Whilst a big dividend yield is undoubtedly great, I think dividends which have significant room to grow in the future are even better.
One example of this is Retail Food Group Limited (ASX: RFG). Investors that were lucky enough to snap up shares 10 years ago would have paid $1.40 a share.
At present the shares of the company behind brands including Gloria Jean's and Donut King provide a trailing 29.25 cents per share fully franked dividend. This equates to a fully franked yield on cost of 20.9%.
Which means that a $10,000 investment in Retail Food Group yielded a fully franked $2,089 in dividends during the last 12 months.
I believe this demonstrates how lucrative it can be to catch future dividend stars early on. With that in mind, here are three shares I think are worth considering today:
Appen Ltd (ASX: APX)
Appen is a leading language data and services provider to government agencies, automakers, and major technology companies including Facebook and Microsoft. Due to the increasing use of machine learning and artificial intelligence driving the demand for quality data, I believe the company is in a great position to grow strongly over the next decade. At present it yields a fully franked 1.9% dividend.
Collins Foods Ltd (ASX: CKF)
Although the shares of this operator of KFC restaurants only provide a trailing fully franked 2.9% dividend, I believe it has significant growth potential. As Collins Foods opens more and more restaurants in the European market, I believe its earnings growth will accelerate. This should allow the company to keep increasing its dividend, especially with its payout ratio being relative low compared to industry peers.
Premier Investments Limited (ASX: PMV)
While the retail industry looks set to be a difficult place to operate with the looming arrival of Amazon in Australia, I believe the main breadwinners from Premier Investments' portfolio of brands are reasonably Amazon-proof. I feel this should allow the company to continue growing earnings and its dividend at a solid rate for the foreseeable future. At present Premier Investments provides a trailing 4% dividend.
