Why I would buy these under-the-radar dividend stars

Due to recent market volatility I think that Westpac Banking Corp (ASX: WBC) shares are attractively priced at the moment, especially when you consider the generous yield they provide.

However, a lot of investors will no doubt already have significant exposure to the banks.

So, for those investors, I have picked out two top dividend shares that I like which are flying under the radar. They are as follows:

Baby Bunting Group Ltd (ASX: BBN)

Unfortunately for its shareholders this baby products retailer has been a victim of its own success recently. The negative impact of clearance sales from closing competitors has weighed heavily on its margins and led to Baby Bunting posting a 27.2% decline in half-year net profit to $4.2 million two weeks ago. Pleasingly, though, there are signs that this short-term headwind is subsiding now, putting Baby Bunting in a strong position to gobble up the market share these competitors have left behind. Based on its current share price, Baby Bunting’s shares are changing hands at 18x trailing earnings and provide a trailing fully franked 4.7% dividend. I think this make Baby Bunting a great option for income investors.

Money3 Corporation Limited (ASX: MNY)

Last week this growing financial services company reported its half-year result which revealed yet another strong performance from its secured auto loans business. Strong demand for these loans led to the company’s gross loan book growing 18.5% to $292.8 million. This ultimately helped Money3 deliver a 12.3% increase in half-year net profit after tax to $15.5 million. But perhaps best of all was its dividend increase. The board elected to pay a fully franked interim dividend of 4.5 cents per share, an increase of 80% on the prior corresponding period. This means that Money3’s shares now provide investors with a trailing 4.2% yield. It is worth noting, however, that its shares did go ex-dividend this morning. But with the company’s market share of the second hand automotive finance market just a tiny 2%, I believe it has a significant runway for growth in the future.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended 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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