The ASX share APA Group (ASX: APA) is providing a pleasing mixture of ongoing growth and a large dividend yield.
APA Group describes itself as Australia's energy infrastructure partner. It owns and/or manages a $27 billion portfolio of gas, electricity, solar and wind assets. APA delivers around half of the nation's domestic gas through 15,000km of gas pipelines. Its electricity transmission assets connect Victoria with South Australia, Tasmania with Victoria and New South Wales with Queensland, providing vital flexibility and support for the grid.
The business is one of the most impressive ASX dividend shares in my view, not because its distribution is rapidly growing (it isn't), but because income-focused investors usually value reliability and the dividend yield as important features.
FY25 was a solid year for the business and FY26 is shaping up to be an even better year.
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Why FY25 was a great year of progress
The business reported revenue growth of 4.7% to $2.7 billion and underlying operating profit (EBITDA) rose 6.4% to $2 billion, with the underlying EBITDA margin increasing to 74.2%, reflecting "strong asset performance and cost reduction initiatives."
APA noted that it invested $655 million of capital in FY25 on pipelines and the completion of construction of the Port Hedland solar and battery project.
Expanding its energy portfolio means the business is likely to increase its cash flow generation, unlocking funding for larger distributions. The business has an organic growth development pipeline of around $2.1 billion, which will be funded from its balance sheet.
The business did pay a larger distribution to investors. With the passive income payout, it increased the annual distribution by 1.8% to 57 cents per security. That means it has increased its payout every year for the last 20 years in a row. There's only one ASX share that has a longer track record of dividend growth.
I think dividend reliability is incredibly important because income-focused investors may need that cash to pay for life expenses. It wouldn't be good to see that payout disappear when it's most needed.
Of course, APA's dividend yield is not guaranteed. But, the signs are good for growth in FY26.
Growth expected for the APA dividend yield
The business has been very reliable with its distribution guidance – it has done what it says.
For FY26, APA is expecting to grow its FY26 distribution by another 1 cent per security to 58 cents per security. It currently has a forward distribution yield of 6.6%, which is an excellent payout, in my view. Every time the RBA cuts the interest rate makes the yield look more attractive.
It's expecting to grow the underlying operating profit (EBITDA) to between $2.12 billion to $2 billion – the mid-point of this represents year over year growth of 7.2%, which would be faster than inflation and assisted by new assets and cost reduction.
I think APA is an attractive business to own for the dividend income, though I'd think it of it as a slow-and-steady sort of investment.
