The Australian share market is a great place to generate passive income.
This is because a large number of listed companies share a portion of their profits with their shareholders each year in the form of dividends.
Furthermore, if a company is growing its profits each year, it's very likely that its dividend will be growing as well.
Compound this growth over many years, or even decades, and you could be pulling in huge dividend income from ASX shares.
But which ASX dividend-growth shares could be great long term options? Let's take a look at two that analysts rate as buys:
APA Group (ASX: APA)
APA Group is an energy infrastructure company that owns, manages, and operates a $27 billion portfolio. This comprises electricity transmission, gas distribution, solar and wind farms, and battery station assets.
This portfolio has allowed APA to increase its dividend every year for almost 20 years.
And analysts at Macquarie believe this trend will continue for the foreseeable future. The broker is forecasting dividends per share of 56 cents in FY 2024 and then 57.5 cents in FY 2025. Based on the current APA Group share price of $7.91, this equates to 7.1% and 7.3% dividend yields, respectively.
Macquarie has an outperform rating and $9.40 price target on its shares.
Lovisa Holdings Ltd (ASX: LOV)
Another ASX dividend-growth share that could be a great long term option for income investors is Lovisa.
It is a leading fast fashion jewellery retailer with over 850 stores across 30 countries. But that isn't where Lovisa plans to stop. Far from it. The company has huge global expansion plans that will be supportive of its growth for many years to come.
It is largely for this reason that Morgans is bullish on the company. Its analysts note that "investment will be needed to expand LOV's network in the US and Europe and to take it into new markets, but the company has the balance sheet capacity to fund this and the returns could be stellar."
This bodes well for its earnings and dividends over the next decade. In the meantime, Morgans is forecasting fully franked dividends of 80 cents per share in FY 2024 and 86 cents per share in FY 2025. Based on the current Lovisa share price of $34.94, this implies yields of 2.3% and 2.45%, respectively.
Morgans has an add rating and $37.00 price target on its shares.
