While current dividend yield gets most of the attention from investors, arguably this is short sighted and investor attention would be better focused on identifying companies with growing streams of earnings and the ability to meaningfully raise their dividends in the future.
Here are three companies that are expected to grow both their earnings and their dividends in the 2017 financial year (FY), which could offer better prospects for long-term income-seeking investors.
McMillan Shakespeare Limited (ASX: MMS) is a leading provider of novated leasing and salary packaging. Having paid out dividends totalling 52 cents per share (cps) in FY 2015, one analyst consensus forecast expects the total dividend to rise to 66 cps in FY 2017 which implies growth of 27% over the two years. With McMillan's share price currently at $14.79 that would imply a fully franked yield of 4.4%.
iSentia Group Ltd (ASX: ISD) is a leading provider of media intelligence services across Australia and with a growing presence in Asia. Having only been listed since June 2014, iSentia doesn't have a long history of paying dividends. However, its dividend is expected to increase from 6.9 cps in FY 2015 to 9.3 cps in FY 2017 which implies growth of 35% over two years. With the stock down significantly from its 52-week high, at its current share price of $3.88, iSentia has a forecast yield of 2.4%.
QBE Insurance Group Ltd (ASX: QBE) is a global insurance business which as I noted here has been a disappointment for shareholders in recent years. Things could be looking up however with expectations that the dividend could rise from 51 cps in 2015 to 67 cps in 2017, implying growth of 31%. With the share price currently trading at $12, QBE's prospective yield is 5.6%. (data source: CommSec)
