2 ASX dividend shares I'm loading up on in 2024

I am a big fan of these two dividend stocks.

| More on:
Smiling woman holding Australian dollar notes in each hand, symbolising dividends.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX dividend shares that provide compelling passive income are very appealing to me. There are a few stocks I've invested in multiple times in 2024.

A business doesn't need a huge dividend yield to be an effective income stock. Ideally, it has a solid starting yield, good prospects for earnings growth, and relatively stable payouts (that hopefully can grow over time).

With that in mind, below are two companies I've been focusing my investing dollars on this year.

Metcash Ltd (ASX: MTS)

Metcash has three different divisions with many recognisable brands.

It has a food division that supplies IGAs around Australia. The company has recently announced the acquisition of Superior Food, a wholesaler that supplies businesses like restaurants, cafes, hotels and hospitals.

Metcash has a liquor division that supplies various independent liquor retailers, including the national brands Cellarbrations, The Bottle-O, IGA Liquor, and Porters Liquor. It also supplies state-based brands such as Thirsty Camel, Big Bargain Bottleshop, and Duncans.

Finally, it owns several hardware brands, including Mitre 10, Home Timber & Hardware and Total Tools, as well as other smaller businesses. It recently announced it was buying one of the country's biggest frame and truss businesses, Alpine Truss.

As you can see, the ASX dividend share is quite diversified in what it does. I'd say it's one of the obvious beneficiaries of a growing Australian population.

I like that it has been making a move towards growing its hardware exposure, with several acquisitions to get to its current portfolio. The Total Tools takeover has proven to be a very useful addition.

Metcash currently has a dividend payout ratio of 70% of underlying net profit after tax (NPAT). According to the estimate on Commsec, the company is projected to pay a grossed-up dividend yield of 7.3% in FY24, 7.7% in FY25 and 8% in FY26.

One of the main things that attracts me to Metcash is the low price/earnings (P/E) ratio considering its quality. According to Commsec, the Metcash share price is valued at just 13x FY25's estimated earnings.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

It's probably not a surprise that I've been buying this ASX dividend share regularly this year; it's one of my favourites for a few different reasons.

I'm a fan of the company's underlying diversification because it's invested in various assets and industries.

Some of the ASX shares it has sizeable positions in include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Ltd (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG), Apex Healthcare, BHP Group Ltd (ASX: BHP) and Macquarie Group Ltd (ASX: MQG).

Some other areas in which it's invested are unlisted assets, including credit/bonds, agriculture, swimming schools, electrical parts, and others.

I like the long-term investment ethos of this ASX dividend share, with a focus on businesses that can typically provide defensive and hopefully growing cash flows. Every year, Soul Patts expands its portfolio by investing in a new business and/or growing an existing business. This is the sort of business that could make progress in the coming years, whatever happens with the local or global company.

The company has grown its annual ordinary dividend every year since 2000, which is an excellent record. It's not guaranteed to continue, but management places high importance on growing the dividend for the coming years. At the current Soul Patts share price, it has a trailing grossed-up dividend yield of around 3.8%.

Motley Fool contributor Tristan Harrison has positions in Brickworks, Metcash, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Dividend Investing

2 high-yield ASX stocks I'd buy for dividends

I think these stocks are undervalued and offer a compelling yield.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

Buy these ASX dividend stocks for a passive income boost

Analysts think income investors should be buying these income stocks.

Read more »

One hand giving $100 notes to another hand, symbolising ex-dividend date.
Dividend Investing

Morgans says these ASX dividend shares are top buys

The broker has good things to say about these income options this month.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Dividend Investing

Warren Buffett's sister uses this simple method for passive income without dividends

This strategy can be a great way to create cash flow.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

4 ASX income stocks to buy for 4% to 8% dividend yields

Analysts think these stocks are in the buy zone. What are they forecasting for them?

Read more »

Woman calculating dividends on calculator and working on a laptop.
Dividend Investing

What's the dividend yield of NAB shares right now?

What’s the size of NAB’s payout?

Read more »

Older couple enjoying the backyard
Dividend Investing

3 ASX 200 dividend stocks for investors to buy

Analysts are expecting these stocks to provide great yields. But how great?

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Dividend Investing

2 cheap ASX dividend shares I'd buy for income

I think these two stocks can provide excellent dividends.

Read more »