ANZ Group Holdings Ltd (ASX: ANZ) shares may be highly appreciated for the dividends, but it could be good to diversify if a lot of someone's portfolio is already allocated to the ASX bank share. There are plenty of other ASX dividend stocks to consider.
Banking is a tough industry at the moment, with strong competition between lenders, which is hurting the net interest margin (NIM) – a key profitability measure. The current economic conditions amid high interest rates are a headwind for credit demand.
ANZ continues to pay a relatively high dividend yield, but the estimate on Commsec suggests the bank's annual payout will reduce from $1.75 per share in FY23 to $1.66 per share in FY24.
Ideally, the ASX dividend stocks we invest in for passive income can provide growing payouts, which is one of the main reasons why I like the companies below.
Coles Group Ltd (ASX: COL)
Coles is one of the largest supermarket businesses in Australia, providing essential products. It's the type of business that I think can benefit from Australia's growing population as it opens new supermarkets and experiences comparable sales growth for existing stores.
The business has made a major push in the last few years to provide more exclusive, own-brand and convenience products. It is also working on increasing the sustainability of its operations.
Its efforts seem to be resonating with customers, with supermarket sales revenue in the third quarter of FY24 up 5.1% to $9.07 billion. Within that, e-commerce sales increased by 34.9% to $856 million, with online penetration of sales increasing to 9.3%.
Higher sales can help increase profit margins at the business, particularly if cost inflation reduces in FY25.
Impressively, the ASX dividend stock has grown its annual payout every year since 2019, when it first started paying a dividend. The projection on Commsec suggests the annual dividend per share could rise to 69.5 cents in FY25 and 78.5 cents per share in FY26. This would translate into forward grossed-up dividend yields of 5.5% and 6.2%, respectively.
Brickworks Limited (ASX: BKW)
Brickworks is one of the largest building product manufacturers in Australia. It's the biggest brickmaker and is also involved in areas like paving, roofing, masonry and stone, cement, specialised building systems and timber.
The business owns a significant chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. This diversified investment conglomerate owns assets across industries like telecommunications, resources, property, agriculture, financial services, and so on. Soul Patts is delivering capital growth and a rising dividend to Brickworks.
Brickworks also owns a significant portfolio of property assets, including half of an industrial property trust, which is building large warehouses on land that Brickworks used to own 100% of. These new, advanced warehouses are increasing the value of the land and unlocking rental earnings for Brickworks.
The business has grown its annual dividend per share every year since 2014, and it hasn't cut its dividend in approximately five decades.
Brickworks currently has a trailing grossed-up dividend yield of 3.3%. While it's not a large starting yield, it could be materially higher in the coming years if dividend increases continue.
