2 ASX shares with a dividend boost coming

Some businesses are about to hand investors a pay rise.

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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.

Green dollar sign rocket on the back of a man.

Image source: Getty Images

APA Group (ASX: APA)

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)

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.

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