Dividends are great, but fast-growing dividends are even better in my opinion.
Whilst there are a number of generous dividend payers on the ASX, the ones that grow their dividends year after year are worth their weight in gold.
Take for example the master franchisor of the Gloria Jean's brand, Retail Food Group Limited (ASX: RFG). This is a company that has grown its dividend each year for at least the last decade and is expected to raise it again this year to 30 cents per share, according to CommSec.
This means that investors that bought its shares 10 years ago at the low price of 98 cents, would be looking at an incredible yield on cost of 30.6%. So for every $10,000 invested in Retail Food Group 10 years ago, investors would receive a fully franked dividend worth $3,060.
I believe this goes to show how lucrative it can be if investors can find companies with strong growth prospects and a history of growing their dividends.
Four companies which I think could be the next Retail Food Group are as follows:
Altium Limited (ASX: ALU)
The printed circuit board software provider is a company that I believe has a lot of potential due to the rapid growth of the internet of things market. Its shares are forecast to pay a fully franked 4.3% dividend this year, before increasing by 22% per annum through to FY 2019.
Mantra Group Ltd (ASX: MTR)
This leading accommodation provider's shares are expected to provide a fully franked 3.3% dividend this year. Moving forward I believe the strong tailwinds of the inbound tourism boom will allow it to grow both its earnings and dividend at a solid rate over the next decade.
Sydney Airport Holdings Ltd (ASX: SYD)
Sydney Airport is of course another company which looks set to benefit from the tourism boom. As more and more passengers flock through its gates, I expect earnings and its dividend to grow at a quick rate. Currently its shares are expected to provide an unfranked 5% dividend in FY 2017.
