Most investors seem to think that you can only get good dividend income from shares with big yields.
However, over a number of years it's shares that are growing the dividend the quickest that will provide the most dividend income. A pleasing side effect should also be strong capital growth.
Here are three shares that could fit the bill:
Domino's Pizza Enterprises Ltd (ASX: DMP)
Domino's is the master franchisor for Domino's outlets in Australia, New Zealand, Germany, Japan, France, the Netherlands and Belgium.
It was a market darling until recently when its high valuation and alleged underpaid wages sent the share price down to $40.
However, the underlying business is still growing strongly with the profit margin and number of outlets growing nicely.
In FY17 it grew underlying earnings per share (EPS) by 26.8%, which allowed management to increase the dividend by 26.9%.
Domino's is currently trading at 29x FY18's estimated earnings with a partially franked dividend yield of 2%.
Altium Limited (ASX: ALU)
Altium is one of the world's leading electronic PCB software companies.
It gives engineers from organisations like NASA, BMW and Cochlear Limited (ASX: COH) the tools to create the products of the future.
Altium is generating strong returns thanks to the growth of the 'Internet of Things' phenomenon. In FY17 it grew net profit after tax (NPAT) by 22%. This strong growth meant that management could grow the dividend by 15%.
Altium is currently trading at 37x FY18's estimated earnings with an unfranked dividend yield of 1.72%.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is one of the largest private hospital operators in the world.
The ageing population of Australia, the UK and France should give Ramsay a lot of potential for growth over the next two decades.
In FY17 Ramsay grew its earnings per share by 13% and the dividend by 13%.
Ramsay is currently trading at 23x FY18's estimated earnings with a grossed-up dividend yield of 2.87%.
Foolish takeaway
I think all three of these shares will soundly beat the market over the next five years. Altium is probably a bit too expensive for a buy today, but the other two look like solid choices.
