.
Coles has managed to grow its revenue while investing for its future. The ASX dividend share is building some huge warehouses with significant automation features.
In FY20, Coles grew its total dividend per share by 62% to 57.5 cents, up from 35.5 cents. In FY21, it grew its dividend by 6.1% to 61 cents per share. In FY22, Coles increased its dividend by another 3.3% to 63 cents per share.
In the first quarter of FY23, its total revenue went up by another 1.3%.
APA Group (ASX: APA)
The business owns a national gas pipeline which is more than 15,000km in size, connecting sources of supply with markets across mainland Australia. It owns, or has interests in, gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). The company delivers half of Australia's natural gas usage.
The ASX dividend share is steadily investing in new pipelines and projects which can unlock more cash flow, which then funds higher distributions.
In FY20, it grew the total distribution by 6.4% to 50 cents per security. Then, in FY21, the total distribution increased by 2% to 51 cents per security. In FY22, it increased the distribution by 3.9% to 53 cents per security. The FY23 distribution is expected to grow by 3.8% to 55 cents per security.
The FY23 expected yield is 5.2%.
