The CSL Limited (ASX: CSL) share price has been a staple of the S&P/ASX 200 Index (ASX: XJO) for decades now. In fact, CSL has spent its time over the past decade or so climbing up from the middle of the ASX 200 pack to the number three position on the Index that it now occupies.
But unlike its fellow top ASX 200 shares, such as BHP Group Ltd (ASX: BHP) or the big four banks, CSL has never been regarded as a dividend heavyweight.
A quick look at the CSL share price today will probably tell you why. Right now, CSL has a trailing dividend yield of just 1.11%. That only comes partially franked too.
In stark contrast, BHP shares currently offer a fully-franked trailing yield of 8.86% right now. Commonwealth Bank of Australia (ASX: CBA) is at a fully-franked 4.2%, while Westpac Banking Corp (ASX: WBC) offers 5.62%.
So dividend-chasing income investors probably won't take too long in deciding which shares to have in their portfolios. But those investors might want to take a second look because all is not quite as it seems at first glance.
Yes, you won't get as much dividend income upfront buying CSL shares as you would BHP or one of the big four banks. But CSL could well be a sleeping divided giant and one whose dividends might approach, or even exceed, the level of income offered by ASX's other heavyweights in just a few years.
Here's why.
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Why the CSL share price could be a sleeping dividend giant
CSL first started paying its investors dividends back in 2013. The company's very first dividend payment was a final dividend worth 52 US cents per share. In 2014, the company doled out annual dividend payments worth US$1.13 per share.
But just five years later in 2019, CSL was up to paying out US$1.85 in dividends per share. By 2022, this had risen again to a total of US$2.22 per share.
In US dollar terms, CSL has consistently raised its annual dividend every single year since 2013. Because of currency exchange rates, we can't say the same for its dividends in Aussie dollar terms. But the trend is clear.
In 2023 so far, this trend has continued too. The interim dividend that investors received only earlier this month came in at US$1.07 per share. That was a significant hike over 2022's corresponding payment of US$1.04 per share.
Between 2014 and 2022, CSL's annual dividend rocketed by a cumulative 96.5%. If CSL's dividends keep rising at this level over the next eight years, investors will be bagging US$4.36 in dividends per share by the year 2030. That's $6.54 per share in Australian dollars at the current exchange rate.
If that were to occur (which is by no means guaranteed), it would be highly lucrative for long-term investors, and would finally make CSL an ASX dividend heavyweight.
So this just proves that you can't judge an ASX divided share by the yield on its cover. By the time the 'sleeping giant' awakens, it might be too late to nab the shares at a good share price.
