To be successful in the stock market you want big dividends and capital gains. However, in the last year everyone has seemingly been focused solely on dividends. But why?
As good as they did in 2013, blue-chips weren't the best performing stocks by any means. Sure, they paid big dividends and notched-up somewhat impressive growth, but some stocks more than doubled in value throughout 2013 as a result of strong management and big increases in earnings.
For example, although Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) have returned 5.5% dividends and have driven mid-teen capital gains in the past 12 months, each of the following stocks have returned more than 53% in share price plus dividends.
What's more, they're each expected to grow dividends and earnings considerably in 2014.
The first of which is Greencross Limited (ASX: GXL). Greencross is a vet aiming to control 20% of the domestic market via acquisitions of existing practices on EBIT multiples of around four. So far the strategy has paid off and its share price has increased by more than 100% since the beginning of 2013. Last year it paid a 10 cent dividend but some analysts are forecasting a full-year payout of up to 16 cents in FY14.
In the soft commodities sector, Tassal Group (ASX: TGR) has pulled off a commendable transition in its operations. From focusing on international exportation to increasing per capita consumption of salmon in the domestic market, it managed to grow earnings considerably on flat revenue growth. It is now a more efficient producer with growing dividends (expected to jump over 20%) in FY14.
Lastly, RCG Corporation Limited (ASX: RCG) continues to produce happy shareholders with growth in both earnings and share price. In addition to paying a dividend over 5.5% in the past year, it has notched-up capital gains of over 50%. However it's not over yet and as the owner of The Athletes Foot and distributor of many well-known footwear brands such as Saucony, Catepillar and more, its busy growing its labels on shelves around Australia and New Zealand.
Foolish takeaway
You don't have look far to find fast growing, high-yielding dividend stocks with reputable brands. These companies have business models ideal for holding for the long-term since they pay tax effective dividends and have the ability to grow earnings for many years to come. Of these companies, RCG pays the biggest dividend (5.5%), whilst Greencross is most leveraged to growth but arguably the most risky.
