The S&P/ASX 200 Index (ASX: XJO) share Brickworks Limited (ASX: BKW) could be a good contender for unlocking pleasing monthly passive income in the form of dividends.

However, the business doesn't pay dividends every single month. It dishes out a payment to investors every six months. So, I think it's best to think of a monthly total as an annual figure that's divided into twelve equal parts.

Brickworks is a diversified business with a number of different segments, including Australian building products (it is Australia's biggest brickmaker), US building products, industrial property, and investments.

The 'investments' refers to owning a large chunk of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and robotic bricklayer business FBR Ltd (ASX: FBR) shares.

Monthly dividend income goal

To make $1,000 a month of dividend passive income, we're talking about $12,000 of annual income.

The current estimate on Commsec is that Brickworks is going to pay an annual dividend per share of 65 cents.

For investors to receive $12,000 of annual passive income, they'd need 18,462 Brickworks shares.

The Brickworks dividend could then increase to 67 cents per share in FY24 and 69 cents per share in FY25. If investors focused on the FY25 annual payment, investors would only need 17,392 shares to get the annual passive dividend income goal of $12,000.

What is the yield?

Brickworks isn't the highest-yielding ASX dividend share around but with the steady dividend growth, it can steadily increase the yield-on-cost for investors.

Based on the forecast FY23 dividend, the forward grossed-up dividend yield could be 3.9%. By FY25, the Brickworks grossed-up dividend yield is predicted to be 4.1%.

Brickworks says that its dividend is essentially funded by dividends from its Soul Pattinson shares and the net rental income from the industrial property trusts that it owns alongside Goodman Group (ASX: GMG).

Dividend reliability

Brickworks says that it has a long history of dividend growth. Indeed, the company says it has been 46 years since normal dividends were last decreased – in 1976.

Brickworks said it's "proud" of its long history of dividend growth and the "stability" it provides to shareholders.

Over the prior 20 years, it has increased its dividend at a compound annual growth rate (CAGR) of 7.1% per annum.

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We should expect that the share market is going to see some volatility each year. There is a changing mix of buyers and sellers each day, combined with changing headlines in the news.

But, I've focused on ASX dividend shares that aim to provide investors with growing dividends. That way, I can concentrate on my growing dividend cash flow and not worry what the share price is going to do next.

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

I think that Soul Pattinson has the best record when it comes to dividend growth. The business has grown its dividend every year since 2000. No other ASX share has dividend growth consistency like this company.

It owns a portfolio of assets – both listed and unlisted. The portfolio is diversified across sectors like telecommunications, building products, resources, agriculture, financial services and swimming schools.

The ASX dividend share receives dividends from its portfolio each year. The majority of that money is sent to shareholders as a growing dividend, with the rest kept to re-invest in more opportunities to enable further growth.

The company's FY22 ordinary dividend per share of 72 cents translates into a grossed-up dividend yield of 3.6%.

Duxton Water Ltd (ASX: D2O)

Duxton Water is a unique company on the ASX – its purpose is to own water entitlements and lease them to farmers on contracts of various lengths.

The ASX dividend share says that it has an "intention to pay a consistent and growing dividend stream". It just declared a dividend per share of 3.5 cents. It plans to increase this payment by 0.1 cents per share every six months to the 2024 interim payment which is guided as 3.7 cents per share.

Water entitlements could become increasingly important as more water-hungry crops are planted, such as almonds.

I think water entitlements are a good way to indirectly invest in the agricultural industry.

With the reported imminent end of La Nina – the wetter weather system – this could lead to less rain, pushing up water prices.

The FY23 grossed-up dividend yield from Duxton Water is expected to be 5.7% and the company has indicated an intention to lower debt because of the higher interest rates.

Brickworks Limited (ASX: BKW)

Brickworks is one of the largest manufacturers of building products in Australia, with offerings such as bricks, paving, masonry and roofing.

Interestingly, the ASX share owns a significant chunk of Soul Pattinson shares, which provides Brickworks with growing dividends and stability – very handy with the cyclical nature of building products.

But, for me, without praising Soul Pattinson again, another very positive side of Brickworks is that it owns half of an industrial property trust where advanced warehouses are being built on excess Brickworks land that has been sold into the trust.

Businesses like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Amazon are some of the tenants in the huge warehouses.

Brickworks said that the property portfolio's valuation has seen the "positive impact of rental growth outstrip the effect of capitalisation rate expansion." It also has a large development pipeline. At the end of the FY23 first half, Brickworks' net property trust assets are expected to exceed $2.2 billion and this could keep rising as properties are completed.

The property trust rental profit and Soul Pattinson's dividend have helped increase the Brickworks dividend steadily over the past several years.

Brickworks currently has a grossed-up dividend yield of 3.7% and it hasn't cut its dividend for over 40 years.

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The tricky thing is knowing what sort of ideas to look at. There are some businesses that may seem like they have very high dividend yields, but the last 12 months of dividends may not be the same as the next 12 months.

For example, we recently saw in Rio Tinto Limited's (ASX: RIO) 2022 result that its total dividend per share was cut by 53% after a 41% drop in net profit after tax (NPAT).

If investors were expecting the same dividend from the ASX mining share, they may have been disappointed. But, I don't think it's wise to expect that miners can pay the same level of dividend year after year because resource prices can significantly change if supply and demand change heavily too.

For investors looking for a high level of income – somewhere in the region of 10% or higher –  we're talking about a business that doesn't have a high valuation and is paying out relatively a large amount of its annual profit. If an investor were looking for an ASX share that could provide over $1,000 of dividend income from a $10,000 investment consistently, I have an idea.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop owns a national network of stores across Australia. It's also looking to grow in New Zealand, which is unlocking more growth for the ASX dividend share. The company has a total of 122 stores.

It sells a wide range of male and female grooming products. But, it's also expanding its range with other categories like oral care, hair care, massage, air treatment and beauty categories.

Despite all the worries about the economy, its financials continue to look good. The FY23 half-year result saw total sales increase 3.8% to $131.9 million, NPAT went up 4.5% to $13.7 million and the interim dividend was bumped up by 4.4% to 4.7 cents per share.

It's that dividend growth that I particularly like. It has steadily grown its dividend each year since 2017 (when it first started paying a dividend).

