These 2 ASX 200 dividend shares keep giving shareholders a pay rise

These healthy dividends are revving higher.

| More on:
A person sitting at a desk smiling and looking at a computer.

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

The two S&P/ASX 200 Index (ASX: XJO) dividend shares that I'm going to cover in this article have been regularly giving shareholders a pay rise.

Not too many ASX 200 shares have increased their dividends each year since the start of COVID-19. The two companies I'm going to talk about have been growing their dividends each year since 2015, with one growth streak stretching back to 2013.

A growing dividend certainly isn't guaranteed. However, if a company has a board that wants to grow the dividend — and the profit (reserve) allows for a bigger payment — then there's a good chance a larger dividend could occur.

Bapcor Ltd (ASX: BAP)

Bapcor describes itself as Asia Pacific's leading provider of vehicle parts, accessories, equipment, servicing, and solutions. It has a number of brands including Burson, BNT, Truckline, WANO, Autobarn, Autopro, Midas, ABS, Shock Shop, Federal Batteries, and Battery Town.

Car parts regularly need replacing and it's usually cheaper to replace a part than buy a whole new car. As such, this business may see fairly consistent demand during the current economic cycle. Demand for parts may even increase during leaner times if more people are trying to make their cars last longer.

In the FY23 result, the ASX 200 dividend share's pro forma earnings per share (EPS) only dropped by 4.8% despite the macroeconomic uncertainty. The annual dividend per share was increased by 2.3% to 22 cents per share.

According to Commsec, the business is projected to grow its dividend per share by 4.5% to 23 cents per share. This would be a grossed-up dividend yield of around 4.75%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is one of the largest pathology businesses in the world, playing an important part in the healthcare cycle. It has a large presence in countries like Australia, the US, Germany, and the UK.

Due to the nature of healthcare, demand for Sonic's services is fairly consistent. The business is benefiting from a couple of strong tailwinds. These are population growth and an ageing population in the countries where it operates.

The ASX 200 dividend share got an earnings boost during the COVID-19 period when it was processing COVID-19 tests. It has used — and is still using — a lot of that cash flow to make acquisitions to boost its scale and earnings.

Sonic Healthcare has a stated "progressive" dividend policy. It has grown its dividend each year for the past decade. In FY23, the company grew its annual dividend per share by 4% to $1.04.

In FY24, the company is expecting to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) by up to 5%, to a range of between $1.7 billion to $1.8 billion.

According to Commsec, at the current Sonic Healthcare share price, it is valued at 22 times FY24's estimated earnings. The projection suggests the annual dividend per share could increase by almost 3% to $1.07. That would be a grossed-up dividend yield of 5%.

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 recommended Bapcor and Sonic Healthcare. 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

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

These top ASX dividend shares offer 5%+ yields

Analysts think income investors should be buying these shares.

Read more »

A piggy bank is surround by hands preparing to pay coins into the slot, representing a company capital raisingh in asx share price represented by multiple hands all placing coins in a piggy bank
Dividend Investing

3 Australian dividend stocks trading at bargain prices

These ASX dividend shares look far too cheap to me.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Dividend Investing

Invest $5,000 into these ASX dividend stocks in August

Here's what analysts are recommending as buys right now.

Read more »

Young professional person providing advise to older couple.
Investing Strategies

Why franking credits are a powerful bonus for ASX investors

With super tax changes on the horizon, here’s why franking credits matter more than ever.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for passive income

Let's see what analysts are recommending to their clients right now.

Read more »

Business meeting to discuss buy now pay later platform
Dividend Investing

Forget term deposits! I'd buy these two ASX 200 shares instead

I think term deposits have a weak outlook.

Read more »

A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.
ETFs

Does the VanEck Wide Moat ETF really have a 6% dividend yield right now?

How can an American-focused ETF pay such a big yield?

Read more »

a man in a business suit sits at his laptop computer at his desk and smiles broadly in an office setting, giving an air of optimism and confidence.
Dividend Investing

Up 25% since April, are Macquarie shares still a good buy for passive income?

A leading expert gives his verdict on Macquarie shares and the passive income on offer.

Read more »