The ASX dividend stock APA Group (ASX: APA) may not be the biggest dividend-paying business in Australia, but I think it could be one of the most appealing for a few different reasons.
APA owns and/or manages a $27 billion portfolio of gas, electricity, solar, battery, and wind assets. Impressively, it delivers around half of the nation's domestic gas through 15,000km of gas pipelines that it owns, operates, and maintains.
It also has investments in electricity transmission assets, which connect Victoria with South Australia, Tasmania with Victoria, and New South Wales with Queensland.
Finally, APA owns and operates power generation assets, including gas-powered, as well as wind and solar assets.
Its assets are always in demand – it doesn't face cyclical demand like a retailer or miner.
Let's get into what three of the most attractive things are about the business.
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High yield
When someone invests for passive income, I imagine they want a good dividend yield right away. Ideally, the business has a similar/higher dividend yield than what interest rate term deposits are offering.
The ASX dividend stock certainly offers a noticeably higher payout return than what banks are currently offering.
APA is expecting to increase its payout to 58 cents per security in the 2026 financial year. That translates into a forward distribution yield of 6.2%.
The ASX dividend stock has long-term payout growth
For me, what's more important than the yield right now is its long record of payout growth for shareholders. If I'm investing for passive income, I want to see there's a good record of regular growth (rather than cuts).
APA is one of the best available ASX dividend stocks in terms of consistent payout growth.
Incredibly, it has grown its payout every year for the last 20 years in a row, which is the second-best record on the ASX.
Growth isn't guaranteed from the ASX dividend stock forever, of course, but I think it can continue growing because of two key reasons. Firstly, a vast majority of APA's revenue is linked to inflation, which provides solid growth over time.
Secondly, APA's cash flow is regularly boosted by an addition to its portfolio of energy assets.
Expanding portfolio
APA's energy portfolio is already diversified, and it's adding to it regularly, which helps increase the cash flow from its asset base.
The latest asset it has announced for its portfolio is the proposed Brigalow Peaker Power Plant for Queensland, in partnership with CS Energy. It's aimed to be operational in 2028, which will provide firming capacity for peak electricity demand periods, complementing variable renewable energy.
APA will own 80% of the project, while CS Energy will operate and maintain the plant, retaining a 20% ownership stake in the project. The agreement between the two businesses will see APA generate returns under an inflation-linked revenue arrangement, as well as the potential for higher returns from a small portion of variable revenue.
Overall, thanks to its payouts and long-term earnings growth, I believe the ASX dividend stock has a promising future and is worth considering for purchase in almost any market.
