Is your New Year's resolution to work less and earn more?
Then, buying some quality ASX dividend shares could be just the ticket to get that lovely passive income flowing throughout 2024 and beyond.
But with many ASX companies paying dividends, which ones deserve a place in your portfolio?
We asked our Foolish writers to let us know which ASX dividend stocks they think are worthy of your consideration right now. Here is what the team came up with:
6 best ASX dividend shares for January 2024 (smallest to largest)
- Smartgroup Corporation Ltd (ASX: SIQ), $1.16 billion
- Brickworks Limited (ASX: BKW) $4.17 billion
- Harvey Norman Holdings Limited (ASX: HVN), $5.13 billion
- Ampol Ltd (ASX: ALD), $8.63 billion
- Washington H Soul Pattinson & Company Ltd (ASX: SOL), $11.74 billion
- Woodside Energy Group Ltd (ASX: WDS), $59.15 billion
(Market capitalisations as of market close 3 January 2024).
Why our Foolish writers love these ASX passive income stocks
Smartgroup Corporation Ltd
What it does: Smartgroup is a provider of salary packaging, novated leasing, payroll administration and other employee management services. Founded in 1999, the company has grown to encompass 385,000 active customers across 3,700 employer clients.
By Mitchell Lawler: Profitability is a must in order for shareholders to relish in dividend income. That's why I find Smartgroup an attractive proposition for passive income, given its track record of maintaining net profit margins above 20% for the past five years or so.
Through its novated leases, Smartgroup is exposed to the growing demand for electric vehicles. In its latest half-year result, the company reported a doubling in EV quotes from the prior corresponding period.
Due to the removal of the fringe benefits tax, and several other benefits for employees and employers, I suspect Smartgroup's services will grow in popularity. The company won a contract to serve the South Australian Government for an initial five-year term.
With a dividend yield of 3.4%, Smartgroup is an ASX share I hold for its combination of passive income and potential capital growth.
Motley Fool contributor Mitchell Lawler owns shares of Smartgroup Corporation Ltd.
Brickworks Limited
What it does: Brickworks sells a variety of building products in Australia. It is the leading brickmaker in Australia and the northeast of the United States. The company also has a sizeable stake in investment house Washington H Soul Pattinson & Company Ltd and owns half of a property trust with a growing portfolio of industrial properties.
By Tristan Harrison: Brickworks has one of the most resilient dividend records on the ASX – it has grown or maintained its dividend every year for almost 50 years. That's a reassuring level of consistency during uncertain times, such as right now.
The Soul Patts stake provides Brickworks with diversification and steadily growing dividends, which helps offset the variability of the building products divisions.
I like the ongoing industrial property completions, which are maximising the value of excess Brickworks land. Each newly completed warehouse adds new rental profit and generates a development profit.
In FY23, the company paid an annual fully franked dividend per share of 65 cents. It's a relatively low yield, but the stability and long-term increases are attractive to me.
Motley Fool contributor Tristan Harrison owns shares of Brickworks Limited and Washington H Soul Pattinson & Company Ltd.
Harvey Norman Holdings Limited
What it does: Harvey Norman is an Australian-based electronics and furniture retailer. The company has a mix of more than 300 franchised and self-operated stores across eight countries. The retailer opened five new stores during the second half of 2023.
By Bernd Struben: Hot running inflation and the accompanying increase in interest rates haven't been kind to ASX retail stocks as consumers tightened their belts. And Harvey Norman is no exception. The company recently reported a 7.8% year-on-year decline in sales revenue for the period from 1 July 2023 to 25 November.
Still, the Harvey Norman share price has surged 28% since 26 June. Even after that lift, shares still trade on a fully franked trailing dividend yield of 6.07%. With inflation coming under control and interest rates likely at or near their peak, I believe the ASX 200 retailer will continue to please passive income investors in the year ahead.
Motley Fool contributor Bernd Struben does not own shares of Harvey Norman Holdings Limited.
Ampol Ltd
What it does: Ampol operates an oil refinery and a large network of petrol stations around Australia.
By Tony Yoo: Geopolitical conflicts in Europe and the Middle East over the past couple of years have made it unfortunately clear that fossil fuel use will be around for a while longer as the world waits for sufficient renewable sources to come online.
Ampol, as a dominant player in the country, is well placed to provide Australians with their fuel needs for years to come. The company is involved at the refining, distribution and retail levels.
Not only is the stock paying out a fully franked 6.9% dividend yield at the moment, but eight out of 11 analysts surveyed on CMC Invest rate it as a buy.
Motley Fool contributor Tony Yoo does not own shares of Ampol Ltd.
Washington H Soul Pattinson & Company Ltd
What it does: Washington H. Soul Pattinson, or Soul Patts for short, is an investing house that manages a large portfolio of diversified assets on behalf of its investors.
By Sebastian Bowen: Soul Patts is my favourite ASX dividend share on the market. As such, I am happy to recommend it as a top passive income share to kick off 2024.
When you buy Soul Patts shares, you are buying an interest in a massive portfolio of assets which include blue chip ASX shares, as well as large stakes in quality companies like Brickworks (as mentioned above). Soul Patts also has unlisted assets and investments in private credit.
The primary reason I love this share for passive income is the company's unrivalled streak of raising its annual dividend every single year for 23 years and counting.
This demonstrates quality, discipline and long-term thinking, in my view. I absolutely believe that anyone who buys Soul Patts today for its sub-3% yield will be looking at a far higher yield down the road.
Motley Fool contributor Sebastian Bowen owns shares of Washington H Soul Pattinson and Company Ltd.
Woodside Energy Group Ltd
What it does: Woodside is one of the world's largest energy producers, with a collection of high-quality operations across several geographies.
By James Mickleboro: Due to recent oil price weakness, Woodside shares have pulled back and now trade far closer to their 52-week low than their 52-week high.
I think this makes it a good time to snap up the company's shares, especially given its low-cost operations, potential merger with Santos Ltd (ASX: STO), and strong cash generation.
In addition, it is unlikely that OPEC will allow oil prices to fall much further. With potential interest rate cuts on the way in 2024, this could boost economic growth and demand for oil, which will bode well for Woodside's profits and dividends.
Morgan Stanley is positive on the energy giant. It currently has an outperform rating and a $35 price target on its shares. In respect to dividends, it expects fully franked dividends per share of $2.01 in FY 2023 and $2.05 in FY 2024. This implies generous yields of 6.45% and 6.58%, respectively.
Motley Fool contributor James Mickleboro owns shares of Woodside Energy Group Ltd.
