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.
