Your instant 5 share dividend portfolio

If you’re investing for the long term, don’t focus on the stocks tipped to pay big dividends in the next 12 months, pick the companies which have a history of returning excess funds to shareholders, but may be more geared towards growth.

Below are five stocks I’d gladly add to my portfolio for both their potential to grow earnings and pay out bigger dividends, over time.

  • Collins Foods Ltd (ASX: CKF) is an owner and operator of KFC, Sizzler and Snag Stand fast casual dining restaurants. Despite boasting a market cap of just $210 million the company has grown earnings per share strongly over the past three years. It currently trades on a forecast fully franked dividend yield of 5.3%.
  • RCG Corporation Ltd (ASX: RCG) is the owner of The Athlete’s Foot stores and distributor of exclusive footwear brands throughout Australia and New Zealand. It currently trades on a huge forecast dividend yield of 7.7% (10.9% grossed-up). What’s more, I expect earnings per share to grow in coming years.
  • Amcom Telecommunications Limited (ASX: AMM) is a small-cap telecommunications stock which provides data networks, centres and IT services to business customers. Although the stock trades on a P/E of 22.5 and yield of 3.3% (fully franked), I expect strong earnings and dividend growth in coming years.
  • M2 Group Ltd (ASX: MTU) is the owner of Dodo, Primus, Commander and Eftel brands. As M2 expands by taking advantage of its huge customer base – through marketing complimentary products like power and gas – I expect its revenues to become more sticky and more profitable. It trades on a forecast dividend yield of 4% fully franked.
  • Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a diversified holding company which has been in existence for over 100 years. Names on its registry include companies like New Hope Corporation, Brickworks, TPG Telecom and much more. In coming years, earnings per share and its 3.2% fully franked dividend are likely to improve modestly. This means now could be a great time to buy in.

Our #1 dividend stock idea – Yours FREE! 

I think all of these businesses are great investments for those seeking both income and growth. However, our top analyst, Scott Phillips, recently identified one cheap but growing ASX stock with a 6.3% grossed-up dividend yield which I think is a STANDOUT buy today. If you're interested in knowing its name, just click on the link below, enter your email address and we'll send you the FREE report on his top dividend stock idea for 2014 - 2015!

"The Motley Fool's Top Dividend Stock for 2014-2015"

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

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