An ASX dividend titan I'd buy over BHP shares

I think this ASX stock can offer much healthier passive income.

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BHP Group Ltd (ASX: BHP) grabs a lot of investor attention, partly because it's the biggest company on the ASX by market capitalisation, but also due to the size of the dividends it pays out. However, I believe there's a lot more to reliable passive income than just the current dividend yield. I think it takes a certain level of stability for a stock to be regarded as a reliable ASX dividend titan.

If an investor is seeking dependable passive income, I believe they'd benefit from owning ASX shares that can continue paying decent dividends through all economic conditions. For example, it can be very distressing for an investor's dividends to dry up precisely when they most need them to flow during times of recession.

Admittedly, BHP's profits and dividends are not intrinsically linked to Australia's economic performance, but they are, to a significant extent, reliant on iron ore prices. And the iron ore price can be extremely volatile – it's down by over 20% so far this year. This may not bode well for BHP's dividends to be maintained at their current levels.

Where I'd look for defensive passive income

I believe ASX healthcare stock Sonic Healthcare Ltd (ASX: SHL) could be a better pick than BHP shares for long-term dividends.

For starters, Sonic Healthcare's board has a 'progressive dividend policy'. In other words, the directors are focused on growing the dividend, if the company can afford to do so.

Furthermore, healthcare is a sector that can deliver defensive earnings, in my opinion. After all, we don't choose when to get sick, and most people place a high value on their health.

Sonic provides pathology services in multiple countries including Australia, Germany, the UK, the USA, and Switzerland. The company could benefit from ongoing population growth in those countries, technological advancements and geographic expansion. Sonic has also made a number of acquisitions in the last few years to boost its scale.

Impressively, the company has grown its dividend almost every year for the last 30 years, with only a handful of years when the dividend was maintained during that period.

Sonic has grown its annual dividend every year since 2013, so it has delivered a sustained decade of dividend growth.

What is this ASX dividend titan's yield?

Excluding franking credits, the last two dividends declared by Sonic amount to a dividend yield of 4.05%.

According to Commsec, the company's dividend is expected to keep growing. The projection translates into a dividend yield of 4.1% in FY26.

I think that's a solid starting yield, with room for long-term growth.

Motley Fool contributor Tristan Harrison has positions in Sonic Healthcare. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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