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3 small cap dividend shares flying under the radar

Whilst popular dividend shares such as Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC) are well-known in investment circles, there are a few shares at the small end of the market that are likely to be flying under the radar.

Three that I think are worth a closer look are listed below. Here’s why I like them:

1300 Smiles Limited (ASX: ONT)

Conditions in the dental industry have been reasonably tough in recent times. This was highlighted when the Australian Dental Association of Queensland recently confirmed that 65% of the population do not visit the dentist for their two-yearly check-ups. But one positive is that during these tough times 1300 Smiles has been able to continue to expand its network through acquisitions at attractive prices. I believe this has positioned it well for growth when conditions improve. At present the dentist operator’s shares provide a trailing fully franked 3.2% dividend.

Money3 Corporation Limited (ASX: MNY)

In FY 2017 this financial services company was a strong performer thanks largely to the impressive performance of its fast-growing auto loans business. This led to above-average earnings growth and a solid increase to its dividend. I expect more of the same over the next couple of years at least thanks to its new $150 million debt facility. This debt facility has resolved a major legacy issue for the company and puts it in a position to grow its market share strongly over the coming years. This bodes well for its dividend, which currently provides investors with a trailing fully franked 3.4% yield.

Think Childcare Ltd (ASX: TNK)

I think this growing childcare company could be a great option for income investors. Although its performance was a little mixed last year, things should get easier in 2018 and beyond thanks to favourable government funding changes. These changes are expected to make childcare more affordable, ultimately boosting occupancy levels and potentially its profits. Another reason to be positive on its long-term future is that Think has a pipeline of existing childcare centres waiting to be acquired via its incubator program. I expect this to provide it with plenty of acquisitive growth for years to come. Its shares provide investors with a trailing fully franked 4.5% dividend.

Finally, whilst this star stock is not a small cap dividend share, it is one of the best dividend shares on the market in my opinion.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended 1300SMILES Limited and Money3 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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