With Australian interest rates unlikely to move very far in either direction in 2017, I suspect high yielding shares will remain an extremely popular choice amongst income-seeking investors.
Although it can be quite easy to pick out the highest yielding shares using a basic stock filter, it is important for investors to make sure they pick shares with sustainable and growing dividends.
With that in mind, here are four shares that I think are well placed to deliver growing dividends over the next few years:
Sonic Healthcare Limited (ASX: SHL)
The pathology and diagnostic imaging company has an impressive record of delivering strong dividend growth and is very well placed to maintain this trend moving forward. The company has a broad geographic reach and should continue to benefit from advances in technology and the further consolidation of smaller players. Investors who buy shares today can expect a dividend yield of around 3.8%, although this will only be partially franked due to its large international operations.
RCG Corporation Ltd (ASX: RCG)
RCG is behind some of the most popular footwear and athletic retail chains including The Athlete's Foot and Hype DC. The company has an excellent track record of delivering strong same-store-sales growth as well as successfully integrating earnings accretive acquisitions. RCG is expected to deliver a strong uptick in earnings in FY17 and this is expected to support a forecast dividend yield of 4.9%.
Challenger Ltd (ASX: CGF)
Australia's leading annuity provider has enjoyed great success over the past five years and remains extremely well positioned to take advantage of the growing demand for reliable retirement income. Challenger continues to add new distribution partners for its Life business and is also gaining credibility with its fast-growing funds management business. Although a trailing dividend yield of around 3% might not sound very attractive, the company is expected to grow this strongly over the next few years.
IPH Ltd (ASX: IPH)
IPH shares have been in a strong downtrend for the best part of 12 months but I feel they offer a fairly attractive risk-reward proposition at the current price of $4.82. The company operates in the fast-growing intellectual property segment of the legal market and has cemented its position as one of the leading players in the Asia-Pacific region with a number of strategic acquisitions. IPH is expected to deliver double-digit earnings growth in FY17 and the shares currently offer a forecast dividend yield of 4.9%.
