We all know that "get-rich-quick" schemes rarely if ever are true. There are too many variables or things that could go wrong. With investments, we're not talking about bets on stocks. It's all about finding the companies that can give the best return over many years.
A high-yield stock may attract your attention, yet after the initial stock purchase you want that stock to grow dividend payments as much as possible.
If a stock's dividend grew around 7% annually, the dividend payment should double every 10 years or so. If it was originally a 5% yield, 10 years later the dividend would be like a 10% yield. There's no way you could double a bank's term deposit rate like that. The bigger the dividend, the more you can reinvest.
So what companies offer a high yield and could keep growing their dividend steadily?
Automotive Holdings Group Ltd (ASX: AHE) currently has a very generous 5.8% yield fully franked. Over the past five years, Australia's largest auto retailer raised dividends by high-single digits annually. It is forecast to continue raising future dividends another 10% annually over the next several years. At that rate dividends could potentially double in about seven years – even better!
IOOF Holdings Limited (ASX: IFL) provides financial products and portfolio administration services for superannuation and investment trusts. In financial year 2014, dividends rose 13%. The stock yields 5.5% fully franked and dividends are expected to rise around 10% yearly for the next several years. With more people wanting superannuation and other annuity income for their retirement, IOOF Holdings' future growth looks promising.
Investment management service provider Perpetual Limited (ASX: PPT) has seen very strong earnings gains in financial year 2014, which sent dividend payments up over 30%. The company's investments have paid off well. Currently, the yield is 4.2% fully franked. Yet over the next two years, analysts forecast dividends could rise as much as a whopping 23% annually. That would be a great income boost for your portfolio.
