ASX energy giant APA Group (ASX: APA) continues to build its reputation as an ASX dividend share that can provide a stable level of passive income.
APA owns a large portfolio of energy assets around Australia, including a large national gas pipeline that transports around half of the country's gas usage.
The company has stakes in several other energy-related assets, including gas storage facilities, gas-fired power stations, and renewable energy generation (solar and wind farms). The business also owns a growing number of electricity transmission assets.
When it comes to the ASX energy giant's payouts, there are two main things I want to tell you about.
Solid distribution yield from the ASX energy giant
APA has one of the most impressive records when it comes to passive income.
Amazingly, the company has grown its distribution every year since 2004. In other words, it has boosted its payout in every annual result across two decades. There's only one business on the ASX with a longer growth streak than APA.
The company expects to increase its distribution again in FY24 — by 1.8% to 56 cents per security.
Based on the APA share price of $8.53 at the close of trade on Friday, the forecast payout for FY24 equates to a forward distribution yield of 6.5%. That's comfortably more than a generous term deposit rate from the big ASX bank shares.
Ongoing investments for growth
APA is benefiting from revenue growth largely linked to inflation, so the elevated CPI numbers of the last couple of years have helped boost its revenue.
With its FY24 forecast payout of 56 cents per security, the 1.8% growth reflects "the desire to balance distribution growth with the funding" of its growth ambitions.
The ASX energy giant continues to deploy capital investment in the first half of FY24 to drive longer-term growth and ensure the reliability of its assets. Some of its current growth projects include the East Coast grid expansion, the Kurri Kurri lateral, the Northern Goldfields interconnect, and the western outer ring main (WORM).
On the renewable energy efforts, the construction of the Port Hedland solar farm and BESS (battery energy storage system) project is on track and scheduled for completion in the fourth quarter of the 2024 calendar year.
As a bonus, APA is working on the idea that its pipelines may be able to transport hydrogen in the future, which could future-proof the business if it's successful with those tests and initiatives.
