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What I look for in quality ASX dividend shares

Finding quality ASX dividend shares isn’t easy. But they’re out there. There are a few factors that I like to look for.

‘Income shares’ can mean a different thing to different people. But just because a business pays a dividend doesn’t automatically make it an ASX dividend share. Having a high yield isn’t automatically great either.

These are some of the factors I look at:

Past dividend history

Past performance of dividends is no guarantee of future dividends. However, whilst companies don’t have much control over the profits it generates year to year, boards of companies can essentially decide the level of dividend they want to pay as long as the profit reserve and balance sheet allows it.

Businesses that have already created a history of being reliable and growing the dividend probably have the right business model and dividend-focused board to continue that streak, even during difficult economic times.

Some of the ASX shares with the longest dividend growth records includes Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), APA Group (ASX: APA), Sonic Healthcare Ltd (ASX: SHL), Domino’s Pizza Enterprises Ltd. (ASX: DMP), Rural Funds Group (ASX: RFF), Future Generation Investment Company Ltd (ASX: FGX) and Brickworks Limited (ASX: BKW).

Good underlying growth

It could be expecting too much to think a business can grow its profit every single year. But a business is only going to be able grow its dividend over the long term if the profit is going to be able to grow upwards over time.

Each business has a different profit driver. Businesses like Brickworks and Rural Funds are benefiting from steadily-rising cashflow from their assets each year.

Some businesses like WHSP, APA, Accent Group Ltd (ASX: AX1), Bapcor Ltd (ASX: BAP) and others continue to see organic growth, as well as investing in new businesses or assets to grow profit further. ASX shares that have multiple growth levers have the ability to grow dividends quicker over time.


A business can’t really count as an ASX dividend share if the yield is low.

Ideally, I’m looking for a business with a dividend yield (including the franking credits) of at least 3%. But a 4% yield or higher is even more attractive if immediate income is a focus.

Putting it altogether

There are plenty of ASX dividend shares out there at the moment, but not many I’d want to buy. If it wasn’t at such a high price, WHSP would be my favourite ASX dividend share pick. However, for now, it’s businesses like Brickworks and MFF Capital Investments Ltd (ASX: MFF) that could be the best value income shares today.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz owns shares of WHSP, MFF Capital, Future Generation and Rural Funds.
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