It’s hard to tell which way share prices are going to go from one month to the next or even each year.
What’s much easier to predict is the dividend paid by a company. If it’s paying a nice, growing dividend then it’s much easier to hang onto a share through the rises and falls of a share price.
Below are three businesses with big dividends that would make great income buys today:
Vocus Group Ltd (ASX: VOC)
Vocus is one of the major telecommunications players on the ASX, known for brands such as Dodo, iPrimus and Commander.
It is getting a growing market share of NBN customers and it also possesses its own infrastructure of cables around Australia, and New Zealand alongside sub-marine connections to other countries.
The growing demand for data should see Vocus’ revenue, profit and dividend steadily rise over time. It’s currently trading at 21.7x FY16’s earnings with a grossed up dividend yield of 6.11%.
DuluxGroup Limited (ASX: DLX)
Dulux is the global paint giant known for brands like British Paints and Dulux. It’s been steadily growing thanks to everyone’s love of property, renovating and construction.
Whether the property market is in a boom or bust phase, paint will continue to be used. This makes Dulux a reasonably defensive business.
Dulux continues to make small, bolt-on acquisitions to aid its overall home improvement offering and boost profit.
It’s trading at 17.4x FY17’s estimated earnings with a grossed up dividend yield of 5.65%.
Retail Food Group Limited (ASX: RFG)
Retail Food Group is the franchisor of a number of brands including Brumby’s and Gloria Jean’s. It has large growth potential thanks to the multitude of brands that it can expand with.
It has a growing network overseas too, which could mean it expands its number of outlets to management’s goal of over 3,000. This would dramatically improve revenue and profitability for the company.
Retail Food Group has already increased its dividend for the last 10 consecutive years and there’s no reason why it can’t keep being successful. It’s trading at 15.7x FY17’s estimated earnings with a grossed up dividend yield of 6.17%.
All three of these businesses have delightful dividend yields which are expected to grow over the coming years. At the current prices I think Vocus looks like the best value, but I expect Retail Food Group will create the most growth.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of Retail Food Group Limited. 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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