The first seven weeks of the second half of FY23 saw gross profit growth, even though total sales dropped 2.1%. This was thanks to a higher gross profit margin.

Using the last two declared dividends, Shaver Shop currently has a grossed-up dividend yield of 12.6%. That would create $1,260 of annual passive income (including franking credits) from a $10,000 investment.

Is this a good idea?

For investors that have a low tax rate and are focused on dividends, I think Shaver Shop could be an effective ASX dividend share to choose. However, I'm not sure the company's share price can deliver tons of share price growth from here.

High-yield dividends may not suit every investor. There are other businesses which could deliver a solid amount of dividend income, but also achieve stronger after-tax total returns over the long-term.

A few S&P/ASX 200 Index (ASX: XJO) shares that may be able to deliver a combination of dividends and growth include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and Wesfarmers Ltd (ASX: WES). But, the starting dividend yields are lower from these names.

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Impacts from the COVID-19 period impacted both supply and demand in the global economy. To take demand out of the economy, central banks took interest rates back to pre-COVID times, and then kept going.

In the Reserve Bank of Australia's (RBA) most recent monthly update, it said that CPI inflation over the year to December 2022 was 7.8%, the highest since 1990. In underlying terms, inflation was 6.9%, which was higher than expected. Domestic demand is "adding to the inflation pressures."

The RBA said inflation is expected to decline this year, with both global factors and slower growth in domestic demand. The central forecast is for CPI inflation to decline to 4.75% in 2023 and to around 3% by mid-2025.

It was recently reported that the 'core personal consumption expenditure price index' in the US, which is the Federal Reserve's preferred measure of inflation, saw a 0.6% rise in January, with a 4.7% increase from the prior year, which was above economists' expectations.

This could mean that the Federal Reserve needs to keep increasing interest rates to end elevated inflation.

But, I think these two ASX 200 shares look like compelling ideas in this environment.

Brickworks Limited (ASX: BKW)

Brickworks is one of the leading building product manufacturers in Australia. It's the leading brickmaker in Australia, while also having a strong presence in areas like masonry and roofing.

The outlook for the housing market and construction in Australia is weaker than in 2021 because of the current economic climate. But, I think there will be another period of strength in the future, so I think this period of weakness could be a prime time to invest.

I think the ASX 200 share's half-ownership of the two industrial property trusts along with Goodman Group (ASX: GMG) is very useful – it's giving it a source of growing cash flow thanks to the rental profit, as well as growing underlying value thanks to finishing warehouse property developments.

Those industrial properties are benefiting from structural tailwinds, fuelling strong demand for prime industrial property. The developments are "increasingly sophisticated, incorporating features such as robotics, automation and multi-storey warehousing and providing critical supply chain and logistics solutions" for customers.

I think the industrial property, plus the holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares, give the business a lot of underlying value and protection.

Brickworks revealed that at the end of its last financial year, it had a net inferred asset backing which equated to around $33 per share, but that value does shift around as the Soul Pattinson share price changes.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is a business that invests in funds management businesses and helps them grow. The business partners with leading fund managers that want to start or grow their own businesses. Pinnacle can help with tasks like legal, compliance, reporting, seed funds under management (FUM) and so on.

Since early November 2021, the Pinnacle share price has dropped by around 45%. I think that makes it a great time to consider investing in the business.

It's not surprising to me that the business has suffered. Not only has the underlying FUM been hurt by falling asset markets, but investors may be more likely to pull their money out and less likely to put money into one of the fund managers that Pinnacle is invested in.

I think that when inflation slows and interest rates stop rising (and even begin to fall), the FUM could naturally start rising and investors may be more confident about putting money to work with one of the ASX 200 share's fund managers.

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Not only do some ASX shares pay wonderful dividends (or distributions), but Australian companies also have the added bonus of franking credits, which are refundable tax credits.

In other words, for high-income earners, the franking credits will reduce the tax burden of receiving the dividends. For lower-income earners, some (or all) of the franking credits may be refunded when the tax return is completed.

But, I wouldn't suggest investing in an asset or an ASX share just because of the possible income. The risk of a fall in the share price means we should try to identify good investments that are at good prices.

In my opinion, the below three names tick the necessary boxes.

Brickworks Limited (ASX: BKW)

Brickworks is the leading brickmaker in Australia. It also offers other products including roofing (through Bristle Roofing) which makes it fairly diversified.

The ASX dividend stock is also increasing its exposure to the northern hemisphere. It has been growing its brick market share in North America after making some acquisitions there. Plus, the business will soon be supplying millions of bricks to the UK after recently signing an agreement with a distributor.

Brickworks also owns two other major assets that are funding its dividend and delivering growth.

Firstly, Brickworks owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. Soul Pattinson itself has grown its dividend to shareholders every year for the last two decades.

Brickworks also has a 50% stake in a growing industrial property trust. That trust is building huge, modern warehouses on land that Brickworks no longer needs. This is enabling the generation of property development profits and unlocks a growing stream of rental income.

Brickworks hasn't cut its dividend for over four decades and currently has a trailing grossed-up dividend yield of 3.7%.

Adairs Ltd (ASX: ADH)

The Adairs share price has been one of the most-hit ASX dividend stocks during this period of volatility and uncertainty surrounding the economy as interest rates soar.

It's quite possible that the company's earnings will have a bumpy ride over the next year or so. The company sells furniture and homewares through three different brands – Adairs, Focus on Furniture and Mocka.

Adairs just reported its FY23 first half, which showed that earnings per share (EPS) was up 22% to 12.7 cents per share. The company also said that it was focusing on debt reduction – net debt fell by $12.2 million from June 2022 to $81 million at December 2022.

Despite that, Adairs decided to pay a dividend per share of 8 cents per share. If it were to pay an annual dividend per share of 16 cents for FY23, that would equate to a grossed-up dividend yield of 9.5%.

I think that retail conditions will improve in 2024, which could be helpful for both investor sentiment and hopefully earnings.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns farmland across Australia. That includes cattle, almonds, vineyards, macadamias, sugar and cotton.

The ASX dividend stock has a goal of increasing its distribution to investors by 4% each year. The Rural Funds share price is close to its 52-week low, so I think this is a very good time to consider investing.

