The ASX dividend share Propel Funeral Partners Ltd (ASX: PFP) is one of the most underrated businesses available for Aussies to buy for passive income, in my view. I think most Australians could benefit from owning it.
Propel is the second largest funeral operator in Australia and New Zealand. It has just over 200 locations, including 41 cremation facilities and nine cemeteries.
It's quite a morbid idea, but I think it has compelling attributes, so let's get into it.
Image source: Getty Images
Solid starting dividend yield
For a business to be counted as a good ASX dividend share in my books, I believe it needs to offer a good dividend yield. Simply paying a dividend isn't enough, in my view.
While this company doesn't have a huge dividend yield like some ASX mining shares or ASX retail shares, I think it's a good starting point considering how defensive the business is – sadly, a certain number of deaths occur each year.
Based on the company's FY25 dividend payout of 14.4 cents, it has a grossed-up dividend yield of 4.1%, including franking credits. That's comparable to any 12-month term deposit, in my view.
Plus, I'm expecting the payout to grow significantly as the years go by, thanks to the power of compounding.
Compelling long-term tailwinds
The business is significantly exposed to long-term tailwinds. Australia's population is growing and ageing, which results in forecasts that there will be an increasing number of deaths in the coming years.
Propel says that the number of deaths is the most significant driver of revenue in the 'death care' industry.
The ASX dividend share points out that the number of deaths in Australia grew by an average of 1.2% per year between 1990 and 2024. Death volumes are expected to increase at a rate of 2.8% per year between 2025 to 2035 and then grow by 2.4% between 2036 to 2045. In other words, annual death volumes are expected (on average) to rise every year for the next 20 years.
As one of the largest players in the industry, it's well-positioned to benefit from these tailwinds. Additionally, it makes acquisitions every so often to expand its geographic presence and boost scale.
Pleasing financial growth
But, the business isn't just benefiting from the growth of funeral volumes. Inflation is also helping drive the top line.
When the company announced its FY25 result, it also gave a trading update for July 2025, which revealed a record month of revenue, exceeding $21.5 million. It saw seasonally stronger funeral volumes, but it also experienced average revenue per funeral growth of 2.7%, year-over-year.
While rampant inflation has calmed, the company is still seeing an increase in revenue per funeral, which is a bonus for its financials and can help drive the bottom line.
Over the long-term, I think the ASX dividend share's revenue, net profit and dividend can steadily climb.
There are few ASX dividend shares I'm as confident in their long-term growth as Propel, which is why I think it could be a good buy for income-focused Australians.
