Due to high inflation, rising interest rates, and the cost of living crisis, the economic outlook remains very uncertain. In light of this, it could be prudent for investors to seek ASX dividend shares that offer defensive characteristics and a solid track record of paying shareholders a rising passive income.
But how do you identify dividend shares to buy in the current environment? Listed below are three steps to find top ASX dividend shares to buy in 2023 and beyond.
Defensive characteristics
The first step to take is identifying dividend shares that have defensive characteristics. Doing so could mean that your portfolio has a greater chance of offering a rising passive income regardless of what happens in the economy.
This could mean searching for ASX dividend shares in the utilities and consumer staples sectors, where sales and profitability are less likely to be impacted by an economic slowdown than in other sectors.
A track record of dividend growth
Another step for investors to take is to look for companies that have a strong track record of growing their dividends. Particularly if they were able to maintain (or even grow) their dividends during previous periods of economic uncertainty. This is the sign of a strong and/or adaptable business model.
Investors can look at annual reports or online share trading platforms to check the track records of dividend payments for companies.
A positive outlook
A track record of growing dividend payments means nothing if the company's longer-term outlook isn't positive. Investors should keep their eyes open for disruption or signs that a company's future is less certain than it was.
An example of this might have been Telstra Group Ltd (ASX: TLS) a decade or so ago when the NBN rollout began. While Telstra had been a defensive option for investors for some time, the goalposts were well and truly changed with the NBN rollout and its dividend payments were on a downward trajectory until recently.
Foolish Takeaway
Overall, if you follow these steps, I believe you could be better positioned to find ASX dividend shares that will provide you with a growing passive income long into the future.
