There are few S&P/ASX 200 Index (ASX: XJO) shares that can say their dividend payout has grown or been maintained every year for two decades. Owners of Brickworks Limited (ASX: BKW) shares have seen reliable dividend payments for almost five decades.
Dividends aren't guaranteed, but companies that have built a history of sending solid dividends to shareholders could continue to deliver pleasing payouts.
There are a couple of reasons why I believe Brickworks' strong dividend record can continue.
Incredible dividend streak
Brickworks says that it's proud of its long history of dividend growth and the stability this provides to shareholders.
It has been 48 years since the last full-year ordinary dividend was decreased in 1976. Following the dividend hike in the FY24 first-half result, the company has grown its dividend every year for the past ten years.
Total shareholder returns have been satisfactory as well – in the HY24 result, the ASX 200 share revealed that over the prior 25 years, it had achieved an average shareholder return per annum of 12.9%, compared to an 8.6% return per annum for the All Ordinaries Accumulation Index (ASX: XAOA).
What is funding the dividends?
Brickworks may be best known for its Australian and US building product divisions – it's the country's largest brickmaker, one of the largest roofing businesses and more.
However, two other segments are providing resilient cash flow to enable Brickworks to keep paying and growing its dividend.
First, the ASX 200 share owns approximately a quarter of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), an investment conglomerate that is invested across numerous industries including resources, telecommunications, swimming schools, agriculture, financial services and property. Soul Patts itself has grown its dividend ever year since 2000, providing growing cash flow to shareholders such as Brickworks.
Brickworks also owns a variety of property assets, with the crown jewel being its 50% share of an industrial property trust. The business is benefiting from organic rental increases with those properties, as well as the ongoing completion of new large industrial warehouses adding to the rental snowball. The FY24 first-half result saw net rental income rise 4% (including the headwind of higher-costing debt), while gross rental income increased 17%.
That combination of growing rental profits and a rising Soul Patts dividend is helping send the Brickworks dividend higher.
Brickworks currently has a grossed-up dividend yield of 3.5%, which I believe is a decent starting point.
