Investors looking for income from ASX dividend shares are in the right place. These two offer both growth and a good yield.
Inflation may be slowing, but I think it has shown the importance of finding investments that can pass on price increases to customers, or the value of ASX dividend shares that can deliver dividend growth.
I’m going to talk about two of my preferred stocks for dividend growth.
WCM Global Growth Ltd (ASX: WQG)
I will start with the listed investment company (LIC), which has a high dividend yield.
A LIC aims to make profits from investment returns, it can then pay some of that profit to shareholders as a dividend.
The investments are focused on a global share portfolio outside of Australia. The investment team look for companies with a growing economic moat (or growing competitive advantages). WCM looks for businesses with a growing return on equity (ROE), and a corporate culture that can strengthen the competitive advantages.
Some of the businesses in the portfolio right now include Novo Nordisk, Microsoft, Datadog and Amazon.
Over the past five years, its portfolio has delivered an average (net) return per year of 12.9%.
The ASX dividend share has been steadily growing its dividend since 2019. Its quarterly dividend to be paid in September is expected (by WQG) to be 1.76 cents, a year-on-year increase of 6%.
An annualised 1.76 cents per share turns into $0.074 per share, which is a cash yield of 5.3% at the current WCM Global growth share price, or 7.6% including the franking credits. It’s valued at a 12% discount to the NTA at 22 December 2023, meaning it’s like buying $1 of assets for $0.88.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is one of the leading ASX healthcare shares, in my mind.
It has grown its dividend most years over the last three decades, and it has a “progressive dividend policy”, meaning the board of directors want to give shareholders a dividend increase each year, if possible.
In FY23 it grew its annual dividend per share by 4% year-on-year, or growth of 14.2% compared to FY21.
In terms of profit growth, the global pathology business is doing a good job of increasing its revenue with both organic revenue growth (with growing populations and ageing populations in its markets), and the occasional acquisition to boost its scale. European acquisitions have been a focus in recent times.
Sonic Healthcare is investing in additional areas of pathology that could help grow and/or diversify earnings, it’s looking at AI and microbiome testing.
The ASX dividend share has a FY23 cash yield of 3.25%, and 4.6% including the franking credits.
