ASX shares that have created a track record of dividend growth can be exactly what some income-focused investors are looking for.
No dividend growth is guaranteed, but some companies are highly committed to providing stable payouts for shareholders. In contrast, some sectors — ASX mining shares, for example — can see volatility in their distributions.
Profit is what pays for the dividends, so ideally, we want to see companies with long-term profit growth plans so we can be confident that the payout trajectory can continue.
With that in mind, the two names below already have impressive dividend histories and could remain reliable dividend payers for some time, in my view.
APA Group (ASX: APA)
APA is a major energy infrastructure business – it owns a national gas pipeline across Australia. The ASX dividend share also owns or has stakes in gas processing facilities, gas storage and gas-powered energy generation. APA has renewable energy generation assets, including solar and wind, as well as electricity transmission assets.
The company pays dividends from its cash flow each year. And the cash flow is steadily growing as the APA adds additional energy assets to its portfolio, including new pipelines and additional electricity-related infrastructure.
The large majority of APA's revenue is linked to inflation, so recent inflationary periods have been revenue-positive, even if the higher cost of debt is a headwind to profitability.
Pleasingly, APA has grown its distribution every year since 2004 – that's one of the best records on the ASX.
For FY24, the ASX share guided a payout of 56 cents per unit, which translates into a distribution yield of 7.2%.
Sonic Healthcare Ltd (ASX: SHL)
Sonic is one of the largest ASX healthcare shares and also one of the world's largest pathology businesses. It has a significant presence in Australia, the United Kingdom, the United States, Germany, and Switzerland.
The company has delivered organic growth and made a number of acquisitions over the years to become the global player that it is today.
Healthcare is a very defensive sector – people don't choose which economic conditions to get sick in. Also, people usually place a high level of importance on their health and are willing to spend on it. In addition, the relevant governments normally help with some (or all) of the funding of pathology in most of its operating markets.
The ASX share's board of directors has a stated progressive dividend policy, meaning they want to grow the dividend if the company's finances allow. Sonic Healthcare has grown its annual dividend every year since 2013.
Sonic Healthcare currently has a trailing dividend yield of around 4%, excluding franking credits.
