When it comes to ASX dividend stocks, investors will often focus on yield. They will see a 6% dividend yield as superior to a 3% yield.
While this may be true in the short term, it may not be in the long term.
For example, CSL Limited (ASX: CSL) is a great example of a company that isn't considered to be an attractive option for income investors.
Yet for long-term investors, they are getting a significant and growing paycheck from this ASX dividend stock each year.
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Buying and hold ASX dividend stocks
In FY 2024, analysts at Goldman Sachs are forecasting CSL to pay a US$2.70 per share dividend. This represents A$4.12 in local currency and equates to a modest yield of 1.6%. Hardly anything to get excited about for income investors.
However, if you bought CSL's shares 20 years ago, you would have paid $16.57. This means that the yield on cost for those investors is now almost 25%.
To put that into perspective, if you had invested $10,000 into CSL's shares at that point, you will be receiving $2,500 in dividends in FY 2024 if Goldman's estimates are accurate. That could easily be divvied up into monthly payouts to cover some discretionary spending. Clearly something to get excited about!
And that's just one dividend. There have been plenty of dividends along the way and there will be plenty more to come.
In fact, Goldman is forecasting dividends per share of US$3.09 (A$4.71) in FY 2025 and US$3.62 (A$5.52) in FY 2026.
If these estimates prove accurate, that same $10,000 investment from 20 years ago would yield $2,840 and $3,330 in dividends, respectively, across those years.
So, over the course of just three years, your CSL shares have provided $8,670 in dividends from a single $10,000 investment 20 years ago.
But which stock could be the next CSL?
One ASX dividend-paying stock that has been tipped as a great long-term pick is Lovisa Holdings Ltd (ASX: LOV). This is largely due to its massive global expansion and strong management team.
Brokers also see plenty of upside for its shares. For example, UBS put a buy rating and $23 price target on Lovisa's shares this week.
