ASX shares that pay bigger dividends to shareholders are valuable in an era of higher inflation. In 2023, some businesses delivered solid dividend growth and helped shareholders deal with inflation with their own personal finances.
It's not guaranteed that a company that grows its dividend is going to do well in share price terms, but dividend growth may suggest a number of things – profit growth, balance sheet strength and leadership confidence.
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Telstra Group Ltd (ASX: TLS)
Telstra is seen as the market leader of telecommunications in Australia, which can allow it to capture more new users than competitors and possibly increase mobile prices, as we've seen in the last couple of years.
The transition to the NBN was painful for the ASX share's margins, net profit after tax (NPAT) and dividends. But, things are looking more promising for the company these days – a growing number of users and rising average revenue per user (ARPU) is helpful for net profit.
FY23 saw Telstra increase earnings per share (EPS) by 16%, and this helped the annual dividend per share grow by 3% to 17 cents per share.
Altium Limited (ASX: ALU)
Altium is one of the leading electronic PCB software design businesses. It is benefiting from the increasingly technological nature of the world because there are more products and vehicles that require more electrical design work.
Examples of its customers include Space X, NASA, Amazon, Apple, Microsoft, Alphabet and Disney.
Software is the type of industry where growing revenue can lead to rising margins, greater cash flow and stronger dividends over the long term.
FY23 saw the ASX share increase its revenue by 19.2% to US$263.3 million, net profit before tax growth of 29.3% to US$87.8 million and NPAT growth of 19.6% to US$66.3 million. The Altium annual dividend per share rose by 14.9% to 54 cents.
In FY24, the company is expecting revenue to grow by between 20% to 23%, to a total of between US$315 million to US$325 million.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson, now actually known as Soul Patts, is an investment house that owns a diversified portfolio of shares, unlisted businesses, credit and property.
It has the longest dividend growth streak on the ASX, having increased its annual ordinary dividend every year since 2000.
In FY23, Soul Pattinson saw its net asset value (NAV) (pre-tax) increase by 8.8% to $10.8 billion and net cash flow from investments rose 22% to $424.3 million. This enabled the ASX share's total ordinary dividend to increase by 20.8% to 87 cents per share.
The Soul Pattinson managing director Todd Barlow said:
The 18.6% increase in our fully franked final dividend demonstrates yet again continued growth for our shareholders and our confidence in continuing this track record.
The business continues to invest in new assets that can help its long-term asset growth, cash flow growth and dividend growth.
