Instead of searching for a share with an enormous dividend yield, I believe sometimes it pays to find shares with the ability to grow their dividends significantly in the future.
Three shares which I believe can grow their dividends strongly over the next few years are listed below. Here's why I like them:
BT Investment Management Ltd (ASX: BTT)
I've been very impressed at the way BTIM has continued to experience strong fund inflows despite the Brexit. As of September 30 the fund manager had $94.4 billion in funds under management, up over 18% from the $79.7 billion it had under management seven days after the Brexit vote. If it can continue this trend then I believe BTIM will be in a position to grow its dividend further. At present BTIM provides a partially franked 3.9% dividend, having grown it by an average of 21% per annum over the last five years.
Collins Foods Ltd (ASX: CKF)
I think this leading KFC operator could be in a position to grow its dividend at a strong rate over the next decade thanks to its expansion at home and internationally. The company plans to add up to 19 new restaurants to its network each year for at least the next five years. I suspect its expansion overseas will continue for at least a decade considering how under-penetrated the market is. At present its shares provide a trailing fully franked 2.9% dividend.
Helloworld Ltd (ASX: HLO)
This travel company's shares offer investors a trailing fully franked 3% dividend. But with management confident that demand for its integrated service offering will continue to develop and grow, I feel Helloworld has the potential to grow its dividend significantly in the future. In FY 2018 EBITDA is forecast to increase by upwards of 21% year-on-year and I expect its dividend could grow at a similar rate.
