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.
