Investors searching for ASX shares to buy and hold into their retirement may want to consider companies with the potential to significantly raise their dividends over time.
Why focus on this? Well, if you were to retire with $500,000 invested in shares and have a yield on cost of 10%, that will generate $50,000 in income each year. And while a 10% dividend yield sounds like a lot, it isn't as outlandish as it first seems.
For example, CSL Limited (ASX: CSL) isn't a name you would immediately think about for dividends because the yield on offer with its shares is always so slender.
However, investors who have held the biotherapeutics giant's shares for a decade will think very differently.
In early 2012, there were opportunities to pick up CSL's shares for approximately $31.00. Based on CSL's dividend of $3.22 per share in FY 2022, this represents a yield on cost of 10.4% for investors. This means that $500,000 invested in CSL's shares in 2012 would be generating just over $50,000 of dividends this year.
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What about today?
That was then and this is now. So, which dividend-paying ASX growth shares could help you retire rich? Three that I would consider are listed below:
The first ASX growth share to consider is Domino's Pizza Enterprises Ltd (ASX: DMP). This pizza chain operator appears well-placed for long-term growth thanks to its strong brand and bold store expansion plans. At present, its shares offer a trailing partially franked 2.4% dividend yield. Morgans currently has an add rating and an $88.00 price target on Domino's shares.
Another ASX share that could be well-placed for growth over the next decade is Jumbo Interactive (ASX: JIN). It is an online lottery ticket seller and platform provider. Management sees the latter Powered by Jumbo software as a service platform as a major driver of growth in the future thanks to its huge global opportunity. Jumbo's shares currently trade with a trailing fully franked 3% dividend yield. Goldman Sachs has a buy rating and a $15.20 price target on its shares.
Finally, Treasury Wine Estates Ltd (ASX: TWE) could be a dividend-paying growth share to buy. The wine giant currently trades with a trailing fully franked 2.6% dividend yield. Morgans is tipping the company to grow its earnings and dividend at a strong rate over the next few years thanks to its new operating model. The broker has an add rating and a $15.71 price target on Treasury Wine shares.