While the cost of debt has increased, the REIT's rental income which is linked to CPI inflation is also getting a boost.

I think that this is a good time to invest while the distribution yield is elevated. A total distribution of 12.2 cents per unit could be paid in FY23, which would equate to a distribution yield of 5.2%.

For me, farmland seems like a good long-term investment that doesn't deteriorate in the same way that an office building or shopping centre does.

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It's true that term deposits are now offering much better interest rates compared to 12 months ago.

Savers can now get very competitive rates on their savings. For example, when looking at term deposits from the big banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ), we can now see a few term deposit percentage rates starting with a 4.

But, despite the much better interest rates, I think ASX 200 dividend shares are more likely to make us wealthy.

Stronger income compounding potential than term deposits

If I put $10,000 into a term deposit with an interest rate of 4%, in 12 months I'd receive $400 in interest.

To benefit from the power of compounding, I'd need to leave the $400 of interest with the bank and re-invest the $10,400 for another 12 months. At the end of year two, I'd be paid $416 of interest, leaving me with $10,816.

But, ASX 200 dividend shares can deliver more growth, in theory.

If I put $10,000 into an ASX 200 dividend share that had a share price of $10, I'd get 1,000 shares. If that business had an expected 4% dividend yield, I'd get $400 in dividends after the first year. I could re-invest the dividend and let's say I could buy another 40 shares (probably using a dividend re-investment plan), leaving me with 1,040 shares if the share price is still $10.

Let's say that when the company reported its next full-year result it decided to grow the dividend by 10% after achieving earnings growth, resulting in $440 from my original 1,000 shares and $17.60 from my extra 40 shares, meaning a total of $457.60 of income paid in year two.

Assuming the share price didn't change, my original $10,000 investment has turned into $10,858.

It's the ability of a company to grow the dividend alongside earnings that can supercharge passive income combined with re-investment, rather than simply relying on re-investing the income each year.

Of course, it's not just income that makes up the returns of ASX 200 dividend shares. Capital growth is a big part of the picture.

Capital growth adds to returns

Let's use the biggest ASX exchange-traded fund (ETF) as an example. The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the S&P/ASX 300 Index (ASX: XKO), which is very similar to the ASX 200 and owns many of the same ASX 200 dividend shares.

Since the ETF's inception in May 2009, the fund has produced an average return per annum of 9.21%. Around half of that was from income – an average of 4.64% per annum, more than the dividend yield in my above example – and half of the total return was from capital growth. This shows how the ASX as a whole has performed, and the split of returns.

We don't know what share prices are going to do this month or this year. But, if earnings keep growing then I think ASX 200 dividend shares give themselves a great chance of growing the share price (and the dividend payout).

Which ASX 200 dividend shares to buy?

I like the look of businesses that are capable of producing long-term earnings growth and dividend growth. For example, in this article, I mentioned Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Sonic Healthcare Ltd (ASX: SHL), and APA Group (ASX: APA) and I also cover Wesfarmers Ltd (ASX: WES) shares sometimes.

I believe these are the sorts of names that can make better income returns and total than term deposits.

The post Banking on term deposits to retire rich? I'd buy ASX 200 dividend shares instead appeared first on The Motley Fool Australia.

What if you had no investments and wanted to create a portfolio right now?

What are the first five stocks you would buy as the foundation for your investment stable?

This is a great hypothetical to think about to suppress all the noise, macroeconomics and short-term greed. It forces one to consider the genuine long-term prospects of ASX shares.

As a prime example, TMS Capital portfolio manager Ben Clark was recently asked this very question.

Here are the ASX shares he picked:

Start with some old favourites

Clark would start painting his blank canvas with western Australian conglomerate Wesfarmers Ltd (ASX: WES).

"Wesfarmers is a business, which I truly believe, whose management looked after the shareholders superbly," Clark said in the On The Couch podcast.

"Bunnings, time and again, has proven to be an incredibly good business to own… This lithium venture's about to come online in the next year or two."

Wesfarmers' is "cashed up", and Clark feels it can exploit the current downturn to take on even more exciting business ideas.

The next two to add to the portfolio would be CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG).

"You got to have Macquarie in there," said Clark.

"It's driven by some of the smartest people in the country and on the planet, who are all heavily incentivised to make money for themselves and the business."

For Clark, though, Macquarie differs from many of its international investment banking rivals.

"You've got this very strong risk [management] attitude across the bank, at the top of the bank," he said.

"The business just continues to ground out higher and higher earnings."

'Bedrock of a portfolio'

The fourth pick is Brickworks Limited (ASX: BKW) or Washington H Soul Pattinson and Co Ltd (ASX: SOL), both of which own a considerable amount of each other's shares.

But funnily enough, the ownership overlap doesn't seem to correlate to synchronous movements in their stock prices.

"You do find their share prices not correlated, bizarrely, because they should be," said Clark.

"So sometimes Brickworks will appeal to us more, and sometimes Soul."

Similar to Macquarie and Wesfarmers, these companies have fingers in many different pies. The diversity seems to smooth out their fortunes over time.

Both Soul Patts and Brickworks are famous for increasing their dividends each year over many decades, regardless of how the economy or the stock market is doing.

"Rising stream of income over many, many years. It's the bedrock of a portfolio."

A 'misunderstood' gem

The fifth stock to add is mining royalties company Deterra Royalties Ltd (ASX: DRR).

"It's an incredibly interesting business. But I still think it's misunderstood."

Despite the massive presence of mining companies on the ASX, listed royalties companies are few and far between. According to Clark, they are much more common on the Canadian and New York stock exchanges. 

But most seem to earn their keep from gold extraction and the subsequent profits of their tenants. Plus the mines have fairly short lives.

Deterra has none of those things.

"What Deterra has is globally unique," he said.

"Deterra owns a 1.232% royalty over the MAC [Mining Area C], which about two-thirds of BHP Group Ltd (ASX: BHP)'s total iron ore production comes out of… It's done on revenue, not profit."

Also, the MAC mine has an estimated 60-year life, and BHP is increasing production out of it over the next few years.

These differences mean there is much more certainty over the income.

"This year, it should push out, including franking credits, a yield of about 11% or 12%," said Clark.

