These defensive ASX dividend shares keep giving investors a payrise

ASX dividend shares could be the answer to this environment where central bank interest rates remain very low.

Businesses have the capability of paying out a large amount of their annual cash flow as payments to investors. This helps boost the yield.

These two ASX dividend shares continue to grow their cash payouts for investors:

Rural Funds Group (ASX: RFF)

Rural Funds is a farm-based real estate investment trust (REIT).

It leases out its farms to large, reliable tenants. Plenty of the tenants are listed or are large private businesses. Some of the tenants include Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV), Australian Agricultural Company Ltd (ASX: AAC), Olam and JBS.

The ASX dividend share’s property portfolio is spread across different sectors like cattle, vineyards, almonds and macadamias.

The goal of the REIT is to grow its distribution by 4% per annum for investors. This is achieved by contracted rental increases as well as investment in the farms to grow their productivity and value. An example of that could be increased water access at the farms.

At the current Rural Funds share price, it offers a FY22 yield of 4.2%.

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

This ASX dividend share is one of the oldest businesses on the ASX. It has been listed since 1903. Soul Pattinson has paid a dividend every year since it was listed.

The company has turned into a diversified investment conglomerate with its investments spread across a wide range of industries such as telecommunications, resources, agriculture, financial services, property, building products and more.

In terms of actual investments that it owns, there are plenty of ASX shares in the portfolio including Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG), Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW), Wesfarmers Ltd (ASX: WES), Bailador Technology Investments Ltd (ASX: BTI), Retail Food Group Limited (ASX: RFG) and Life360 Inc (ASX: 360).

Soul Pattinson’s cash flow is steadily growing over time, which is helping fund its increasing dividend. The ASX dividend share has grown its dividend every year since 2000. It pays out a majority of the regular cash flow and then re-invests the rest into more opportunities that can help grow the cash flow and dividend further.

The business is also aiming for long-term growth of the capital value of its portfolio.

It recently acquired one of the largest listed investment companies (LICs) on the ASX called Milton. This came with a portfolio of blue chip ASX shares that it can sell, then reallocate the money towards more opportunities.

Some of the areas it’s looking at include private equity and global shares. There are key themes that the business is focused on, including health and ageing, the energy transition, agriculture, financial services and education. It is building “platforms for growth”.

At the current Soul Pattinson share price, it has a grossed-up dividend yield of 3.5%.

The post These defensive ASX dividend shares keep giving investors a payrise appeared first on The Motley Fool Australia.

More reading

• Are these 2 top ASX dividend shares buys in March 2022?
• 3 reasons why Soul Pattinson (ASX:SOL) is a strong ASX dividend share idea
• The Soul Pattinson (ASX:SOL) share price has lost 17% so far this year. Is it a buy?
• 2 top ASX dividend shares with 4%+ yields
• 2 ASX shares that could keep growing the dividend every year

Motley Fool contributor Tristan Harrison owns RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bailador Technology Investments Limited, Brickworks, Life360, Inc., and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks, RURALFUNDS STAPLED, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Bailador Technology Investments Limited, TPG Telecom Limited, and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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