2 ASX dividend shares that could provide steady passive income

The two ASX dividend shares in this article might be able to provide investors with steady passive income. One example is APA Group (ASX:APA).

| More on:
Dividend stocks represented by paper sign saying dividends next to roll of cash

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

There is a group of ASX dividend shares that have been increasing the dividend for shareholders for many years in a row.

COVID-19 didn't stop the income increases for investors. The underlying profit and cashflow were high enough that it meant the businesses could continue to grow the payouts for investors.

These two ASX dividend shares have managed to keep growing the dividend payout:

APA Group (ASX: APA)

APA describes itself as a leading Australian energy infrastructure business. Its gas transmission pipelines span every state on mainland Australia, delivering approximately half of the nation's gas usage.

The infrastructure energy business has direct management and operational control over its assets and the majority of its investments. Not only does it own a large amount of gas pipelines around Australia, it's also one of the largest owners and operators of renewable power generation assets, with wind and solar projects across Western Australia, South Australia and Queensland.

APA recently announced its first hybrid energy microgrid at the Gruyere Gold Mine in Western Australia, combining solar energy with battery energy storage.

The ASX dividend share has increased its distribution every year for a decade and a half. New projects generate more cashflow, which provides the funding for higher distributions.

APA recently announced it had reached a final investment decision (FID) to commence expansion of transportation capacity on its East Coast grid, linking Queensland with southern markets by approximately 25% for a total investment of $270 million.

At the current APA share price, it has a distribution yield of 5.5%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is another ASX dividend share that has been increasing the payout to shareholders, every year since 2013.

The company has built a global portfolio of pathology businesses. Around 40% of revenue is being generated in Europe and the UK, another 25% in the US and the rest coming from Australia (and a very small contribution from New Zealand).

Long-term profit growth has helped send the dividend higher and higher.

FY19 saw the ASX dividend share's net profit rise 15.6% and the dividend increased 3.7% to $0.84. FY20 saw underlying net profit growth of 6.5% with the full year dividend rising 1.2% to $0.85. The HY21 result showed net profit growth of 166%, with a steady 6% increase of the half-year dividend to $0.36 per share.

Why was the HY21 result so strong? It has seen significant revenue and earnings contribution from COVID-19 testing, leveraging existing infrastructure. More than 18 million COVID-19 PCR tests have been performed. It has seen margin improvements in both laboratory and imaging operations.

Management said that the volumes and quality of testing it has been able to achieve in such a short timeframe was a result of investments it has made over the years. That includes specimen collection facilities, courier networks, laboratories and other facilities, equipment, IT management, staff and supply chains. At the current Sonic share price it has a partially franked dividend yield of 2.5%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

A couple makes silly chip moustache faces and take a selfie on their phone.
Dividend Investing

Maximising franked dividend income: Here's why I own these 2 ASX shares

I make exceptions for these two income shares.

Read more »

A group of young people smiling and watching TikTok on their mobile phones
Dividend Investing

Buy Telstra, Woolworths, and this ASX dividend stock

Analysts think these stocks could be top picks for income investors.

Read more »

A little girl holds broccoli over her eyes with a big happy smile.
Dividend Investing

1 practically perfect Australian stock down 25% to buy for long-term income

There aren't many quality stocks that are down 25% from their highs.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

2 compelling ASX dividend shares with yields above 6%

These stocks have generous dividend yields.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Dividend Investing

Aiming for rock-solid retirement income? I'd buy these two ASX shares

These stocks are excellent options for consistent payments.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Dividend Investing

These ASX dividend stocks could supercharge your passive income

Let's see which stocks are being tipped as buys by analysts this month.

Read more »

A woman with a magnifying glass adjusts her glasses as she holds the glass to her computer screen and peers closely at it.
Dividend Investing

This is the ASX share in my portfolio with the biggest dividend yield

This stock offers a big dividend yield.

Read more »

Broker written in white with a man drawing a yellow underline.
Dividend Investing

Brokers say these ASX 200 dividend shares are top buys

Here are three shares that brokers think income investors should be buying.

Read more »