These ASX dividend winners keep giving investors a pay rise

Apr 23,2024
These ASX dividend winners keep giving investors a pay rise

Some ASX dividend shares have been growing their dividend payouts over many years, which is impressive considering the challenges facing the share market in recent times.

COVID-19 caused many leading ASX companies — including the Commonwealth Bank of Australia (ASX: CBA) and Transurban Group (ASX: TCL) — to cut their dividends.

However, a few businesses have managed to keep growing their dividends throughout the tough times. Let's examine two of them.

TechnologyOne describes itself as Australia's largest enterprise software company. It provides a global software as a service (SaaS) enterprise resource planning (ERP) solution for customers.

The ASX dividend share has more than 1,300 corporations, government agencies, local councils and universities as software clients.

TechnologyOne is working hard to grow its SaaS customer base, which provides consistent and predictable earnings and is helping the business generate higher profit margins. The company expects its group underlying profit before tax margin to improve to 35% in the coming years, driven by the "significant economies of scale".

The FY23 result saw the business grow its profit by 16%, helping fund a 15% increase in the annual dividend payout.

TechnologyOne's annual dividend has increased every year since 2014, so we're at the decade milestone of dividend increases.

The ASX healthcare share is one of the world's biggest pathology businesses. Pathology is an important part of the healthcare process because the patient's ailment needs to be identified.

Sonic has a stated progressive dividend policy, which means the board wants to grow the dividend for shareholders if there's enough retained profit.

The ASX dividend share is using all of the extra profit that it generated from COVID-19 tests to make acquisitions and boost its footprint globally (particularly in Europe).

In the FY24 first-half result, its base business revenue grew by 15% to $4.27 billion. In terms of organic growth, excluding COVID revenue, it reported an increase of 6.2% year over year. The company also said its cost reduction programs are well advanced.

The business grew its FY24 interim dividend by 2% to 43 cents per share. That means the ASX dividend share has a trailing dividend yield of 4%, excluding the franking credits.

The ASX dividend share said since 1 July 2023, recent acquisitions and contract wins have secured around $500 million of new annual revenue. The company has revealed further acquisition and contract opportunities under consideration.