The two S&P/ASX 200 Index (ASX: XJO) dividend shares that I'm going to cover in this article have been regularly giving shareholders a pay rise.
Not too many ASX 200 shares have increased their dividends each year since the start of COVID-19. The two companies I'm going to talk about have been growing their dividends each year since 2015, with one growth streak stretching back to 2013.
A growing dividend certainly isn't guaranteed. However, if a company has a board that wants to grow the dividend — and the profit (reserve) allows for a bigger payment — then there's a good chance a larger dividend could occur.
Bapcor Ltd (ASX: BAP)
Bapcor describes itself as Asia Pacific's leading provider of vehicle parts, accessories, equipment, servicing, and solutions. It has a number of brands including Burson, BNT, Truckline, WANO, Autobarn, Autopro, Midas, ABS, Shock Shop, Federal Batteries, and Battery Town.
Car parts regularly need replacing and it's usually cheaper to replace a part than buy a whole new car. As such, this business may see fairly consistent demand during the current economic cycle. Demand for parts may even increase during leaner times if more people are trying to make their cars last longer.
In the FY23 result, the ASX 200 dividend share's pro forma earnings per share (EPS) only dropped by 4.8% despite the macroeconomic uncertainty. The annual dividend per share was increased by 2.3% to 22 cents per share.
According to Commsec, the business is projected to grow its dividend per share by 4.5% to 23 cents per share. This would be a grossed-up dividend yield of around 4.75%.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is one of the largest pathology businesses in the world, playing an important part in the healthcare cycle. It has a large presence in countries like Australia, the US, Germany, and the UK.
Due to the nature of healthcare, demand for Sonic's services is fairly consistent. The business is benefiting from a couple of strong tailwinds. These are population growth and an ageing population in the countries where it operates.
The ASX 200 dividend share got an earnings boost during the COVID-19 period when it was processing COVID-19 tests. It has used — and is still using — a lot of that cash flow to make acquisitions to boost its scale and earnings.
Sonic Healthcare has a stated "progressive" dividend policy. It has grown its dividend each year for the past decade. In FY23, the company grew its annual dividend per share by 4% to $1.04.
In FY24, the company is expecting to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) by up to 5%, to a range of between $1.7 billion to $1.8 billion.
According to Commsec, at the current Sonic Healthcare share price, it is valued at 22 times FY24's estimated earnings. The projection suggests the annual dividend per share could increase by almost 3% to $1.07. That would be a grossed-up dividend yield of 5%.
