The share market is often divided into two categories, dividend stocks and growth stocks.
In the short-term this makes sense, but over the long-term I think it makes sense to consider shares with low starting yields that are growing the dividend quickly, as these would make good long-term dividend shares too.
The initial purchased dividend yield may be small but after a few years of double digit growth the yield-on-cost could be much more attractive.
Here are three shares that could provide strong growth and dividend income:
Bapcor Ltd (ASX: BAP)
Bapcor is Australia's leading auto parts business. It owns a number of small specialist brands as well as Burson and Autobarn.
Management have done a great job of growing margins over the last few years, which has helped the business grow organically. Over the same period Bapcor has gone on an acquisition spree which has turned it into the clear market leader in Australia and New Zealand.
All of this growth has meant the earnings per share has grown strongly, allowing the dividend to grow strongly too.
In FY17 the dividend grew by 18.2% and I expect FY18 will have another good increase as well.
Bapcor is currently trading at 23x FY17's earnings with a grossed-up dividend yield of 3.33%.
Class Ltd (ASX: CL1)
Class is a cloud accounting software provider for self-managed superannuation fund (SMSF) administrators.
It's enjoying strong growth thanks to the number of SMSF accounts that are being moved over to the cloud for more efficient reporting and automation tools.
Class grew its dividend by 34% in FY17 and another good increase could be on the way in FY18.
It's currently trading at 34x FY18's estimated earnings with a grossed-up dividend yield of 2.64%.
The high-flying electronic PCB software company is benefiting significantly from the age of the 'Internet of Things'.
Altium has made a number of clever acquisitions in recent times, as well as working with some very promising businesses like Dassault Systèmes.
Management increased the dividend by 15% in FY17, which was another good increase in a streak of several years of increases.
Altium is currently trading at 38x FY18's estimated earnings with an unfranked dividend yield of 1.68%.
Foolish takeaway
Altium is probably too expensive for a buy today, but Bapcor and Class could both become good income choices for investors over the next two to three years.
