Owners of Brickworks Limited (ASX: BKW) shares have seen a strong flow of dividend income for decades.
There are very few businesses on the ASX that have paid passive income for as long as this ASX dividend share.
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Excellent payout record
At the company's 89th annual general meeting (AGM) in November 2023, it pointed out that it has been 47 years since the normal dividend was last decreased. In other words, the dividend hasn't been reduced since 1976.
Just to be clear, it hasn't increased its dividend every single year, though it has delivered numerous increases this century. It has grown its annual ordinary dividend each year for the past decade.
The FY23 annual dividend saw a 2% rise to 65 cents per Brickworks share. That's not exactly an Earth-shattering increase, but it builds on previous increases. Compounding is a powerful force if growth happens year after year.
The chair of Brickworks, Robert Millner, said:
We are proud of our long history of dividend growth, and the stability this provides to our shareholders.
Over the past 20 years we have increased our dividend at a compound rate of 6.1% per annum.
It also noted that it has delivered total shareholder returns of 12.2% per annum for 25 years, which would have turned $1,000 invested in Brickworks into $17,700 at the end of FY23.
Can the Brickworks dividend keep rising?
Brickworks has held an investment in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) since 1968. It currently owns 26.1% of the investment house which has "delivered outstanding returns, steadily increasing dividends and diversification".
The steadily growing Soul Patts dividend goes to Brickworks and helps fund Brickworks' growing dividend (and the Soul Patts shares assist the underlying value of Brickworks shares).
I think the Soul Patts investment is a big reason for the consistency of the Brickworks dividend.
The other main asset group that's funding the higher Brickworks dividend is property, in my opinion.
Brickworks has sold (and continues to sell) excess building product manufacturing land into a joint venture property trust, which is 50% owned by Goodman Group (ASX: GMG).
The main property trust owns prime industrial and logistics property, tenanted by high-quality third-party customers including Amazon.com.
There is enormous demand for this type of property, which is driving the rental potential of the trust, leading to stronger rental profits and bigger distributions to Brickworks.
The joint venture is steadily completing new large warehouses at its newer estates, which is creating more rent and also leading to development profits.
No dividend is guaranteed, but I think owners of Brickworks shares have a very good chance of seeing another dividend increase in FY24 and beyond.
