The CSL Limited (ASX: CSL) share price is still 14.7% below its all-time high of $336.40, set in early 2020. But, a rise in dividends per share (DPS) paid during this time has boosted the yield on offer to shareholders.
At the moment, the Aussie biotech giant's yield sits at an uninspiring 1.1%. This is less than half the biotech industry's average yield of 2.5%. Nevertheless, CSL might be able to make those payouts more palpable over the next couple of years.
I'm on the lookout for ASX shares that can provide some additional income while not scrimping on growth. A sub-2% yield might not seem like much, but if is attached to a high-quality, growing business, it could still be worthwhile.
Will dividends grow from here?
Up until recently, CSL has an incredible track record for dividend growth. Based on the data that I have going back as far as 2003, CSL managed to grow or maintain its annual dividends for 17 consecutive years, as shown below.
Disappointingly, the sensational streak was broken in 2021. Annual DPS slipped slightly lower to $2.939 from $2.941 when adjusted for currency conversion. Though, it should be noted that in US dollar terms, the enviable record lives on.
Needless to say, the pharmaceutical phenom certainly has a history of growing its dividends.
Looking to 2023 and 2024, analysts are expecting further increases. The current average estimate pegs 2023 dividends from CSL shares at $3.389, climbing to $3.905 in 2024. Those figures would represent respective dividend yields of 1.16% and 1.34%.
Where could it come from?
CSL has now finalised its acquisition of Vifor Pharma, bringing the nephrology, dialysis, and iron deficiency leader under its wing.
In its original deal presentation, CSL forecast Vifor to add low-to-mid teens growth to its net profit after tax and amortisation (NPATA) in the first full year of ownership.
If earnings grow above 10% thanks to Vifor, a 6.5% dividend increase to $3.389 seems achievable.
Would I buy CSL shares for the dividends?
Personally, the dividends on offer — even those potentially being paid this year and next — don't excite me. I believe CSL's management is doing a solid job of making accretive acquisitions. Though, the focus on debt-fuelled acquisitions makes me less excited to rely upon this company as a source of passive income.
If income was my priority, I'd be looking elsewhere for now. ASX bank shares aren't normally my favourite place to stow cash. However, they are currently providing attractive dividend yields, growing earnings, and a fairly defensive investment.