"And it's got net cash on the balance sheet, and I think at some stage, one of those big resource players will come sniffing for it."

The post 5 ASX 200 shares I would buy if I was starting from scratch: expert appeared first on The Motley Fool Australia.

I think it makes sense that ASX shares related to property and ASX tech shares would be impacted by higher interest rates, as it hurts the valuations of ASX growth shares and could impact demand for housing.

However, with confidence now improving about the situation, I think the long-term outlook for the below two ASX shares is very positive, so I'd use this period to jump on these names.

Brickworks Limited (ASX: BKW)

Brickworks is a market leader when it comes to building products in Australia. It sells bricks and paving, roofing, cement, masonry and stone, and specialised building systems. The business is also a brick market leader in the north east of the US.

Plus, excitingly, the business has signed an agreement with Brickability – a "market-leading building products distributor" in the UK. The ten-year supply agreement includes a minimum purchase quantity of 10 million bricks per year, and it expects to build on this over time.

Brickworks recently said that its net property trust assets are expected to exceed $2.2 billion at the end of the FY23 first half. The industrial joint venture trust recently completed an independent revaluation process, resulting in a profit of around $112 million to the ASX share. I think that its future plans for more industrial properties on the land are very promising.

It's benefiting from strong customer rental demand, with "significant" rental growth across its new developments and lease renewals. The property rental growth is outstripping the effect of capitalisation rate expansion because of higher interest rates.

Brickworks is also benefiting from the long-term dividend and asset growth of the investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which Brickworks owns a large chunk of.

Bailador Technology Investments Ltd (ASX: BTI)

Bailador is a business that describes itself as a growth capital fund that's focused on the IT sector. It aims to provide exposure to a portfolio of IT companies with global addressable markets. Bailador invests in "private technology companies at the expansion stage."

There are a few different characteristics that Bailador typically looks for when investing in technology companies which include: being run by the founders, having been operating for between two to six years, having a "proven business model with attractive unit economics", international revenue generation, a huge market opportunity and the ability to generate repeat revenue.

The Bailador share price has fallen around 20% since the end of August 2022, despite the ASX share having a large amount of cash on the balance sheet as it searches for opportunities.

At the end of December, it had a pre-tax net tangible asset (NTA) value of $1.74. That suggests the Bailador share price is at a 26% discount to this value. It could also pay a grossed-up dividend yield of more than 7.5% at the current values.

I think small technology companies have a very promising future.

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An ASX 200 dividend stock with a five or ten-year streak of raising their dividends is usually a good sign that you've found a quality income stock. But an ASX 200 dividend stock with a 20-year-plus streak? That's ASX dividend royalty.

That's exactly what the Washington H. Soul Pattinson Co Ltd (ASX: SOL) share price has on offer for income investors today.

Why Soul Patts is a quality ASX 200 dividend stock

I already own Soul Patts shares – in fact, the company is one of my top ASX holdings. But I plan to add far more of this would-be ASX dividend aristocrat to my portfolio in 2023, if the pricing allows it.

I would go one step further and argue that if I had to own just one ASX 200 dividend stock in my portfolio, this would be it.

But let's backtrack a little and get into the weeds of what makes this company such a special ASX dividend share.

So Soul Patts is one of the oldest companies on the ASX 200. It first put down roots way back in 1872, but become the company we know today in 1903. Its first calling was pharmacies, but today, Soul Patts is a bit of a hard company to pigeonhole.

Its primary business is owning large stakes in other investments for the benefit of its shareholders. In this way, it arguably functions closer to a listed investment company (LIC) or a managed fund rather than the typical kinds of companies we see on the ASX.

Soul Patts invests prudently in a large and diversified portfolio of assets. These include a portfolio of blue-chip shares gained in the LIC Milton Corporation acquisition in 2021. But it also includes its large, strategic investments in a handful of ASX shares. 

For example, Soul Patts owns 12.6% of TPG Telecom Ltd (ASX: TPG), 39.9% of New Hope Corporation Limited (ASX: NHC) and 43.3% of Brickworks Limited (ASX: BKW).

The company also owns a stable of unlisted assets, which includes assets ranging from industrial property to swim schools.

An ASX dividend aristocrat?

This diversified investment portfolio has given Soul Patts the unique distinction of being able to fund annual dividend increases every single year since the year 2000. That's throughout both the global financial crisis of 2007-2009, as well as the COVID pandemic.

This is an ASX dividend record unmatched on the ASX 200 or, indeed, on the entire ASX. It's the closest thing the ASX has to a United States-style 'dividend aristocrat', which is a US share that has increased its dividends every year for 25 years.

Back in December last year, Soul Patts announced during its annual general meeting that its total shareholder return (share price gains and dividends) came to an average of 12.5% per annum over the 20 years to 30 November 2022.

That was a good 3.4% per annum above what the ASX All Ordinaries Accumulation Index had achieved over the same period.

So, in conclusion, this is an ASX 200 dividend stock I will never own enough of. I can't wait to add to my position in 2023. If there's a compelling price point, I'll be loading the boat with this top-notch company.

The post 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023 appeared first on The Motley Fool Australia.

But a dividend share fundamentally lacks the safety that a term deposit or a savings account can offer. No ASX share can offer true safety of income.

But let's see how close we can get to true safety by checking out three of the most consistent dividend payers the ASX has to offer.

3 of the safest ASX dividend stocks in Australia

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

Washington H. Soul Pattinson, or Soul Patts for short, was always going to make this list. That's by virtue of its unrivalled dividend track record on the ASX. This diversified investment company has increased its annual dividend payments every single year since 2000.

Yes, through the dot-com bust, the global financial crisis, and more recently, the COVID pandemic.

No other ASX share can even come close to matching this record, making this company one of ASX's safest dividend stocks. Soul Patts shares offer a fully franked dividend yield of 2.5% at recent pricing.

Brickworks Limited (ASX: BKW)

ASX 200 construction materials company Brickworks is another ASX dividend stock to consider if you're searching for safe income. Brickworks has a diversified earnings base, consisting primarily of its business of selling bricks and other construction supplies. But Brickworks also has a burgeoning property portfolio, as well as significant investments in other shares, namely Soul Patts by coincidence.

