Investors usually accept that the older they get, the more focus they need to place on income compared to growth when it comes to investing.

That’s one reason why dividend shares – like the big four banks – are hugely popular with self-managed super funds (SMSF) and older Australians.

But there’s also a case for holding some companies that can grow their dividends and growth stocks, no matter what stage of life investors are in.

With no tax payable on capital gains or income, retirees don’t need to choose between the two and can hold a mix of both. That can turn out to be a wise decision if the person lives longer than they might expect.

The perfect combination would be a diversified selection of stocks that are already paying out decent dividends, but also the potential to growth those dividends substantially over time.

Here are five shares that might fit the bill:

  1. Wesfarmers Ltd (ASX: WES), the owner of Coles and Bunnings, already pays a dividend yield of 4.5% fully franked, and consensus forecasts point to a robust increase in dividends in the 2017 financial year.
  2. Flight Centre Travel Group Ltd (ASX: FLT), the ubiquitous travel agent with multiple operations in more than 10 countries, currently pays a dividend yield of 5.1%. That’s in a year of disappointing earnings, and the year ahead may be tough too. But over the long-term, if Flight Centre can maintain its revenue growth, dividends will grow nicely.
  3. Vita Group Limited (ASX: VTG), which runs 103 Telstra Corporation Ltd (ASX: TLS) retail stores and a number of business centres, currently sports a yield of 4.3% at the current price of $3.24. If Telstra hands over more of its retail stores to Vita, that dividend could grow rapidly.
  4. Contango Microcap Ltd (ASX: CTN) is a listed investment company that focuses on investing in smaller companies on the ASX. The company consistently pays out dividends of around 6% (it’s currently 5.8%), and has an investment return exceeding 16% since inception 12 years ago.
  5. Flexigroup Limited (ASX: FXL) provides many retailers with those interest-free financing deals, and the company currently pays a 6.4% fully franked dividend. The bonus is that shares look cheap on a trailing P/E of 8.7x, providing potential for capital gains as well as increased dividends in future.

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Motley Fool writer/analyst Mike King owns shares in Wesfarmers Ltd, Flight Centre Travel Group and Contango Microcap. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.