A small group of ASX shares has built a history of reliable dividend payments. Aussies looking for rock-solid retirement income could be reassured by looking at these sorts of stocks.
No dividends are guaranteed, of course. But, when some businesses are in defensive industries and they have a long history of delivering regular dividend growth, I think they are contenders for investors looking for a high level of dependability.
If I were in retirement, I wouldn't want my income to disappear at the time I need it most during an economic downturn. That's why I like the below two ASX shares for retirement income.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This business is one of the oldest on the ASX – it has been listed for more than 120 years. Pleasingly, it has paid an annual dividend in every one of these years, demonstrating excellent passive income longevity.
Soul Patts is an investment conglomerate that has a very diversified portfolio, which is focused on defensive assets that provide reliable and largely uncorrelated cash flow to the business. We're talking about industries like telecommunications, resources, property, swimming schools, agriculture, financial services, credit, funerals, and so on.
The ASX share receives cash flow from its portfolio, which is mainly dividends. It pays for its expenses and then sends a majority of that net cash flow to investors in the form of rising dividends. The rest is invested in new opportunities for its portfolio.
Incredibly, Soul Patts has grown its annual ordinary dividend per share every year since 2000, which is the best record on the ASX for long-term dividends. This is one of the main reasons why it's the biggest position in my portfolio. I think it's a great option for retirement income.
It currently has a grossed-up dividend yield of 3.5%, including franking credits.
APA Group (ASX: APA)
APA is a large energy infrastructure business with a major asset base.
It owns a huge gas pipeline network across Australia, as well as gas energy generation, gas processing facilities, gas storage, wind farms, solar farms, and electricity transmission assets. Impressively, the business transports half of the country's gas usage.
This is another business that has a very long distribution growth record. It has grown its distribution every year for the past 20 years, which is great but also not too surprising, given how the business operates.
Energy is always in demand in Australia, for both household and business usage. APA has steadily grown its energy portfolio over the years with additional assets, whether that's new pipelines, electricity transmission assets, or something else. That is helping the business grow its cash flow, combined with the inflation-linked increases for a large majority of its revenue.
It's expecting to pay a distribution per security of 57 cents for FY25, which translates into a distribution yield of 6.8%, which is a great yield for retirement income.
