There aren't too many S&P/ASX 200 Index (ASX: XJO) dividend shares that grew their dividends during COVID-19. But the two I'm about to reveal actually grew their shareholder payouts during the pandemic.
Inflation and higher interest rates are hurting the valuations of many businesses at the moment. It's also important to note here that a business isn't guaranteed to increase its dividend every single year. Indeed, it may not even pay one.
But I think even in the current environment, the two ASX 200 dividend shares in this article are capable of continuing to deliver solid dividends, representing a good dividend yield at current valuations.
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Charter Hall Long WALE REIT (ASX: CLW)
This business is a real estate investment trust (REIT) that owns a diversified portfolio of properties across a variety of sectors. The factor that links them is that they have long-term rental agreements, which is shown in the weighted average lease expiry (WALE) figure.
The WALE was 12 years at the last disclosure which, as the business said, provides portfolio income security. I think this is attractive in uncertain economic times.
Its properties are spread across the following sectors: long WALE retail, industrial and logistics, office, social infrastructure, and agri-logistics.
Charter Hall Long WALE says that 99% of its tenants are blue chip, being either government, ASX-listed, multinational, or national companies. Some of its main tenants include Australian government entities, Telstra Corporation Ltd (ASX: TLS), BP, and Endeavour Group Ltd (ASX: EDV).
The ASX 200 dividend share recently bought a 25% share of the Geoscience Australia property in Canberra on a 7.4% initial dividend yield with 3% fixed annual rent increases.
Charter Hall Long WALE is also expecting to generate 28 cents of operating earnings per security (EPS) and a distribution per security of 28 cents. This translates into a forward distribution yield of 6.3%.
I think the 18% fall in the share price since the end of April is enough to reflect the higher interest rate environment. Don't forget, the rental income continues to rise as well. Certainly, the rental income linked to CPI inflation is getting a large boost.
Bapcor Ltd (ASX: BAP)
This is a business focused on auto parts. Its key Burson business sells parts to mechanics while Autobarn and Autopro are two large retail chains providing auto parts to the public.
The company has a number of wholesale businesses relating to heavy truck parts, light truck parts, electrical parts, and so on.
The ASX 200 dividend share also has service businesses like Midas and ABS.
During tougher economic times, it's understandable there will be fewer new car purchases. People are logically more likely to buy a second-hand car or try to make their current car last longer. I think this means that demand for car parts could increase during a recession. Certainly, if a part on my car were to break, I'd rather replace it than buy another car.
Time will tell whether Bapcor can keep growing its profit over the next couple of financial years, but I think there's a good chance the dividend growth streak can continue. Indeed, it has grown every year since 2015.
I'm also positive about the company's plans to expand into Asia, where it has a small but growing Burson network.
According to Commsec, it could pay an annual dividend per share of 22.6 cents per share in FY23, which translates into a grossed-up dividend yield of 4.7%.
