ASX dividend shares can be an excellent way for investors to generate passive income from their portfolios. Here, I'm going to talk about two of the ASX's dividend income beasts that have the longest dividend growth records on the ASX.
Most businesses can grow their dividend when the economy is booming. But I'm particularly impressed by the ASX dividend shares that keep growing dividends during difficult times.
There are very few businesses that have grown their payouts every year since before the global financial crisis. But both of the businesses below have done just that.
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Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Soul Pattinson has increased its annual ordinary dividend every year since 2000, which is the best record on the ASX.
The ASX dividend income beast has managed this thanks to its investment conglomerate nature. It owns a portfolio of assets across ASX blue chip shares, ASX small cap shares, private equity, property, structured debt, and strategic positions in other ASX shares.
Soul Pattinson has large positions in businesses like Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG), Apex Healthcare, Aeris Resources Ltd (ASX: AIS), Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), and Commonwealth Bank of Australia (ASX: CBA).
The company has looked to build a portfolio of "robust, defensible business models and uncorrelated assets". The growing cash flow from its investments have helped fund Soul Pattinson's growing dividends. There's enough cash flow left over after paying for its expenditure to re-invest in more opportunities.
The total returns of this ASX dividend income star have outperformed the All Ordinaries Accumulation Index (ASX: XAOA), thanks to the steady compounding of its portfolio in good businesses.
APA Group (ASX: APA)
APA is an energy infrastructure business that owns a huge gas pipeline network. In fact, it transports half of Australia's natural gas usage. It also has a growing portfolio of renewable energy and electricity transmission assets.
Each time it completes a project, such as a new pipeline, the business benefits from an increased level of cash flow generation which can then fund a higher distribution.
It has increased its distribution each year since 2004 and is expecting to deliver a distribution of 55 cents per security in FY23. This would represent an increase of 3.8% compared to FY22.
The company says it's "building momentum" across its business and "investing in the capability, systems and processes necessary to be the partner of choice in delivering infrastructure solutions for the energy transition".
As an energy infrastructure business, it's planning to invest in renewables, gas and hydrogen infrastructure, and electricity transmission. The ASX dividend income share currently has an investment pipeline of more than $1.4 billion, including the East Coast grid expansion and western outer ring main. These will provide increased capacity ahead of winter 2023. It is also investing in the Northern Goldfield interconnect project in Western Australia.
