One of the leading S&P/ASX 200 Index (ASX: XJO) dividend heroes is APA Group (ASX: APA). There are multiple reasons to love it, especially at the current valuation.
APA is one of the leading businesses when it comes to a consistently growing payout, a high dividend yield, defensive earnings and growing operating earnings.
APA is one of the largest energy businesses in Australia, with a huge gas pipeline network across Australia, gas processing facilities, gas storage, gas-powered electricity generation, electricity transmission assets, solar farms and wind farms.
That may not sound like the most exciting business, which is one of the reasons why I'm calling it a forgotten ASX 200 dividend hero. It's not in an exciting industry, but it's the type of business that has delivered and can deliver a consistently rising payout.
It transports half of the country's gas usage, so it's an important cog in the Australian economy. The APA share price has risen by 30% in 2025 to date and there are a few reasons why it looks like a solid long-term buy today.
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Why it's a ASX 200 dividend hero
There are not too many businesses that have increased their dividend every year since 2019 – the pandemic, iron ore decline and high inflation led to plenty of businesses cutting their dividends in the last six years.
Even fewer businesses have hiked their annual dividends every year for a decade in a row.
A very small number of ASX shares have increased their dividend every year going back to before the GFC.
APA has increased its payout every year for the past 20 years in a row, which is the second-longest streak on the ASX.
It's also providing investors with a sizeable distribution yield. It expects to hike its distribution to 58 cents per security in FY26. That translates into a forward distribution yield of 6.3%, which is a high level of income for a defensive and growing business. I think its track record is underrated by some income investors.
Why it could still be cheap
After rising 30% in 2025 so far, the ASX 200 dividend hero is certainly not as cheap as it used to be.
I think the best way to measure APA's earnings is to look at its cash flow. It aims to grow its cash flow thanks to its growing portfolio of energy assets, as well as inflation-linked rises with its revenue. Plus, it's the cash flow that APA uses to pay the passive income to investors.
The business reported free cash flow of $1.08 billion in FY25, compared to its current market capitalisation of $12 billion, according to the ASX. That puts the business at around 12x its FY25 cash flow, which I think is a very reasonable valuation to invest in, even if it's not as good value as it was at the start of the year.
