2 ASX shares with a dividend boost coming

Some businesses are about to hand investors a pay rise.

| More on:
Green dollar sign rocket on the back of a man.

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

Key points

  • In what may be a rare event in 2023, there are some ASX shares that could grow their dividends
  • APA, the energy infrastructure giant, is guiding a distribution of 55 cents per unit
  • Westpac could grow its dividend by 10% in FY23 to $1.38

Some ASX shares are about to give investors a much bigger payout in FY23. In this period of economic uncertainty, more dividends could be very welcome.

While other businesses are facing trickier economic conditions, which may mean a lower payment to investors.

However, there are others that could be on course to pay very pleasing cash flow to investors this year.

Let's have a look at two that could increase their payouts in the coming months.

APA Group (ASX: APA)

Created with Highcharts 11.4.3Apa Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

APA operates over 15,000km of natural gas pipelines around the country, which connects sources of supply with end markets across Australia. It delivers half of the country's natural gas usage. The business also owns or has an interest in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms).

The business has been growing its distribution each year for over a decade and a half. It funds its distribution from the growing cash flow of its portfolio of assets.

It's currently investing in more pipelines which can unlock further cash flow. The ASX share is also investing in electrification assets, such as the cable that connects Tasmania and the mainland called Basslink.

APA has provided guidance that it's going to grow its FY23 distribution per security by 3.8% to 55 cents. That works out to be a distribution yield of 5.1%.

Westpac Banking Corp (ASX: WBC)

Created with Highcharts 11.4.3Westpac Banking Corporation PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Westpac is one of the biggest ASX bank shares and it's benefiting from the rising interest rates. The bank is passing on interest rate rises to borrowers but not so quick to savers (or at all, in February).

This has the effect of boosting the net interest margin (NIM) of the bank. Higher lending profits are expected to mean stronger overall profits.

Indeed, Morgans suggests that Westpac offers the greatest return on equity (ROE) improvement potential. The major ASX bank share is working on reducing its costs, which could also be a boost for earnings.

According to Commsec, Westpac could grow its annual dividend per share by 10% to $1.38. That suggests the bank could pay a grossed-up dividend yield of 8.25% in the current financial year.

Dividend growth is also forecast for FY24 and FY25. By the 2025 financial year, it could pay a grossed-up dividend yield of 9.1%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Woman laying with $100 notes around her, symbolising dividends.
Dividend Investing

How much dividend income does the average ASX investor earn?

It's an impressive amount!

Read more »

Person holding Australian dollar notes, symbolising dividends.
Dividend Investing

Which ASX 200 sector paid the best dividends in FY25?

We reveal the dividend returns of each of the 11 market sectors in FY25.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Where to invest $50,000 in ASX dividend shares

Let's see why these shares could help income investors build a strong portfolio.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

2 Australian stocks with ultra safe dividend yields

These businesses have paid consistently-growing dividends for decades.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

$500 buys me 233 shares in this 10%-yielding income stock!

Macquarie expects this stock to offer big yields.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Buy these high-yield ASX shares for major passive income in 2025 and beyond

Let's see why analysts think these shares could be great buys for income investors.

Read more »

A happy elderly woman smiles and cheers as she looks at good investment news on her laptop.
Dividend Investing

2 ASX dividend champions that never cut payouts

These two dividend stocks have consistently rewarded investors. 

Read more »