Your instant 5-share dividend portfolio

Many bullish analysts and financial commentators have been predicting that the S&P/ASX 200 (ASX: XJO) (^AXJO) will reach 6,000 by year’s end, but after a soft start to the year, share market investors might be questioning whether or not it was the right time to get into the market.

Whether it reaches 6,000 or not, share prices will rise, or fall, sustainably-based on earnings growth not speculation. Good dividends will also continue to be in high demand.

So with that in mind, here are five top dividend stocks which will likely grow earnings and dividends in 2014 and beyond.

Challenger Ltd (ASX: CGF) is a diversified financial services stock which draws a majority of its earnings from fixed income securities, namely annuities. Its services continue to be in demand with the ageing population, which provides a long-term tailwind. It currently yields 3.7%, but the payout could grow by up to 25% in 2014 and include franking.

WAM Capital Limited (ASX: WAM) is a financial services firm which invests in Australian stocks and returns profits to shareholders. A rise in the domestic market will bode well for this fund manager and result in increased earnings for FY14. It currently boasts a trailing dividend yield of 6.3% plus franking.

Another well-priced dividend idea is BWP Trust (ASX: BWP). BWP invests in commercial property throughout Australia and has long-term leases with well-known retailers such as Bunnings Warehouse. It has a trailing dividend yield of 6.4%.

Thorn Group Ltd (ASX: TGA) is an operator of household goods in the Australian rental market which includes Radio Rentals. Consensus forecasts indicate modest earnings growth in 2014, before trending upwards beyond 2015. It currently pays a 5% dividend fully franked.

Lastly, debt receivables and collection company Credit Corp Group Limited (ASX: CCP) has grown its market capitalisation to $400 million, thanks to a strong record of success. Its 10-year average annual shareholder return is 21.6% not including dividends. It currently pays 4% fully franked.

Foolish takeaway

At the end of the day, a stock price is merely a multiple of yearly profits. Share prices cannot continue to sustainably climb without substantial earnings growth. Outside the usual names on the market, there are numerous companies which can provide very strong dividends and great growth prospects.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.   

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