ASX dividend shares could be the way to go during this period of uncertainty and market volatility.
But, not every business is destined to provide investors with resilient payouts over the years. Certain businesses do seem to have a bigger commitment to rising payouts than others.
I'd focus on those names with increasing payouts if receiving passive income is a key focus. Of course, dividends are not guaranteed, but businesses do have a significant level of control over the size of the payout they send to investors each year.
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APA Group (ASX: APA)
APA has been, and continues to be, one of the most stable ASX dividend shares in terms of consistent distribution growth.
The energy infrastructure business has increased its annual distribution each year over the past two decades. Only one other business has a longer-term record than that.
There are two factors that have driven the payout higher over the last 20 years.
Firstly, it has regularly added to its energy portfolio across Australia over the years, with new gas pipelines, electricity transmission, wind farms, solar farms and batteries. It has new gas pipelines and a new gas power plant in the works, which should provide a good boost to cash flow. It's the growing cash flow that funds higher distribution payouts from APA.
A second earnings tailwind is that a vast majority of revenue is linked to inflation. Any upswing in inflation this year – which seems likely – could provide a longer-term boost to revenue and cash flow.
It's expecting to increase its FY26 annual distribution by 1 cent per security to 58 cents, translating into a forward distribution yield of 6.3%.
Future Generation Australia Ltd (ASX: FGX)
Future Generation Australia has a strong track record of dividend growth. The listed investment company (LIC) has increased its annual payout every year for the last decade. Not many ASX dividend shares have achieved that!
It's not a typical LIC because there are no management fees or performance fees involved. It's invested in a range of ASX share-focused funds, who all work for free. Instead of fees, Future Generation Australia donates 1% of its net fees to youth-focused charities.
Future Generation Australia provides underlying exposure to hundreds of ASX shares, resulting in excellent diversification and (typically) less volatility than the wider ASX share market. It recently announced its FY25 result, which included an annual dividend per share of 7.2 cents. At the time of writing, it has a grossed-up dividend yield of 7.5%, including franking credits.
