ASX shares that keep growing their dividend may be attractive to investors looking for stable income.
Dividend growth certainly isn't guaranteed. The amounts are decided by the board, but the company needs to have generated profit to pay the dividend.
Businesses that have increased their dividends for many years in a row may be able to keep doing so because they're in a resilient industry, or perhaps have strong assets that enable payout growth.
I wouldn't want to buy a business just because it has grown its dividend – the valuation needs to make sense too.
Here I'll outline two ASX shares that have a strong track record of dividend growth.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is an ASX healthcare share which is one of the largest pathology providers in Australia, the US, the UK and Europe.
People don't decide to get sick based on what part of the economic cycle we're in, so demand is quite consistent. It helps that there is good government funding for healthcare in a lot of the countries where it operates.
The business is benefiting from a number of tailwinds that can help it grow earnings – acquisitions, population growth, ageing demographics and improving technology (including artificial intelligence).
The ASX share has grown its dividend every year since 2013, so it has been a decade of dividend increases. At the current Sonic Healthcare share price, it has a trailing grossed-up dividend yield of 5%. The next 12 months could see a larger yield thanks to the company's "progressive dividend" policy.
Brickworks Limited (ASX: BKW)
Brickworks is the largest brickmaker in Australia and the north east of the US. It also makes other products in Australia such as paving, masonry, roofing and so on.
The most important assets for the company to afford its growing dividend is its holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and its 50% stake in the industrial property trust. The property trust owns a growing portfolio of large industrial (logistics and distribution) warehouses, which is unlocking more rental profit which can then fund higher Brickworks dividends.
Soul Pattinson is an investment house that owns a large and growing portfolio of assets, such as businesses that operate in sectors like telecommunications, resources, swimming schools and agriculture. It has been growing its dividend per share for Brickworks every year since 2000.
Brickworks has grown its annual dividend per share every year since 2014, so it has been approximately a decade of consecutive dividend growth from the ASX share.
The trailing grossed-up dividend yield of Brickworks is 3.7%.
