The ASX dividend share APA Group (ASX: APA) is arguably one of the very best ideas for passive income. I think it's a great long-term pick for retirees.
APA Group is not as famous as names like Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP), but I think it offers more attractive dividend features, particularly with its payout reliability.
The business owns or operates a diverse $27 billion of energy assets and transports approximately half of the nation's gas usage through its pipelines. Other assets include gas-powered energy generation, electricity transmission, wind farms, solar farms, gas storage and gas processing.
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Excellent ASX dividend share credentials for retirees
The business has provided investors with more than two decades of continuous distribution growth – it has increased its payout every year since the mid-2000s.
Only Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has a better record than that in terms of uninterrupted dividend growth, but APA's dividend yield is significantly higher than Soul Patts.
APA expects to pay an annual distribution per security of 58 cents in FY26. That translates into a current distribution yield of 5.7%. That's extremely competitive with the best (currently elevated) term deposit rates.
But, FY26 is essentially history now. I expect it'll increase its annual payout again to 59 cents per security in FY27, which would be a distribution yield of 5.8%.
Passive income is not guaranteed, but this is one of the S&P/ASX 200 Index (ASX: XJO) shares I'd be most willing to rely on for income.
Long-term growth of cash flow
The business continues to invest in its asset base, which can help improve its cash flow over time – that's what funds the rising distributions.
It's working on expanding its East Coast gas grid, it has done early works on the Beetaloo Basin, it's growing remote power generation in the Pilbara, it's building a gas peaking plant in Queensland and so on. The business reported in the HY26 result that it had an organic growth pipeline of around $3 billion, which is a great tailwind. All of this will help increase its earnings to pay larger distributions in the future.
APA also has inflation-linked tariff escalation for most (around 90%) of its revenue, which helps offset cost increases it may experience during periods like this.
Energy is one of the most important elements of society these days, so APA plays a vital role in that. I'd describe APA as one of the most defensive ASX 200 shares available that retirees could look at.
Of course, it's not the only ASX share I'd own in a retirement-focused portfolio.
