My portfolio is designed to try to provide a combination of dividends, dividend growth and share price growth. None of those things is guaranteed, but I think the ASX dividend share names I've invested in can provide a good source of passive income.
We should expect that the share market is going to see some volatility each year. There is a changing mix of buyers and sellers each day, combined with changing headlines in the news.
But, I've focused on ASX dividend shares that aim to provide investors with growing dividends. That way, I can concentrate on my growing dividend cash flow and not worry what the share price is going to do next.
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Washington H. Soul Pattinson and Co. Ltd (ASX:SOL)
I think that Soul Pattinson has the best record when it comes to dividend growth. The business has grown its dividend every year since 2000. No other ASX share has dividend growth consistency like this company.
It owns a portfolio of assets – both listed and unlisted. The portfolio is diversified across sectors like telecommunications, building products, resources, agriculture, financial services and swimming schools.
The ASX dividend share receives dividends from its portfolio each year. The majority of that money is sent to shareholders as a growing dividend, with the rest kept to re-invest in more opportunities to enable further growth.
The company's FY22 ordinary dividend per share of 72 cents translates into a grossed-up dividend yield of 3.6%.
Duxton Water Ltd (ASX: D2O)
Duxton Water is a unique company on the ASX – its purpose is to own water entitlements and lease them to farmers on contracts of various lengths.
The ASX dividend share says that it has an "intention to pay a consistent and growing dividend stream". It just declared a dividend per share of 3.5 cents. It plans to increase this payment by 0.1 cents per share every six months to the 2024 interim payment which is guided as 3.7 cents per share.
Water entitlements could become increasingly important as more water-hungry crops are planted, such as almonds.
I think water entitlements are a good way to indirectly invest in the agricultural industry.
With the reported imminent end of La Nina – the wetter weather system – this could lead to less rain, pushing up water prices.
The FY23 grossed-up dividend yield from Duxton Water is expected to be 5.7% and the company has indicated an intention to lower debt because of the higher interest rates.
Brickworks Limited (ASX: BKW)
Brickworks is one of the largest manufacturers of building products in Australia, with offerings such as bricks, paving, masonry and roofing.
Interestingly, the ASX share owns a significant chunk of Soul Pattinson shares, which provides Brickworks with growing dividends and stability – very handy with the cyclical nature of building products.
But, for me, without praising Soul Pattinson again, another very positive side of Brickworks is that it owns half of an industrial property trust where advanced warehouses are being built on excess Brickworks land that has been sold into the trust.
Businesses like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Amazon are some of the tenants in the huge warehouses.
Brickworks said that the property portfolio's valuation has seen the "positive impact of rental growth outstrip the effect of capitalisation rate expansion." It also has a large development pipeline. At the end of the FY23 first half, Brickworks' net property trust assets are expected to exceed $2.2 billion and this could keep rising as properties are completed.
The property trust rental profit and Soul Pattinson's dividend have helped increase the Brickworks dividend steadily over the past several years.
Brickworks currently has a grossed-up dividend yield of 3.7% and it hasn't cut its dividend for over 40 years.