This has enabled the company to either maintain or increase its dividend every year for more than four decades. It doesn't quite have the clockwork-like bonafides of Soul Patts. But it still comes pretty close, making it one of the safest income shares on the market.

Brickworks currently has a fully-franked dividend yield of 2.6% on the table.

Commonwealth Bank of Australia (ASX: CBA)

CBA is one of the ASX 200's most famous dividend stocks. While it doesn't quite have the near-flawless dividend track records of the above two shares, I feel it still merits inclusion in this list due to the popularity of the big four ASX bank shares for income investors.

Looking at the other big four members, CBA's dividend record arguably shines out as one of the most impressive. Between 2009 and 2019, CBA raised its annual dividend every year, with the exception of the 2016 dividend, which was flat at 2015's levels.

CBA's payouts took a big hit during the COVID-ravaged 2020. But its dividends have been building back with a vengeance, with the bank giving investors big dividend hikes in both 2021 and 2022.

Last year, CBA doled out a total of $3.85 in fully-franked dividends per share, giving CBA a trailing yield of 3.46% today.

The post 3 of the safest ASX 200 dividend stocks in Australia appeared first on The Motley Fool Australia.

There are a group of businesses in the US that have increased their dividends every year for more than 25 years. They are called dividend aristocrats. Examples include McDonald's, Coca Cola, Procter & Gamble, and S&P Global.

On the ASX, there aren't any names that have managed to do that, though the investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is getting very close, having increased its dividend every year since 2000.

This article is going to be about two ASX dividend shares that could pay (growing) dividends for many years ahead. I'm looking for businesses that could achieve resilient cash flow and that could enable the dividend payments to keep flowing.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop has increased its dividend every year since 2017, meaning it kept increasing during COVID-19.

It currently has a grossed-up dividend yield of 11.7% after a payment of 10 cents per share in FY22. The numbers on Commsec suggest that the business could grow the dividend and pay 10.5 cents per share in FY23, translating into a grossed-up dividend yield of 12.3%.

By FY25, the business could pay an annual dividend per share of 12 cents, which be a grossed-up dividend yield of 14%.

This business doesn't just sell advanced shavers, clippers and trimmers, and wet shave items, it also sells products across oral care, hair care, massage, air purity treatment, and beauty categories.

Shaver Shop is expanding its product ranges, growing its store network, benefiting from scale and selling the latest products.

I think people are going to keep shaving, even if fashion trends do change over time. In my opinion, this could be one of the underrated ASX passive income ideas with a market capitalisation under $1 billion.

Brickworks Limited (ASX: BKW)

Brickworks is the largest brickmaker in Australia and the northeast of the US. It recently signed a deal to start sending large quantities of bricks to the UK as well. The business also sells other building products in Australia, such as roofing, masonry, and cement.

But, the parts that make it an interesting dividend idea are its other assets.

It owns a large chunk of Soul Pattinson shares, which gives Brickworks a steady and growing stream of dividend cash flow to fund its own dividend. Plus, Soul Pattinson is achieving capital growth for Brickworks as well.

Brickworks also has a growing industrial property trust which it owns alongside Goodman Group (ASX: GMG). The idea is to build high-quality warehouses on excess land that Brickworks no longer needs. This unlocks the potential value of the land, plus creates strong rental cash flow. I think businesses will always need good logistics locations (warehouses), so this property trust could do well for many years ahead, helping the passive income.

The Soul Pattinson dividend and property trust rental income essentially funds the Brickworks dividend, with building product earnings being a bonus.

Brickworks has grown its dividend each year since 2014 and hasn't cut its dividend for more than 40 years.

It currently offers a grossed-up dividend yield of 3.7%.

The post Can these next-gen dividend heroes provide a passive income for life? appeared first on The Motley Fool Australia.

The ASX 200 has done so well that it's close to its all-time high.

However, I'd largely put that down to the two sectors that make up a significant part of the index – banks and resources.

With higher interest rates and a higher iron ore price, it's good times for names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).

Still plenty of opportunities out there

While ASX's biggest industries are doing well, the share prices of (at least) three other areas still look promising.

ASX tech shares were smashed in 2022, so I think those names that have been hit heavily represent much better buying. For example, compared to their peak prices, the Xero Limited (ASX: XRO) share price, the REA Group Limited (ASX: REA) share price and the Seek Ltd (ASX: SEK) share price are all down materially.

Fintechs are also down, despite elevated earnings on the cash they hold, such as Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL).

Higher interest rates do reduce asset prices, in theory. But, they're still the same businesses they were before. So, I think the much lower price we're seeing with these names is giving us opportunities to invest at a cheaper price.

There are some areas within the ASX 200 that may see an earnings hit in 2023, but I believe the lower share prices make up for that, though some share prices have risen a fair bit.

Retail and building products could be interesting hunting grounds to look at. Over the next three to five years, I think ASX 200 shares like Brickworks Limited (ASX: BKW), James Hardie Industries plc (ASX: JHX), CSR Limited (ASX: CSR), Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH), Premier Investments Limited (ASX: PMV) and Metcash Limited (ASX: MTS) could also perform well.

Ready to keep investing

I think that a number of these shares will surpass their former heights in the coming years as they grow their underlying operations.

While some industries do go through cycles, I think the lower point of the cycle is a good time to invest in retailers, building product businesses and ASX tech shares.

I'm going to be putting more money to work this year, which will hopefully accelerate my wealth-building efforts in the coming years. Buying at a lower price also means that I'm getting a higher dividend yield from my investments.

I will probably write an article about the next ASX 200 share that I buy, so keep an eye out for that.

The post The ASX 200 is still full of cheap shares despite this year's surge and I'm ready to buy more appeared first on The Motley Fool Australia.

There are many different types of assets that can produce income such as property, savings accounts, term deposits and bonds. For me, ASX dividend shares are the way to go.

I'm not just trying to buy the ASX shares with the highest dividend yield. Nor am I sticking with ASX blue-chip shares for my dividend goal. I believe there are businesses that are a bit smaller which can provide plenty of capital growth and dividend growth over time.

How I'm building towards my passive income dividend goal

It would be great if I were handed $1 million tomorrow so that I could invest and instantly reach my goal.

My actual strategy is to invest a monthly amount, however much my household has saved that month, into the most compelling ASX dividend share at the time that I can see.

