Investing in ASX Dividend shares has been a proven strategy for wealth creation, with many investors seeing substantial returns through both dividend payouts and capital appreciation. For example, Commonwealth Bank (ASX: CBA), one of the best dividend stocks ASX has to offer, has consistently rewarded investors. In 2010, CBA shares traded at around $50, and today, they are above $110—a capital gain of over 120%. On top of that, the bank has paid an average annual dividend yield of around 4.5%, meaning a $10,000 investment back then would have generated over $9,000 in dividends alone.
Similarly, BHP (ASX: BHP), a leading resource stock in the ASX200, has delivered outstanding returns. A $10,000 investment in BHP shares in 2015, when they were around $20, would be worth over $50,000 today, excluding dividends. This combination of price appreciation and consistent income has made blue-chip dividend stocks a favorite among long-term investors. Financial experts providing beststock market advice emphasize reinvesting dividends to maximize the power of compounding. For instance, an investor who reinvested dividends from Wesfarmers (ASX: WES) over the past decade would have significantly outperformed those who took cash payouts.
Today, let’s explore two such stocks that can be your source of passive income. Whether you are looking for steady returns or a way to grow your wealth over time, these ASX dividend shares could be valuable additions to your portfolio.
Rural Funds Group Limited (ASX: RFF)
Rural Funds Group is a real estate investment trust, which holds and leases agricultural property and equipment. Its activities and assets include leasing of almond orchards, macadamia orchards, poultry property and infrastructure, vineyards, cattle properties, cotton property, agricultural plant and equipment, cattle and water rights.. The company was founded on December 19, 2013 and is headquartered in Canberra, Australia.
Dividend Profile:
RFF has upheld an impressive track record of consistent dividend distributions over the long term. The company has delivered a stable dividend of $0.12 per share over the past four years, reflecting an increase from $0.11 per share in 2020 and $0.10 per share in 2018. Dividend yields have remained robust, fluctuating primarily with share price movements, and currently stand at a healthy 6.45%. This consistency in payouts highlights RFF’s strong cash flow generation and commitment to returning value to shareholders, making it an attractive option for income-focused investors.
Investment Thesis:
The Australian agriculture industry is a crucial component of the national economy, contributing significantly to food production, livestock feed, and export-driven growth. Agricultural activities, including crop cultivation and livestock grazing, are distributed across diverse regions, with crop and horticulture production predominantly concentrated in coastal areas. The sector is poised for substantial expansion, with projections estimating that the total gross production value will reach approximately US$70.39 billion by 2025, reflecting a compound annual growth rate (CAGR) of 6.91%. By 2029, this figure is expected to increase to US$91.95 billion, according to market forecasts. Additionally, imports are anticipated to rise to US$3.51 billion by 2025, growing at an annual rate of 3.29%, while exports are projected to reach US$27.8 billion, expanding at a rate of 1.92% per year. This sustained growth, coupled with robust demand, underscores the stability and long-term viability of Australia’s agricultural sector.
Outlook:
The company manages a diverse asset portfolio valued at $1.93 billion, leveraging leasing activities as a core business strategy. These assets are strategically distributed across five sectors and multiple climatic zones, mitigating risks associated with weather-related disruptions and natural disasters. Additionally, the company maintains a Weighted Average Lease Expiry (WALE) of 13 years, ensuring long-term revenue stability and sustainability. Consequently, the company projects an Adjusted Funds From Operations (AFFO) of 11.4 cents per unit (cpu) for FY25, reflecting a year-over-year growth of 4%.
Cog Financial Services Limited (ASX: COG)
COG Financial Services Ltd. engages in the provision of equipment finance, funds management, and lending sector. It operates through the following segments: Finance Broking and Aggregation; Funds Management and Lending; and All Other. The Finance Broking and Aggregation segment comprise business units on the aggregation of broker volumes through scale, and finance broking focused on a range of finance products and asset types. The Funds Management and Lending segment is focused on the management of investment funds and providing financing arrangements to commercial customers for essential business assets. The All Other segment includes equity investment of in the associate Earlypay Limited, and corporate office function provided by the ultimate parent entity. The company was founded on June 11, 2002 and is headquartered in Chatswood, Australia.
