ASX dividend shares are a great place to hunt for sources of passive income. Some may be considered 'safe' – or as safe as a dividend can be.
Dividends are not at all guaranteed payments. But, some dividend payments are more volatile than others because of the nature of their profits.
It's normal to see dividends from mining and energy shares go up and down because of the volatility of resource prices, which is why I wouldn't count on the dividends from Rio Tinto Limited (ASX: RIO) and Woodside Energy Group Ltd (ASX: WDS) being strong forever.
During recessions and major economic dislocations, it's normal for bank shares to cut their dividends like we saw during COVID-19 from names like Commonwealth Bank of Australia (ASX: CBA) and ANZ Group Holdings Ltd (ASX: ANZ).
So, with that in mind, I'm about to run through some ASX dividend shares that could continue to pay good dividends in the coming years. I'd love to invest $10,000 evenly between these four names.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
I think this ASX dividend share is the king of passive income. While it's unlikely to have the biggest dividend yield, its consistent dividend growth is impressive, in my opinion. It has grown its ordinary annual payout every year since 2000.
The company has a diversified portfolio, which is spread across a number of ASX shares and industries, including TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), New Hope Corporation Limited (ASX: NHC), Aeris Resources Ltd (ASX: AIS), Macquarie Group Ltd (ASX: MQG) and BHP Group Ltd (ASX: BHP).
Unlisted investments include agriculture, luxury retirement living, swimming schools and electrical parts.
Soul Patts pays expenses from the dividend income it receives and then distributes the majority to shareholders. It invests the retained cash into other businesses.
According to Commsec, this company could pay an ordinary grossed-up dividend yield of 3.9%
Rural Funds Group (ASX: RFF)
Rural Funds is a leading real estate investment trust (REIT) that owns a portfolio of farmland across Australia, with cattle, vineyards, almonds, macadamias, sugar and cotton.
It aims to grow its distribution by 4% per annum, which is typically more than inflation. The business is funding the higher shareholder passive income through contracted rental increases and productivity improvements (which unlocks further rental growth and improved farm values).
The ASX dividend share has increased its distribution by at least 4% every year since it listed several years ago.
With a guided 5% total distribution yield in FY23, I think this is a solid option for steady passive income and long-term growth in the coming years.
Sonic Healthcare Ltd (ASX: SHL)
I don't think the need for healthcare and pathology will disappear. Sonic's role in the healthcare process is very important, as we saw during the worst of the COVID-19 years as it conducted millions of COVID tests in places like Australia, the US and Europe.
The ASX healthcare share has a stated 'progressive dividend policy', so the board tries to reward investors with pay rises each year.
Sonic Healthcare is benefiting from elevated organic growth as delayed healthcare procedures due to the pandemic are finally carried out.
I like that the company has been making acquisitions to diversify and grow its earnings, giving it more financial firepower to hopefully pay bigger dividends.
According to Commsec, it could pay a grossed-up dividend yield of 4.5%.
APA Group (ASX: APA)
APA is a leading energy infrastructure business that owns a national gas pipeline, delivering half of the country's natural gas usage. The company also owns other gas assets, like storage and power generation.
It has a growing portfolio of renewable energy and electricity transmission assets. For example, it recently acquired Basslink, a cable asset that connects Tasmania with mainland Australia, enabling the export of renewable energy across the Bass Strait.
The company has grown its passive income every year for the past decade and a half, thanks to its steadily-growing cash flow, which is funding bigger payouts. It continues investing in projects, which will hopefully enable even bigger payments.
APA expects to pay a distribution of 55 cents per security in FY23, which translates into a forward distribution yield of 5.2%.
Foolish takeaway
An average dividend yield of 4.6% would generate $460 of dividend income per year. It's not the biggest yield, but it would hopefully grow every year. I believe these dividend payers can be resilient in downturns.
