I?m sure very few people think of Domino’s Pizza Enterprises Ltd. (ASX: DMP) as a dividend share, but if you had invested in the pizza chain operator 10 years ago you might see it differently.
Anyone that invests in Domino?s today should expect to receive a fully franked dividend of around 99.2 cents per share in FY 2017 according to CommSec. At the current price that equates to a paltry yield of 1.4% and well below the market average of 4.5%.
But investors that were lucky enough to pick up Domino?s shares for $3.15 a piece 10 years ago and resisted…
I’m sure very few people think of Domino’s Pizza Enterprises Ltd. (ASX: DMP) as a dividend share, but if you had invested in the pizza chain operator 10 years ago you might see it differently.
Anyone that invests in Domino’s today should expect to receive a fully franked dividend of around 99.2 cents per share in FY 2017 according to CommSec. At the current price that equates to a paltry yield of 1.4% and well below the market average of 4.5%.
But investors that were lucky enough to pick up Domino’s shares for $3.15 a piece 10 years ago and resisted selling would receive a yield on cost of 31.5%.
Let’s put that in perspective. For every $10,000 invested in Domino’s 10 years ago investors would receive $3,150 in dividends in FY 2017. A huge difference to the $140 you’d get if you invested $10,000 today.
With that in mind I feel investors with a long time horizon should be forward thinking when it comes to dividend shares. Companies that have strong long-term growth prospects and a history of growing their dividends could become future dividend stars.
Here are three which I feel have a strong chance of being the next Domino’s:
Blackmores Limited (ASX: BKL)
One of the best things about health supplements company Blackmores is that it already provides a trailing fully franked 3.5% dividend. Whilst a difficult start to FY 2017 may result in it taking a step backwards this year, I feel confident that the company will return to growth next year. Thanks to its strong growth prospects, I believe Blackmores can increase its dividend significantly over the next decade.
Mantra Group Ltd (ASX: MTR)
Accommodation provider Mantra Group is another company that already pays a generous dividend. In FY 2017 Mantra’s shares are expected to provide a fully franked 4.2% dividend according to CommSec. Due to the tourism boom I believe that Mantra will see strong long-term demand for its rooms, which should provide it with the earnings growth required to continue increasing its dividend for years to come.
Webjet Limited (ASX: WEB)
In FY 2017 Webjet is forecast to pay a fully franked 2.1% dividend. As more consumers and businesses move away from traditional bricks-and-mortar travel agencies to online travel bookings, I believe Webjet stands to profit greatly. I believe this should allow the company to grow both its earnings and its dividend at a solid rate for at least the next decade. Although its dividend may be small now, in time I believe it has a real chance of becoming a dividend star.
If you would like more quality dividend ideas, then I would recommend this top dividend share as well. A strong yield and potential share price gains make this a great investment idea in my opinion.
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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.
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