Keeping the income flowing into a portfolio is a top priority for investors. Attractive dividend yields are good to start out with, but the great income stocks are those that steadily increase their dividends over time.
It's like a bank account that has a growing deposit interest rate. That's where the real power of compounding interest starts to take off.
Here are four companies that offer good yields right now and a have a steady track record for raising dividends over past years.
Premier Investments Limited (ASX: PMV) the clothing retailer offers a 4.8% dividend yield fully franked. Over the past five years, its average annual dividend growth rate was about 5.6%, which is a decent increase to stay ahead of inflation. What's great is the forecast annual average dividend growth of about 10% by analysts over the next two years. Good growth to look forward to!
IOOF Holdings Ltd (ASX: IFL) is a financial services provider that works with investment trusts, superannuation and financial planning. Its dividend yield is 5.4% and over the next two years it is forecast by analysts to grow dividend payments by about 10% per annum on average. That's higher than its past five-year annual average growth rate.
Woodside Petroleum Limited (ASX: WPL), the $35.3 billion energy producer, has a great history of raising dividends over the past five years. The average annual growth was about 16%. Now, it offers a lovely 5.5% yield, but analyst forecasts have the company's dividends going down around an average 9% annually over the next two years.
This could improve if the company can show the market how it can expand oil and gas production. It still has its Browse floating LNG project planned, yet that will be a number of years before it achieves production. Other acquisitions or investments could raise earnings prospects since it has decided not be commit $2.5 billion to the Leviathan LNG project near Israel.
Spark Infrastructure Group (ASX: SKI) has a 6.1% yield and over the past five years its dividend payout grew a compound average 18.3% annually. This energy infrastructure fund has moderated in dividend growth now, but for long-term income it still has potential as the energy market grows.
