Why these fast-growing dividend shares could be in the buy zone

Some of the most popular blue chip shares on the local share market such as Woolworths Group Ltd (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS) have disappointed shareholders in recent years with cuts to their dividends.

Thankfully that has not been the case for all shares on the ASX. In fact, some have been growing their dividends at an explosive rate and look likely to continue doing so in the future.

I think this could make it worth considering investing in these dividend shares today:

Domino’s Pizza Enterprises Ltd. (ASX: DMP)

Whilst I’m not convinced that this pizza chain operator’s shares have bottomed yet after its disappointing first-half performance and concerns over its buyback program rattled the market, I still think it could be an opportune time to snap them up with a patient long-term view. Over the last five years Domino’s has grown its dividend by an average of 28% per annum. I expect similar growth over the next five years thanks to its enormous expansion plans. At present Domino’s shares provide a partially franked 2.9% estimated forward dividend. Whilst this isn’t a market-beater today, in a few years I expect the yield on cost could approach 7%.

Premier Investments Limited (ASX: PMV)

The company behind the fast-growing Smiggle and Peter Alexander brands has grown its dividend by an average of 8% per annum over the last five years. I think this growth rate could accelerate over the next five years thanks to the global expansion of the Smiggle brand. This brand is expected to achieve annual sales in excess of $450 million by FY 2020, almost double the sales the brand generated in FY 2017. The Peter Alexander brand is also expected to contribute strongly as well, potentially putting management in a position to increase its dividend significantly. At present its shares provide a trailing fully franked 3.9% yield.

Here is a third dividend share with enormous future growth potential as well. I think it is great value at the moment for income investors.

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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 and has recommended Premier Investments Limited and 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 Scott Phillips.

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