I have a watchlist of individual businesses on the ASX, as well as listed investment companies (LIC). Some of the businesses that are currently in my portfolio include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Rural Funds Group (ASX: RFF), Fortescue Metals Group Limited (ASX: FMG), Duxton Water Ltd (ASX: D2O) and Bailador Technology Investments Ltd (ASX BTI).

Sometimes performance can be quite variable in the short term. Just look at the share prices of Fortescue and Bailador over the past year.

Each investment has a different dividend yield. But, let's say that the investment I make each month comes with an average dividend yield of 5%. Investing $1,000 that month would add an extra $50 of annual income. Investing $2,000 in a month would add $100 of extra income.

If the business paying me $100 of annual income in year one grows its dividend by 10%, then in year two I'd get $110 of annual passive dividend income from that investment.

Investing month after month, year after year will help me reach my $30,000 goal of income.

How long it takes will depend on how much I invest and how well those investments grow. I can control how much I invest, but I view it as important to spend money on things that make my family and me happy. I'm not trying to save every last dollar.

If I've chosen a good investment, then I just need to be patient and let it grow over time, including through volatility. The less tinkering the better. Compounding is a very powerful force if it's allowed to run its course.

Foolish takeaway

Receiving $30,000 of annual passive dividend income still seems like a long way off. But, I believe that if I just keep regularly investing I will get there, it's just a matter of time. Regular readers may know that I sometimes cover the shares I buy, so I'll be writing about where I'm seeing value for my own dividend-focused portfolio.

The post ASX passive income: My game plan to reach $30,000 per year appeared first on The Motley Fool Australia.

Businesses that have good dividend yields and a compelling future could be options to unlock investment cash flow.

While some companies have high yields and could achieve a lot of income very quickly, there are others that could deliver solid growth in the coming years.

So, I'll offer up a few names as ideas for each strategy.

Instant big passive income

If I'd just won the lottery and I were looking to instantly generate a lot of passive dividend income, then carefully choosing high-yielding ASX dividend shares could be one way to go.

The higher the dividend yield, the less reliable that dividend income can be. However, if the business is trading on a very low multiple of its earnings, meaning it has a low price/earnings (P/E) ratio, then it could pay a very good dividend yield. I would only choose ideas that look like they could grow earnings in the coming years.

There are a few names, at the current prices, that I'd look to achieve a dividend yield of close to 10% or higher.

I think that Shaver Shop Group Ltd (ASX: SSG) could be an effective pick. It's exposed to a growing beauty and personal care market, which is helped by a growing Australian population. It's expanding its product range and increasing the number of stores across Australia and New Zealand.

The business is expected to grow its earnings each year from FY23 to FY25 according to Commsec numbers. At the current Shaver Shop share price it's valued at under 10 times FY23's estimated earnings with a possible FY23 grossed-up dividend yield of 12.5%.

Adairs Ltd (ASX: ADH) is another ASX retail share that's predicted to grow its earnings and dividend each year between FY23 to FY25. The furniture and homewares business has plans to grow its store network, upsize some existing Adairs stores, expand its product ranges and increase the number of members.

Using Commsec numbers, it's valued at under 10 times FY23's estimated earnings with a potential grossed-up dividend yield of 9.3%.

GQG Partners Inc (ASX: GQG) is another interesting ASX dividend share for potential passive income. The business has guided that it's going to pay 90% of its distributable earnings to investors each year.

It's a US fund manager that is regularly attracting more fund inflows and achieving good returns on its existing funds. GQG is also looking to expand geographically, in places like Australia and Canada.

By FY25 it could be paying a dividend yield of around 10% according to estimates on Commsec.

A portfolio worth $500,000 could generate $50,000 of income if it had a 10% dividend yield.

Long-term dividend growth

I also believe that there are some very compelling ASX shares that could deliver long-term value creation while also growing the income payments to shareholders. This could help achieve strong annual passive income after a number of years of investing.

While ASX dividend shares may not achieve the strongest capital growth, the good ones could achieve good compounding growth over the long term.

Brickworks Limited (ASX: BKW) already has a record of not cutting its dividend for around 45 years. I like the impressive industrial properties that are being built on excess Brickworks land. The large exposure to Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares can also help grow Brickworks' cash flow and the underlying value in the coming years.

Lovisa Holdings Ltd (ASX: LOV) is a retailer that sells affordable jewellery to younger shoppers. It already has a global store base, but this number could expand significantly, particularly if it's able to grow in places like Europe, the US, China (including Hong Kong) and India. I think earnings could grow very strongly over the rest of the 2020s.

Universal Store Holdings Ltd (ASX: UNI) is an apparel retailer that's focused on the younger demographic. I think this segment of the market may be less affected by a possible recession compared to the general retail segment. The business has plans to grow its store network and I like that it's also looking to expand with other brands.

I believe these three businesses are just a few of the names that could help deliver passive income and good capital growth over the coming years for investors.

The post Which ASX dividend shares I'd buy now to target $50,000 of annual passive income appeared first on The Motley Fool Australia.

Let me show you what I mean.

If a company has a dividend yield of 5%, but then its share price drops by 10%, the yield becomes 5.5%. If the share price falls 20% then the yield becomes 6%.

What we've seen over the past year is inflation and interest rates pummelling various asset classes. Some areas of the share market haven't escaped that pain.

But, large share market declines don't happen very often, so I'd say this is a rare opportunity for investors to grab some businesses with much higher yields than they normally offer.

Here are some of the areas where I'm seeing ASX income stock opportunities.

ASX retail shares

In theory, higher interest rates are meant to push down the value of most assets.

But, many retailers have been particularly hit with the prospect of the economic situation hurting their sales and earnings.

However, while the short-term may be difficult, I think the valuation of some retailers means the yields could be very high, such as Adairs Ltd (ASX: ADH), Accent Group Ltd (ASX: AX1), Universal Store Holdings Ltd (ASX: UNI) and Nick Scali Limited (ASX: NCK).

Quality property stocks

It's understandable that some ASX property shares have been hit hard as interest rates jumped higher.

Real estate investment trusts (REITs) are suffering from the double whammy of pressure on property valuations and debt being more expensive.

