When an investor searches for ASX dividend shares to add to their portfolio, the gold standard is arguably finding those rare stocks that have the potential to fund a lifetime of passive income.
After all, what could be better than buying a dividend share and never worrying about whether it will be able to scrape together enough cash for its next dividend?
Buying these lifelong sources of passive income can be thought of as investing in a coiled dividend spring.
But of course, finding these coiled springs is easier said than done. So today, let's discuss two ASX dividend shares that I think have the potential to fund a lifetime of passive income.
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2 ASX dividend shares to fund a lifetime of passive income
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
First up is Washington H. Soul Pattinson, or Soul Patts for short. I've long touted this stock as one of the best dividend shares on the ASX. This company owns a portfolio of underlying assets, which it manages on behalf of its shareholders, much as a listed investment company (LIC) does.
In Soul Patts' case, these assets include major stakes in other ASX stocks, including New Hope Corporation Ltd (ASX: NHC) and TPG Telecom Ltd (ASX: TPG). They also include a huge blue-chip ASX share portfolio and other investments like private credit, venture capital, and unlisted companies.
My confidence in Soul Patts as a lifetime passive income payer comes from its almost flawless track record of delivering meaningful returns over many decades. For one, the company has a near-25-year streak of providing annual dividend pay rises – a streak unmatched on the ASX. It also hasn't cut its dividend in more than 120 years.
Additionally, these fully-franked dividends have not come at the expense of growth. In an ASX release earlier this month, Soul Patts confirmed that its investors have enjoyed an average 12% per annum return over the 20 years to 30 April. That smashes the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
All of these factors add up to an ASX dividend share that I think has more than enough potential to be a lifelong passive income payer.
Coles Group Ltd (ASX: COL)
When I look for long-term ASX dividend shares, I like to turn to the consumer staples sector. If a company sells us things that we need — rather than want — to buy, I think it inherently makes its business model stronger and more robust than your average ASX share.
That is arguably true of Coles Group. As the second-largest grocer and supermarket operator in Australia, Coles will always be one of the top places customers head to for food, drinks and household essentials if it offers these products at competitive prices.
I believe Coles will continue to be able to do this, thanks to its significant investments in its supply chains and automation-driven distribution centres.
Coles' rival Woolworths Group Ltd (ASX: WOW) is a larger business with more market share than Coles. However, Coles shares trade with a higher dividend yield right now and have a better history of maintaining consistent, fully-franked payouts.
For these reasons, I think Coles is another ASX dividend share that has the potential to be a spring of passive income that won't run dry over a lifetime.
