Regardless of your primary source of income, dependability is key.
Whether it's a salary, interest from bank deposits, or dividends from ASX shares, we all seek some level of security over the frequency and amount of our future earnings.
When investing in ASX dividend shares for long-term passive income, many investors understandably gravitate toward large, established companies with a proven track record of consistent dividend payments. While no company's future growth or earnings can be guaranteed, many factors can be considered when weighing up the likelihood of long-term dividend dependability.
So, we asked our Foolish writers which ASX dividend shares they think should be on your buy list right now if you're seeking reliable income for years to come.
Here is what they told us:
5 top ASX dividend shares for October 2024 (smallest to largest)
- Domino's Pizza Enterprises Ltd (ASX: DMP), $3.35 billion
- APA Group (ASX: APA), $9.91 billion
- Washington H Soul Pattinson & Company Ltd (ASX: SOL), $12.85 billion
- Computershare Ltd (ASX: CPU), $15.36 billion
- Coles Group Ltd (ASX: COL), $24.08 billion
(Market capitalisations as of market close 11 October 2024).
Why our Foolish writers love these ASX passive income stocks
Domino's Pizza Enterprises Ltd
What it does: Domino's Pizza Enterprises is Domino's largest franchisee outside of the United States, with a network of more than 3,800 stores. It holds the master franchise rights to the Domino's brand and network in Australia, New Zealand, and several European and Asian markets such as France and Japan.
By James Mickleboro: The last couple of years have not been easy for Domino's Pizza Enterprises. Management failed miserably in its battle with inflation after customers pushed back on its attempt to pass on its higher costs.
But with inflationary pressures now easing and management announcing a renewed focus on store unit economics and reinvestment to ignite top-line growth, things are looking up for the company. This could make now a great time to make a buy-and-hold investment in this ASX dividend share.
Particularly given the potential for its dividend to grow significantly in the future as Domino's returns to growth.
Goldman Sachs expects this to be the case. After paying a $1.06 per share dividend in FY 2024, the broker is expecting Domino's to pay dividends per share of $1.19 in FY 2025, $1.45 in FY 2026, and then $1.73 in FY 2026. Based on its current share price of $36.24, this will mean dividend yields of 3.28%, 4.00%, and 4.77%, respectively.
Goldman has a buy rating and a $40.00 price target on Domino's shares.
Motley Fool contributor James Mickleboro owns shares of Domino's Pizza Enterprises Ltd.
APA Group
What it does: APA Group is an energy infrastructure business. The company, with a market cap of $9.9 billion, owns and operates a diverse portfolio of gas, electricity, solar, and wind assets.
By Bernd Struben: When it comes to ASX dividend shares to buy and hold for the long term, I first look at whether a company has been growing its dividend payouts. On that front, APA Group has increased its interim and final dividends every year for the past decade.
In FY 2024, APA Group paid a 26.5 cents per share interim dividend and a 29.5 cents per share final dividend, partly franked. At the recent APA Group share price of $7.65, the stock trades on a 7.3% trailing yield.
And with Australia's rapid population growth and ongoing energy transition, I think this diversified energy infrastructure company is well-placed to continue growing its dividends for many more years.
While APA Group shares are down 7% over the past 12 months, I also think this stock is poised to offer some capital gains.
In its FY 2024 earnings results, the company reported a 7.9% year-on-year increase in statutory revenue to $2.59 billion. Statutory net profit of $998 million was up from $287 million in FY 2023.
Motley Fool contributor Bernd Struben does not own shares of APA Group.
Washington H Soul Pattinson & Company Ltd
What it does: Known as Soul Patts, this company operates as an investment conglomerate that started as a pharmacy business. It was listed on the ASX in 1903.
By Tristan Harrison: When I think of investing in ASX dividend shares for the long term, I favour companies with consistent track records of dividend payments. If I'm relying on dividend income to pay for my life expenses, I'd like to be confident that passive income will continue flowing to me, even during periods of downturn (though nothing is guaranteed!).
Soul Patts has paid a dividend every year to shareholders since its listing in 1903. Additionally, it has grown its annual ordinary dividend each year since 2000. That's the longest-running dividend streak on the ASX.
The company funds this growing dividend from the cash flow received from its portfolio of assets. Those investments are diversified across multiple defensive industries that I believe offer relatively uncorrelated cash flow and good investment return potential.
Some of Soul Patts' biggest investments are in sectors such as telecommunications, resources, property, building products, swimming schools, agriculture, financial services, and credit.
As the ASX dividend stock's cash flow from existing and new investments grows, I believe its dividend growth can also continue. In FY24, Soul Patts grew its net cash flow from investments by 10.3% to $468 million, and the annual ordinary dividend was hiked by 9.2% to 95 cents per share.
It currently offers a grossed-up dividend yield of close to 4%.
Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson & Company Ltd.
Computershare Ltd
What it does: Most investors have probably encountered Computershare when managing their portfolios. Whether receiving a dividend or participating in a share purchase plan, Computershare often has a hand in the process. As a financial administration business, the company is paid to handle communications, shareholder records, mortgage services, and more.
By Mitchell Lawler: Many would see Computershare as a boring company unworthy of investment. However, excitement rarely makes for a good filter of quality investments!
What Computershare does possess is a moat – a way of keeping competitors at bay. Computershare's main line of defence is efficient scale. Simply, this means there's a limited market (number of companies requiring administrative services), and usually, only the largest providers can become financially viable.
Computershare currently yields 3.15% in dividends. It is not exactly a money-printer compared to other ASX dividend shares, but given its low payout ratio and growing earnings, there are solid prospects for future dividend growth.
Motley Fool contributor Mitchell Lawler does not own shares of Computershare Ltd.
Coles Group Ltd
What it does: Coles is the second-largest grocer and supermarket operator in the country. The company owns the eponymous Coles supermarket chain, as well as the Liquorland bottle shop brand.
By Sebastian Bowen: I've often regarded Coles as one of the ASX's best long-term bets when it comes to dividend income, and this October is no different.
Since departing from the Wesfarmers nest back in 2018, Coles has established itself as one of the ASX's most consistent dividend payers. The company has increased its annual dividend every single year since 2019, which is no mean feat considering the COVID-induced carnage of 2020 and 2021.
I think that companies in the consumer staples sector tend to be the strongest dividend payers on the markets, thanks to the essential nature of the products they produce or sell. Coles fits this bill to a tee, given its established market share in the grocery and liquor sectors.
Given Coles is among the cheaper places to shop for food, drinks, and household essentials, I think its fully-franked dividends will continue to rise slowly over time with population growth. As such, I would happily recommend Coles to any long-term income investors this month.
Motley Fool contributor Sebastian Bowen owns shares of Wesfarmers.
