2 dividend growth stars on my shopping list

The Altium Limited (ASX:ALU) dividend may not be market-beating today, but I expect it to be one of two that grow at an exceptional rate over the next few years.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Whilst a big dividend yield is undoubtedly great, I think dividends that have significant growth potential are even better.

Two shares which I believe could provide exactly this are listed below. Here's why I think they are great option for income investors with a long time horizon:

Altium Limited (ASX: ALU)

Although Altium's shares only provide an unfranked 2.2% dividend, I wouldn't be too quick to dismiss it as a potential dividend star of the future. The printed circuit board (PCB) design software provider is certainly a company with enormous potential. Due to strong demand for its software, thanks to the rise of smart devices and the Internet of Things, management is confident it will double its revenue by FY 2020 to US$200 million. As well as this sales growth, I expect the company's margins to continue to expand as it scales. This should result in increased profitability and allow the company to grow its dividend at a rapid pace.

Mantra Group Ltd (ASX: MTR)

With the tourism boom showing little sign of slowing, I believe accommodation providers like Mantra are in a great position to profit. As demand for rooms increases, I expect to see Mantra enjoy higher occupancy levels and average room rates. Whilst there have been concerns over the impact Airbnb will have on its business, I believe the sheer number of visitors into Australia and the location of its properties puts it in a great position to continue its growth unabated. At present Mantra's shares provide a trailing fully franked 3.4% dividend.

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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »