The main thing I look for with ASX dividend shares is earnings growth and good prospects for more. When profit is going higher, it means that the dividend can be paid (and grow), it can fund more investment in the business, and the share price can hopefully rise over time.
There are more ASX dividend shares out there than just miners and banks.
Dividends are not guaranteed, but I believe the payments from the two below businesses could be solid and grow in the longer term.
GQG Partners Inc (ASX: GQG)
GQG is a fund manager that offers investors different investment strategies including US shares, global shares and dividend shares.
The business has a stated dividend payout ratio policy to pay 90% of its distributable earnings as a dividend. Fund managers are very scalable – they don't need much capital to keep growing, or even hire a bunch more analysts.
According to Commsec estimates, GQG could pay an annual dividend per share of 14.1 cents in FY24, which translates into a forward dividend yield of 9.5%. Its yield is split across four quarterly payments.
Not only has the ASX dividend share's investment funds performed well, but the company is also experiencing strong funds inflows. In the first five months of 2023, it experienced net inflows of $5.9 billion.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second-largest funeral provider in Australia and New Zealand.
Despite the difficulties caused by COVID-19, the business has grown its dividend each year since 2021. In normal years of operation, the business can have defensive earnings because of how, sadly, a certain number of people die each year. This provides a regular source of earnings for the company.
In fact, Propel is expecting a tailwind as the number of deaths is expected to rise in the coming decades. Australian Bureau of Statistics (ABS) numbers imply that death volumes are expected to rise by 3.1% per annum between 2021 to 2031.
While the funeral volumes may increase, the average revenue per funeral is also increasing – in the first half of FY23 it rose by 7.5% year over year. This helped revenue rise 23.3% while operating net profit after tax (NPAT) grew 34.9%. The interim dividend grew by 18.3% to 7.1 cents per share.
In FY24, estimates on Commsec show the ASX dividend share is predicted to pay a grossed-up dividend yield of 4.9%.
