I think one of the most important elements of a good ASX dividend share is its ability to provide regular dividend growth. If I'm relying on passive income payments, I'd want to choose shares that are highly likely to continue delivering dividends.
Preferably, I'd want to own investments that are likely to regularly increase the payouts to help offset inflation and hopefully grow faster than inflation.
Let's look at three businesses that have increasingly excellent track records of dividend growth.
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APA Group (ASX: APA)
APA Group is one of the largest energy infrastructure businesses on the ASX. It's invested in various aspects of Australia's energy system including a huge network of gas pipelines, gas storage and processing, gas-powered energy generation, solar farms, wind farms and batteries.
It pays for its impressive distribution from the cash flow that its portfolio of energy assets produces. That cash flow is steadily rising amid additions of new energy assets over the years via acquisitions and project builds, as well as inflation-linked revenue increases.
The ASX dividend share has increased its payout every year for more than 20 years in a row, which is an excellent record of consistency.
It expects to increase its annual distribution to 59 cents per security in FY27, adding to its record. This translates into a forward distribution yield of 5.5%.
Future Generation Global Ltd (ASX: FGG)
Future Generation Global is a listed investment company (LIC) that gives investors exposure to a portfolio of global stocks and also compelling philanthropic efforts.
It's invested in a portfolio of funds from more than a dozen fund managers focused on global shares, who all work for free. With those investments, there are more than 3,700 underlying shares in the portfolio, which is great diversification.
The shares come from across the world, including North America, the UK, Europe, Asia, other developed markets and emerging markets.
The ASX dividend share's investment returns help pay for a growing dividend, which has increased every year since FY19, so we're already at several years of consecutive payout growth.
It expects to pay an annual dividend of 8.4 cents per share in FY26, which translates into a grossed-up dividend yield of 7.4%, including franking credits.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is another leading investment business on the ASX. It's an investment house that has been listed for more than 120 years.
The beauty of its strategy is that it's invested in a variety of largely uncorrelated assets that can all generate cash flow in most economic conditions and help the company fund its market-leading dividend.
The ASX dividend share is the leader on the ASX in terms of the number of consecutive years it has increased its dividend. The regular dividend has increased every year since 1998. It's not far off 30 years of consecutive dividend growth!
With a regularly expanding portfolio of new investments – along with organic growth of existing investments – I think it's likely to continue hiking its dividend in the years ahead.
It currently has a grossed-up dividend yield of 3.4%, including franking credits, though I expect the yield for the next 12 months will include a dividend hike.