But, the higher rate of inflation is also boosting their rental income, which is supportive for valuations and distributions to investors.

However, the higher interest rates could cause pain to riskier and highly leveraged players in the property space. So, I'd be careful about which names to choose.

If I had to pick a few names, it would largely be due to their quality tenants and the length of the leases on the contracts. They would be: Charter Hall Long WALE REIT (ASX: CLW), Centuria Industrial REIT (ASX: CIP), Rural Funds Group (ASX: RFF) and Brickworks Limited (ASX: BKW). Brickworks has an impressive asset base, it doesn't rely on its building products earnings to fund the dividend.

Fund managers

With the big hit to various asset classes over the last twelve or so months, funds under management (FUM) have taken a significant hit.

However, I think that once the interest rates stop rising, investor confidence could start returning. That could lead to generally-rising asset prices and a return of good FUM inflows as well. That could make fund managers good ASX income stocks at this level.

Active fund managers do face the headwind of competition from low-cost exchange-traded funds (ETFs). But, the good performing ones could do well, particularly from the lower valuations we're seeing.

With pretty high dividend payout ratios, I think some fund managers could pay very good dividend income in the next few years, including Pinnacle Investment Management Group Ltd (ASX: PNI), GQG Partners Inc (ASX: GQG) and Pacific Current Group Ltd (ASX: PAC).

The post ASX income stocks: A once-in-a-decade chance to get rich? appeared first on The Motley Fool Australia.

Some of my biggest investments are growth-focused, with two of my biggest holdings being listed investment companies (LICs) that target businesses with good growth prospects.

Hopefully, the difficulty seen last year last won't be repeated this year. But whatever happens this year, I'm not going to let it affect my investment strategy in 2023.

Firstly, not every one of my ASX shares had a bad year. Fortescue Metals Group Limited (ASX: FMG) shares performed well for my portfolio; the company also paid another big dividend.

How I'm planning to invest in 2023

When share prices drop, I get excited.

I plan to keep investing whether the market is a bit higher or a bit lower.

While share prices are moving, I believe there will always be an opportunity somewhere, whether it's share X or share Y.

Some individual names can become attractively valued compared to other options over a relatively short amount of time.

For example, BHP Group Ltd (ASX: BHP) shares are sitting at around $50 after a solid run over the past few months. But there are a number of other names that have been heavily punished since the start of 2022 such as Xero Limited (ASX: XRO), Megaport Ltd (ASX: MP1), and Siteminder Ltd (ASX: SDR).

A few months ago, I was suggesting that both ASX mining shares and ASX retail shares were cheap. But, both of those areas have gone on strong runs recently.

Where I'd look for ASX share bargains now

I think there are still some sectors that were heavily hit by interest rate rises but haven't seen a recovery in investor sentiment.

The ASX tech share sector is one area that I believe is a big opportunity. I think names like Xero and Megaport are compelling because of their revenue growth and increasing focus on profitability.

Other tech names I like the look of include Bailador Technology Investments Ltd (ASX: BTI), Frontier Digital Ventures Ltd (ASX: FDV), and REA Group Limited (ASX: REA).

I also think that some property-based ASX shares could be at a good discount to their actual underlying value. Names like Brickworks Limited (ASX: BKW) and perhaps real estate investment trusts (REITs) Centuria Industrial REIT (ASX: CIP) and Rural Funds Group (ASX: RFF) could also be opportunities.

While there is some pessimism around, I think that it won't always be the case. While the share market has recovered some of its lost ground over the last few months, I believe there are still plenty of opportunities and that's where I'll be looking.

The post My ASX shares fell 15% last year. Here's what I'm doing now appeared first on The Motley Fool Australia.

But, far from despairing, this has only hardened my desire to spend 2023 buying even more dividend-paying shares.

We've all heard the maxim 'buy low, sell high'. This is a principle I try my best to stick to. The S&P/ASX 200 Index (ASX: XJO) is still lower today than it was a year ago. That tells me that there might still be opportunities out there to buy myself some cheap shares.

But on a broader note, I think buying shares is almost always a better choice than not buying. History shows that trying to time the markets is a very bad idea. None of us knows what's coming down the road.

If today ends up being the last time the ASX 200 is at its current level, and the index surges 10% higher in 2023, we're all going to feel a little silly if we decided today that it's better to try and wait for a cheaper entry point.

Shares beat cash, so I'm buying more ASX dividend shares in 2023

The historical returns from shares trump the returns of cash over any long stretch of time. Shares also go up more than they go down. Thus, investing in shares rather than leaving your money in the bank is usually the better choice, if the past is anything to go by.

Plus, having dividend cash flow means you can have extra cash to reinvest back into those dividend shares too.

So this is why I'll be putting any extra dollars I have at my disposal in 2023 into ASX dividend-paying shares.

But not just any shares will do. I try and seek out the best-performing shares on the market. So I'll be looking to the likes of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and MFF Capital Investments Ltd (ASX: MFF) to add to my portfolio.

I try and end each calendar year that passes us by with more assets to my name than what I had at the start. 2023 is no different.

The post Why I'll be buying more ASX dividend shares for my portfolio in 2023 appeared first on The Motley Fool Australia.

So here are three dependable ASX shares that I'm seriously considering adding to my share portfolio in 2023.

3 ASX shares that I'm hoping to buy this year

Brickworks Limited (ASX: BKW)

Brickworks is sometimes derided as a 'borin' kind of ASX 200 share. But that's precisely why I would love to own this company. Brickworks' main business is the manufacturing and sale of construction materials, as its name implies.

But this company also has a lucrative property portfolio, which it cannily builds up using surplus land from its manufacturing facilities. This enables the company to mitigate the cyclical nature of the construction materials industry.

Further, the company also has a share investment portfolio, headlined by a massive stake in Washington H. Soul Pattinson and Co Ltd (ASX: SOL), which is another ASX 200 share I deeply admire.

Perhaps what attracts me most to Brickworks shares is the company's stellar dividend track record. Brickworks hasn't cut its dividend in more than four decades, and more often than not, gives its investors an annual dividend pay rise.

All of these factors are driving me to add Brickworks to my portfolio in 2023 if I can get an attractive price.

Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)

This exchange-traded fund (ETF) from Vanguard is an investment I already own. However, I am hoping to add even more to my holdings in 2023. Unlike the more popular Vanguard Australian Shares Index ETF (ASX: VAS), this fund focuses exclusively on the smaller side of the ASX.

Instead of BHP Group Ltd (ASX: CBA) and Commonwealth Bank of Australia (ASX: CBA), you'll find companies like Lynas Rare Earth Ltd (ASX: LYC), Cleanaway Waste Management Ltd (ASX: CWY) and Carsales.com Ltd (ASX: CAR) amongst this ETF's major holdings.

I think smaller ASX shares have far more capacity for growth than our largest businesses. So I like the diversification that this ETF brings to my portfolio. This fund also tends to pay out very healthy dividend distributions as well.

TechnologyOne Ltd (ASX: TNE)

My final 2023 hopeful is an ASX 200 tech share in TechnologyOne. Tech shares had an exceptionally rough year last year. But TechnologyOne was spared the pain. I think this was due to the high quality of this business. This company is a top provider of enterprise software to a range of clients, including companies, universities and governments.

TechnologyOne has delivered some impressive growth numbers over many years too. In FY2022, the company managed to boost its revenues by 19% and its after-tax profits by an even better 22%. I don't see the success slowing down any time soon either.

So this is the third ASX share I would love to see in my portfolio by the end of 2023, and I'm hoping that this year will give me a compelling price at some point to realise this dream.

The post New year, new look: 3 dependable ASX shares I'll be adding to my portfolio in 2023 appeared first on The Motley Fool Australia.

Often the best wisdom from professional investors arises when they discuss ASX shares that have plunged in their portfolio, not the ones that have risen.

That's because the analysts explain why they chose to retain or sell those stocks.

And if they are keeping the faith then it's a great tip for other investors to buy, especially as the price has been discounted.

The portfolio managers at Elvest Fund, in a recent memo to clients, mentioned two S&P/ASX 200 Index (ASX: XJO) shares exactly in that situation.

Discounted stock despite great outlook 

The share price for construction products player Brickworks Limited (ASX: BKW) was down 1% in December, which the Elvest team felt didn't justify "a positive update".

"Brickworks announced expectations to deliver a record half-year result in its property division," read the memo.

"Not long after delivering a strong FY22 result, Brickworks expects to grow its net property trust asset base by $450 million to $2.2 billion in the first half of FY23."

As well as producing goods, Brickworks has substantial investments in real estate and fellow ASX-listed company Washington H Soul Pattinson and Co Ltd (ASX: SOL).

"Over the medium term, we see property underwriting Brickworks' current market cap, leaving substantial residual value within its 26% stake in Washington H Soul Pattinson, as well as the building products division."

The Brickworks share price has dropped 7.1% over the past year, leaving a dividend yield of 2.75%. 

According to CMC Markets, three out of five analysts that cover the stock recommend it as a buy. The remaining two rate Brickworks as a hold.

The reason why this travel stock is struggling and why it'll surge again

Christmas fortunes for Corporate Travel Management Ltd (ASX: CTD) were opposite, with the share price dropping 10.9% over December.

In fact, the stock has plunged almost 30% over the past 12 months.

If you visit any airport in Australia at the moment, it's obvious to see from the lengthy queues the travel industry is going gangbusters.

So what gives?

"Corporate Travel Management declined on news of leisure travel swamping airline capacity and therefore limiting availability for corporate travellers."

But that just means more upside, as far as the Elvest team is concerned.

"As capacity returns, which we believe will occur over the next 12 to 24 months, so too will corporate travel, albeit in the midst of a challenging economic environment," read the memo.

"Corporate Travel Management is attractively priced assuming recovery of pre-COVID activity over the coming years."

Elvest's peers broadly agree, with nine out of 12 analysts currently surveyed on CMC Markets recommending Corporate Travel shares as a buy.

The post 'Attractively priced': Why fund is excited by these 2 ASX 200 shares appeared first on The Motley Fool Australia.

The Australian Financial Review reported that over the next decade, around 3.6 million Australians will move from the accumulation phase to the retirement phase with their superannuation, according to deputy chair of the Australian Prudential Regulation Authority (APRA) Helen Rowell. This could affect $750 billion in savings.

The newspaper quoted the principal of Moran Partners Financial Planning, Paul Moran, who said:

Average punters have no idea about how retirement income works. They understand saving for their retirement but are not sure how they get an income.

There are a number of different sources of potential income. Online savings accounts and term deposits are finally offering a good interest rate. Property rental yields are getting better and improving every month as property prices fall. However, remember that the gross rent yield and net rent yield for property are not the same.

ASX dividend shares can also play a very useful role in developing a passive income stream.

Each household's circumstances are different, with different goals and objectives. This is where a financial planner could be very useful to create a plan.

How ASX dividend shares can help

There are plenty of ASX dividend shares that are able to offer investors a higher dividend yield than other assets can typically offer.

For example, Westpac Banking Corp (ASX: WBC) is expected to pay a grossed-up dividend yield of 8.4% in FY23, which is much higher than what its term deposits are currently offering. But term deposits are guaranteed, and the capital is also protected. Share prices can be very volatile.

Historically, share prices for plenty of businesses have gone on to recover from a widespread market drop. Just look at what happened after the GFC and the COVID-19 crash – the market went on to new heights. But that doesn't mean that it's not painful when investors go through volatility.

Not only can ASX dividend shares pay a good dividend yield, but some of them also have the ability to grow profit over time. This enables them to grow dividends and, hopefully, lead to a rising share price over time.

Examples of businesses that have grown their dividend for a number of years include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Sonic Healthcare Ltd (ASX: SHL), Rural Funds Group (ASX: RFF), and APA Group (ASX: APA).

Investors could also use ASX exchange-traded funds (ETFs) to invest in a broad range of businesses on the ASX, or internationally, to achieve significant diversification through one investment.

Foolish takeaway

ASX dividend shares can be a great way for an investor to generate more passive income from their investments but, generally, the higher the yield, the less consistent that dividend may be.

I'm building a portfolio of ASX dividend shares that I believe can keep growing dividends and pay for my life expenses in the future, so I fully believe in this strategy.

The post How ASX dividend shares can solve retirement income needs appeared first on The Motley Fool Australia.