From the Company Reports:
Cog Financial Services Limited (ASX: COG) delivered steady results for FY24, ending 30 June 2024.
The company reported a 2% year-over-year increase in underlying NPATA to $24.2 million (FY23: $23.7 million). When adjusted for the diminished contribution of the TL Commercial lease business in run-off, the increase is more significant at 12%. Despite this growth in profit, earnings per share adjusted (EPSA) remained flat at 12.56 cents per share (cps).
The company declared a fully franked final dividend of 4.4 cps, bringing the total FY24 dividend to 8.4 cps, consistent with the prior year.
Operationally, COG demonstrated strong growth. Net Assets Financed (NAF) increased by 15%, reaching $8.9 billion and securing an estimated 21% market share in broker-originated NAF for commercial equipment finance. Additionally, assets under management (AUM) grew by 19% year-over-year to $936.3 million, showcasing the company’s expanding influence in its core markets.
Dividend Profile:
The company increased its dividend payment substantially from $0.02 per share in 2020 to $0.08 per share in 2021 and has successfully maintained this level in subsequent years. Over this period, the dividend yield has also risen significantly, driven by unfavorable stock price trends. The yield has grown from 2.71% in 2020 to 7.47% in 2024, and currently stands at a compelling 9.13%, offering an attractive return to shareholders.
Investment Rationale:
The company has strategically focused on diversifying its operations in recent years, primarily through substantial inorganic growth driven by multiple acquisitions, while also achieving notable organic growth. A key area of focus has been the novated leasing market, which offers both stable revenue generation and growth potential in an expanding industry. More significantly, the company has solidified its position as Australia’s largest asset finance broker and aggregator in the equipment financing segment, holding a commanding 21% market share. This leadership position presents robust growth opportunities, driven by strong demand from the mining industry, energy projects, and other infrastructure developments. This diversification and strategic expansion have led to a remarkable increase in net assets financed, growing from approximately $2.7 billion in 2016 to $9 billion by 2024. This substantial growth underscores the company’s ability to capitalize on market opportunities while establishing a firm foundation across multiple revenue-generating segments.
Claim Your Free Report on the Top 5 ASX Stocks to Buy in 2025
Want to stay ahead of the market and discover the best stocks to invest in right now? Our latest free report reveals the Top 5 ASX Stocks to Buy in March 2025, backed by in-depth research and expert analysis. Don’t miss out on these exclusive insights!
Download your free report today: freereport.pristinegaze.com.au
Disclaimer:
Pristine Gaze Pty Ltd trading as Pristine Gaze (ABN 66 680 815 678) and (ACN 680 815 678) is a Corporate Authorised Representative (CAR No. 001312049) of Alpha Securities Pty Ltd (AFSL 330757). The information provided is general information only. Any advice is general advice only. No consideration has been given or will be given to individual objectives, financial situation, or specific needs of any particular person or organisation. The decision to engage our services and the method selected is a personal decision and involves inherent risks, and you must undertake your own investigations and obtain independent advice regarding suitability for your circumstances. Past performance, examples, or projections are not indicative of future results. While we strive to provide accurate information, we make no guarantees regarding the accuracy or completeness of our materials. The website may also contain links to third-party websites or resources, for which Pristine Gaze is not responsible. All content and intellectual property on the Pristine Gaze website, including but not limited to text, graphics, logos, and images, are the property of Pristine Gaze and are protected by applicable copyright and trademark laws. By accessing or using the Pristine Gaze website, you acknowledge and agree to the terms of this disclaimer. Please read our Terms and Conditions, Privacy Policy and Financial Service Guide for further information. Please read our Terms and Conditions, Privacy Policy and Financial Service Guide for further information.
Comments
0 comment