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Can you afford to miss these enormous dividends?

With the official cash rate now at 1.50%, it’s been a terrible time for cash/term deposit investors as they’ve watched their income plummet over the last six years.

Which is why, of course, there exists the so-called chase-for-yield amongst various shares on the ASX.

It’s a serious matter if you’re a retiree and you’re needing to generate an income from your investments.

And for younger investors still in the process of building their portfolio, ‘dividend stocks’ needn’t be avoided due to perceptions of being boring or low growth.

So what does one do?

Some of the greatest dividend payers on the sharemarket have been those companies that provide a dividend yield that actually looked pretty low at the beginning, but has grown impressively over the years to outstrip anything else available in financial markets today.

Ideally, for a dividend-focused investor, a company’s shares should:

  • pay a high up-front dividend,
  • exhibit growth in the dividend over time, and
  • provide minimal risk of a capital loss due to paying too much for the shares

It’s a difficult combination to find in today’s market, but here are three stocks that I think will do well over the next five years for dividend-focused investors.

Brickworks Limited (ASX: BKW)

Currently paying a fully-franked dividend yield of 3.4%, Brickworks has demonstrated steady, but unexciting, dividend growth over the last decade. Nevertheless, for a core part of your portfolio to be held for a number of years, Brickworks probably won’t let you down.

Brickworks is a holding company for a diversified group of businesses in the manufacturing of clay/concrete products for the building industry and includes names such as Austral Bricks, Bristile Roofing and Nubrik. As well as this, the company also has a significant shareholding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), valued at approximately $1.4 billion.

With a history of paying steadily-rising dividends over time, and a forecast increase in earnings growth over the next three years, shares in Brickworks are a solid choice for dividend-conscious investors.

Ainsworth Game Technology Limited (ASX: AGI)

Ainsworth develops and manufactures gaming machines and operates in a similar space to that of Aristocrat Leisure Limited (ASX: ALL).

Currently paying a minimally-franked dividend yield of 4.6%, the shares are considered undervalued at prices of around $2.15 with the dividend forecast to increase by close to 20% over the next two years.

It’s certainly not a stock that’s usually considered for dividend investors, but given its share price has fallen from a high of $3.24 since late last year, Ainsworth is certainly worth a look given the yield and value on offer today.

Flight Centre Travel Group Ltd (ASX: FLT)

A holding company for a number of retail and corporate travel businesses, Flight Centre has an impeccable history since it became a public company back in December 1995.

Its dividend yield at the current price of $35.69 is a fully-franked 4.2% with steady, if unspectacular, growth in the dividend expected in the years ahead.

The company is in rude financial health too with minimal debt on the balance sheet. There are of course competitive pressures being applied against Flight Centre, but it’s not necessarily a given that Flight Centre is simply going to fold in the face of online competition.

If you’re willing to back the CEO’s (Graham Turner’s) vision of a hybrid bricks-and-mortar/online retailer of travel products, and you’re willing to hold the shares for at least 3-5 years, you’ll be amply rewarded with the dividends on offer, even if the share price goes nowhere in the short-term.

Forget companies cutting dividends like BHP and Rio Tinto when you can get GROWING dividends.

This "dirt cheap" company. is growing like gangbusters, and trading on a fat dividend yield, FULLY FRANKED. With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016. Click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required.

Motley Fool contributor Edward Vesely owns shares of Flight Centre Travel Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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