Finding a 'safe' ASX dividend share is certainly easier said than done. Unlike a term deposit, a dividend-paying company has no ongoing obligation to maintain its shareholder payments every year. Only the best dividend shares manage to keep their dividends stable and rising over a long period of time.
Often, this is only obvious in hindsight. But we can still make an educated guess about which ASX divided shares may be the safest based on a number of factors. These include a company's business model, its dividend payout policy, and of course its history of paying its shareholders passive income.
So with that in mind, let's go through five ASX shares that I think offer the safest dividends on the market today.
5 ASX dividend shares that I think offer the market's safest yields
Coles Group Ltd (ASX: COL)
Coles is a company we all know, probably use, and may or may not love. But there is certainly a lot to love when it comes to Coles' dividends. This ASX 200 share only joined the ASX in its own right in 2018. But since then, Coles has built up an admirable dividend track record.
Every single year since 2019, Coles has given its investors a decent dividend pay rise. In 2020, the company was paying out 57.5 cents per share in dividends, but raised this to 61 cents per share in 2021 and 63 cents per share in 2022. 2023 is also off to a good start, with Coles paying out an interim dividend of 36 cents per share, up from 33 cents in 2022.
Given Coles' business is consumer staples goods, this is one ASX share that I have a lot of confidence in for sustainable dividends going forward. Coles offers a trailing, fully franked dividend yield of 3.58% right now.
Brickworks Limited (ASX: BKW)
ASX 200 construction materials company Brickworks is next up. Brickworks has one of the best dividend track records of any share on the ASX. It hasn't given investors a dividend miss or cut since the 1970s.
Brickworks is a company with a few diversified earnings bases. Its construction materials business is its crown jewel, but the company also uses other investments in property and shares to smooth out its cyclical earnings. It has been so successful at this that the company hasn't missed an annual dividend pay rise since 2013.
History speaks volumes, so I'm happy to include Brickworks on this list today given its unrivalled commitment to paying out regular, uninterrupted shareholder income. Today, Brickworks shares offer a fully franked dividend yield of 2.56%.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Soul Patts comes in at the number three spot today. This company is another ASX share that can boast of dividend royalty. This investment house is one of the oldest companies in Australia, with a history that predates even the ASX.
Today, Soul Patts functions as a giant managed fund of sorts, investing in other ASX shares and investments on behalf of its shareholders. This company is one of the favourite companies on the ASX, period. It has an incredible history of delivering stellar investing performance for its investors over many decades. One of the aspects of this performance is dividends.
Like Brickworks, Soul Patts can boast of having one of the ASX's best track records. In this case, Soul Patts is the only ASX share that has given investors an annual dividend pay rise every single year since 2000. That alone is enough to give me the confidence to call this company one of the ASX's safest dividend shares. Right now, Soul Patts offers a yield of 2.49%, fully franked.
Telstra Group Ltd (ASX: TLS)
When it comes to dividends, Telstra has a far spottier record than most ASX blue chip shares. Many investors with a long memory might remember the dark days of 2017-2018 when Telstra slashed its dividends by almost half. But since then, I think Telstra has repaired its 'steady income' image with aplomb.
The company is no longer facing the destructive headwinds of the NBN rollout. Telstra continues to dominate the Australian telecommunications market, which in itself is a highly defensive and inelastic market. As such, I regard Telstra's dividend today as rock solid and would be happy to own it for long-term dividend income.
Even better, Telstra has recently delivered its first dividend hike in years, with the company paying out 16.5 cents per share in dividends in 2022. Its most recent interim dividend of 8.5 cents per share was also a nice increase over last year's payout of 8 cents.
Telstra is offering a trailing and fully franked dividend yield of 3.95% at present.
Vanguard Australian Shares Index ETF (ASX: VAS)
Finally, let's talk about this exchange-traded fund (ETF) from Vanguard. This one is a little different because the income an index fund like this provides can be quite cyclical. But I've included it for this reason: whatever income the ASX share market pays out as a whole, you will get a slice of it.
This index fund holds every company on the S&P/ASX 300 Index (ASX: XKO), in proportional weighting. So you get everything from BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woodside Energy Group Ltd (ASX: WDS) to Coles, Telstra, and Brickworks.
If dividends from all ASX shares as a whole are strong, the dividends of this ETF should be strong as well. In weaker years, income might fall. But I still think it's a great source of dividend income for any investor seeking it. This ETF currently offers a trailing distribution yield of 5.43% today.
