2 small-cap dividend shares I would buy

Why the Dicker Data Ltd (ASX:DDR) dividend could be a better option than the Telstra Corporation Ltd (ASX:TLS) dividend…

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Although big blue-chip shares such as Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES) are well-known for being generous dividend payers, I'm not overly confident that either of them will be in a position to grow their dividends for some time.

So if you're looking for strong dividend growth, I would suggest you take a look at these small-cap dividend shares.

Dicker Data Ltd (ASX: DDR)

It's not just Nextdc Ltd (ASX: NXT) that looks set to be a big winner from the shift to the cloud, this wholesale computer hardware company recently launched a new Enterprise Data business unit. The unit is focused on the ever-growing digital transformation and internet of things opportunity for resellers in the mid-market and enterprise sectors. I expect these new revenue streams will give its top line a big boost in FY 2018 and FY 2019, allowing Dicker Data to continue to grow its dividend. This year the company plans to pay shareholders a fully franked 16.4 cents per share dividend in quarterly instalments. This equates to an annual yield of 6.5%.

Money3 Corporation Limited (ASX: MNY)

Thanks to the explosive growth of its secured automotive loans business, this leading credit provider recently delivered a 44.5% increase in full-year net profit after tax to $29.1 million. This strong growth allowed management to increase its full-year dividend once again, meaning its shares now provide investors with a trailing fully franked 3.9% dividend. I expect more of the same in FY 2018, which I think makes Money3 a great option for income investors.

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of Dicker Data Limited, Telstra Limited, and Wesfarmers 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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