4 shares to start your dividend portfolio growth

Over time dividends have provided a significant part of the returns of the share market, perhaps up to half depending on the country and time period you look at.

Dividends are a great way for management to reward shareholders and provide a physical return for long-term investors.

Here are four dividend shares that I think would be a great start to your dividend portfolio:

Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC) is a listed investment company (LIC) that makes all the investment decisions for you.

It’s been operating for around 100 years and has a portfolio full of blue chips such as the big four bank Commonwealth Bank of Australia (ASX: CBA) and retail giant Wesfarmers Limited (ASX: WES).

AFIC is trading with a grossed-up dividend yield of 5.94%.

WAM Research Limited (ASX: WAX) is another LIC, it is run by Geoff Wilson and his investment team. It has beaten the market quite convincingly over the medium and long term.

WAM Research pays out a lot of the profit that it earns as dividends and has grown its dividend every year since the GFC. It currently has a grossed-up dividend yield of 8.28%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), or ‘Soul Patts’, is an investment conglomerate that owns large stakes in a variety of businesses including TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW).

Soul Patts is trading at 18x FY17’s estimated earnings with a grossed-up dividend yield of 4%.

Rural Funds Group (ASX: RFF) is Australia’s only listed agricultural real estate investment trust (REIT).

It owns a variety of different farm types, with an impressive list of tenants such as Treasury Wine Estates Ltd (ASX: TWE). Most of its rental contracts have annual rental indexation increases that are either CPI related or are a fixed 2.5% increase.

Rural Funds is trading with a distribution yield of 5.13% for FY17.

Foolish takeaway

I think all four of these businesses would make a great start for any dividend portfolio, which is why I’m a shareholder in three of them.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of RURALFUNDS STAPLED. Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED, WAM Research Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Washington H. Soul Pattinson and Company 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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