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3 ASX shares raising dividends like clockwork

Tristan Harrison
Money

The Australian economy isn’t looking great at the moment, particularly on the domestic business side of things for dividend growth.

Businesses like Telstra Corporation Ltd (ASX: TLS) and National Australia Bank Ltd (ASX: NAB) are cutting their dividends.

But it’s not all bad, there are a few ASX shares that keep increasing their dividends like clockwork:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts might be the best share on the ASX for consistent dividend growth. It has increased its annual ordinary dividend every year since 2000, which is a really impressive record.

It has been able to do this because of its investment conglomerate nature, meaning it can invest in any ASX or private business it thinks is a good investment, or even in direct property investments. The diversification within a single business is very attractive.

The dividend is fully funded by the cash it receives from investment income, minus its operating expenses. In other words, it doesn’t rely on capital gains to fund the dividend.

It has paid a dividend every year since its inception over a century ago and currently has a grossed-up dividend yield of 3.6%.

Altium Limited (ASX: ALU)

I think Altium is one of the best ways to invest in ‘the future’. It’s an electronic PCB software business that helps engineer teams of various sizes to design products, services and vehicles . Some of its clients include Qualcomm, NASA, Tesla, Space X, John Deere, Toyota, Amazon and so on.

Altium has increased its dividend every year since 2012 and the dividend payout ratio is steadily getting lower (and even more sustainable) as profit growth outstrips dividend growth.

I expect the dividend may continue to grow for a long time to come with Altium’s rising revenue, improving profit margins and no debt on the balance sheet. Growing the dividend is one of Altium’s stated aims for shareholders.

However, its strong performance has left the dividend yield at only 0.9%.

Duxton Water Ltd (ASX: D2O)

Duxton Water may be the only business of its type in the world, it owns water entitlement credits and leases them out to agricultural businesses. Duxton shareholders can benefit from both the lease income and long-term growth of water value.

The relatively dry conditions in recent times has led to water prices materially increasing over the past couple of years, leading to higher earnings for Duxton Water.

Every six months the company has steadily increased its dividend since 2017 and has predicted a 2.7 cents dividend per share for September 2019 and a 2.8 cents dividend per share for March 2020.

Its forward dividend yield is 5.4%, grossed-up.

Foolish takeaway

Each of these businesses seem very committed to growing the dividend, and pleasingly they are also generating strong long-term capital growth too. At the current prices I’m most attracted to Soul Patts because of how much better value it is recently, and its diversified nature.

These great ASX dividend shares are also well known for growing the dividend every and would work well in a portfolio with Soul Patts.

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Motley Fool contributor Tristan Harrison owns shares of Altium, DUXTON FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium and National Australia Bank Limited. The Motley Fool Australia has recommended DUXTON FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019