If someone is investing in ASX dividend shares, I imagine they want the passive income payments to continue flowing regardless of whether the economy is booming or not.
Buying food, paying for the mortgage, and everything else still needs to happen, whether Australia's GDP is rising or falling.
If an Australian downturn occurs, I don't want my dividend income to be reduced or eliminated entirely.
Some investors like Commonwealth Bank of Australia (ASX: CBA) shares for their dividends, but the bank cut its dividend during the GFC and in 2020. However, some businesses on the ASX have increased their dividends every year since 2000.
Past performance is not a guarantee of future dividends, but there's plenty of evidence that says to me these payment growth streaks could continue. Both of the below businesses have grown their payment every year, including through the GFC and COVID-19 pandemic.
APA Group (ASX: APA)
APA is an impressive ASX energy infrastructure share. It owns several different assets around Australia, including electricity transmission, wind farms, solar farms, gas processing facilities, gas storage, gas energy generation, and, most importantly, a vast national gas pipeline that transports half of the nation's gas usage.
It owns (or manages) 15,000km of gas pipelines worth approximately $26 billion. Its assets are vitally important for the country's economy, for both households and businesses.
The ASX dividend share pays for its distribution from the cash flow that its very sizeable portfolio of assets generates. In the FY24 result, APA reported that its cash flow was $1.07 billion, up slightly compared to FY23. That cash flow is steadily growing as more pipelines and other assets are added to the portfolio.
APA's cash flow is also being supported by the fact that most of its revenue is linked to inflation, which has received a significant boost in the last few years.
Whether the Australian GDP is higher or lower, people and businesses still need energy, so I think there's a good chance the distribution will keep flowing and possibly grow.
In FY25, the business is expecting to grow its distribution to 57 cents per security, which translates into a distribution yield of 7.9%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This ASX dividend share, commonly called Soul Patts, is one of the most appealing S&P/ASX 200 Index (ASX: XJO) stocks to me. It's the leader of dividend growth on the ASX – its annual ordinary dividend has increased every year since 2000.
On top of that, the investment conglomerate has impressively paid a dividend every year in its listed existence, which goes back 120 years. It has been incredibly reliable, though that's not guaranteed to continue indefinitely.
The ASX dividend share's leadership and investment teams have tried to create a diversified portfolio of assets that provides resilient cash flow to the parent business. This can help support profit, the portfolio's value, and the funding for dividend payments.
Some of the (largely) uncorrelated assets that it's invested in include resources, industrial property, telecommunications, financial services, swimming schools, electrification, agriculture, and more.
The latest annual payment from the business was 95 cents per share in FY24, which translates into a grossed-up dividend yield of close to 4%, including franking credits.
