My favourite dividend share on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) would have to be Retail Food Group Limited (ASX: RFG).
In FY 2017 the shares of the master franchisor of popular brands such as Gloria Jean's, Donut King, and Michel's Patisserie are expected to provide investors with a fully franked 4.3% dividend according to CommSec.
Whilst this may not be the biggest yield available on the ASX, it is still higher than the market-average of 4.2% and thoroughly smashes term deposits.
Furthermore, the company has a long history of dividend increases which makes it a great buy and hold investment in my opinion.
For example, in the last 10 years Retail Food Group has increased its dividend each year by a staggering average of 17.9%.
Any lucky investors that bought its shares exactly 10 years ago at the low price of $1.30, can look forward to an estimated yield on cost of 23% in FY 2017.
This means that a $10,000 investment in its shares in 2007 will yield a massive fully franked dividend of $2,300 this year. Let's not forget all those other dividends it has paid, as well as the 430% gain its share price has made during that time.
Clearly the company has been one of the best investments you could have made 10 years ago. But is it still the same today?
Whilst expecting the same to happen over the next 10 years might be wishful thinking, I do believe the company has strong long-term growth prospects that makes it just as attractive today as it was in 2007.
Through a combination of domestic and international expansion, Retail Food Group expects to add a further 140 outlets to its network in just the first half of FY 2017.
As well as this the company could receive a boost from its recently announced partnership with fuel retailer BP to explore opportunities to expand the fresh food and coffee choices for customers at its 1,300 locations.
As a result management is confident that underlying net profit after tax will grow by around 20% in FY 2017. I believe it will not only deliver on this, but that FY 2018 could be equally strong as its international expansion continues.
This makes it a must buy in my opinion, along with fellow food and beverage companies Domino's Pizza Enterprises Ltd. (ASX: DMP) and Collins Foods Ltd (ASX: CKF).
