With an average dividend yield of 4.2%, there certainly is a lot of choice for income investors on the Australian Stock Exchange.
Whilst big yields are great, I believe that fast-growing dividends are even better. I would much rather invest in a company that has the potential to increase its dividend each year for the foreseeable future, rather than one that will remain static or even decrease.
Here are three fast-growing dividend shares at the top of my list:
Premier Investments Limited (ASX: PMV)
The company behind brands such as Smiggle and Peter Alexander currently provides a trailing fully franked 3.6% dividend. According to CommSec this is expected to grow by almost 15% per annum through to FY 2019. Thanks to the success of Smiggle's international expansion, I believe the company will deliver on expectations. At 19x trailing earnings I think Premier Investments is great value and well worth a closer look.
Tassal Group Limited (ASX: TGR)
Tassal is expected to pay a fully franked 4.2% dividend in FY 2017, an increase of 16% from a year earlier. Thanks to favourable salmon pricing in wholesale and export markets, increasing demand, and the successful integration of the De Costi Seafoods acquisition, I believe Tassal is in position to deliver several years of above-average growth. With its shares changing hands at 14x forward earnings, Tassal could be a bargain buy in my eyes.
Vocus Communications Limited (ASX: VOC)
With Vocus growing its NBN market share and management forecasting low-to-mid-teen underlying earnings per share growth in FY 2017, I believe Vocus is a huge bargain at just 14x trailing earnings. Another big bonus is its trailing fully franked 4% dividend. As management is intent on increasing its dividend in line with the growth of the business, I believe this is an absolute must buy dividend share at the current price.
