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Why these ASX shares could double their dividends in the future

Whilst a big dividend yield is great, dividends which have significant room to grow are even better in my opinion.

Two shares which I think could become great dividend shares in the future are as follows:

Altium Limited (ASX: ALU)

The shares of this leading provider of printed circuit board (PCB) design software currently offer a trailing unfranked 2.6% dividend. Although that doesn’t jump out as being a must buy, I think investors that are patient will be rewarded extremely handsomely.

There will be an estimated 20.8 billion connected devices in use worldwide by 2020. This is a sizeable increase from the 6.4 billion devices research firm Gartner estimates to have been in use last year. As almost all of these devices require PCBs, I expect demand for Altium’s software to grow strongly.

I’m not alone in thinking this. Management believes the company is on course to almost double its revenue to US$200 million by 2020. This should allow its dividend to increase significantly.

Collins Foods Ltd (ASX: CKF)

At present the KFC operator’s shares provide a trailing fully franked 3.2% dividend. Whilst this yield is lower than the market average, in the future things could be very different.

Asides from its strong growth prospects through its international expansion, I think the company has a lot of room to increase its dividend payout.

Last year Collins Food paid out just 40% of its earnings as a dividend. In time I would expect this to increase in line with rival Domino’s Pizza Enterprises Ltd, (ASX: DMP), which traditional pays out around 70% of its earnings as a dividend.

Finally, in the last 10 years this hot dividend share has more than quadrupled its dividend. I'm tipping it to continue growing strongly for the next few years, so grab it whilst you can would be my advice.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Altium. 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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