Most people put shares into two different categories, either growth stocks or dividend stocks. But I'd like to argue that growth stocks could be the best way to rapidly grow income.
A lot of management teams realise that shareholders wish to benefit from a company's growth, but don't want to sell their shares, which is why paying a dividend makes sense. If a business is growing its profit at a fast rate then the dividend will grow quickly too, assuming the same payout ratio.
If the profit and dividend are growing by double digits most years then an investor should be able to achieve very nice returns and a quickly-rising stream of dividends.
Here are three shares growing their dividend at a rapid pace:
MNF Group Ltd (ASX: MNF)
MNF Group is a Voice Over Internet Protocol (VOIP) business to Australian retail and wholesale customers. VOIP is a much cheaper form of connection than the traditional landline phones.
The business has generated a lot of growth over the last few years and could be about to make some more as it is re-launching its Pennytel brand, which is aimed at the over-50 demographic, this demographic is a large one thanks to Australia's ageing population.
In its recent result the company announced that it would increase its dividend by 15%.
Altium Limited (ASX: ALU)
Altium is one of the world's leading electronic PCB software providers, essentially it gives engineers the tools to design the latest products of the future. There are many organisations that use its services including NASA, Cochlear Limited (ASX: COH), John Deere and BMW.
The business is achieving rapid growth thanks to the increasing complexity of devices and machinery, the Internet of Things is only going to become more prevalent. That's why Altium predicted that revenue would double in only a few years. Altium's result is due later today, but I wouldn't be surprised to see another double digit increase to the dividend.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is one of the world's leading private hospital operators, it has grown organically and through acquisitions exceptionally well over the past two decades, which is why the dividend has been able to grow at such a strong pace as well.
The ageing demographics of Australia and other countries are only going to become more concentrated, which should see Ramsay's revenue, profit and dividend increase at a good pace for many more years.
Foolish takeaway
At the current prices I think Ramsay and MNF could be good buys today, Altium may be a little expensive. The yields aren't too high but will grow at a fast pace, which should boost your bank account along the way as the companies grow.
