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3 small-cap dividend shares to boost your income

Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) may be some of the best known dividend shares on the local market, but they are certainly not the only ones worth considering by investors.

Three under the radar small-cap dividend shares which I think have a lot of long-term growth potential are listed below.

Here’s why I like them:

Baby Bunting Group Ltd (ASX: BBN)

Since the turn of the year this baby products retailer’s shares have lost 41% of their value due to the negative impact of the closure of its competitors. Clearance activities have hit the company’s margins, leading to a recent profit downgrade and its expectation for flat earnings this year. However, I believe this is just a temporary headwind and expect Baby Bunting to be in a much stronger position in the future once things ease. This could make it well worth grabbing hold of its shares today as they provide a trailing fully franked 5.1% dividend.

Lifehealthcare Group Ltd (ASX: LHC)

Thanks to the strong demand for healthcare services driven by an ageing population, emerging technology, and rising rates of chronic disease, I believe LifeHealthcare could be a great buy and hold investment option. Especially as the medical device company is not going to be impacted by the reforms to the Prostheses List as much as first feared. As a result, management expects to deliver high single to low double digit growth in revenue, underlying EBITDA, and underlying earnings per share this year. I expect its trailing partially franked 5.2% dividend could grow at a similar rate.

Money3 Corporation Limited (ASX: MNY)

In FY 2017 this credit provider posted an impressive 44.5% increase in full-year net profit after tax to $29.1 million thanks largely to strong growth from its secured automotive loans business. Earlier this week the company announced a new debt facility that will give it the capacity to almost double its market share. I expect this will put Money3 in a great position to continue growing its bottom line and dividend over the coming years. At the current share price its shares provide a trailing fully franked 3.1% dividend.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Telstra 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.