I believe that finding shares that offer a good source of income is important for a lot of people.
However, investors shouldn't buy just for the sake of the yield. The earnings and dividend need to have good growth prospects too.
Here are three shares that I think can offer good dividends over the long-term:
WAM Capital Limited (ASX: WAM)
It's hard to look beyond WAM Capital as a good dividend opportunity. The listed investment company (LIC) has outperformed the market over the long-term by some margin and it pays out a lot of that performance as a dividend. It focuses on undervalued growth companies that it believes will experience a catalyst to improve the share price.
The dividend has been increased every year since the GFC. If we assume the same dividend payout in six months, the projected grossed-up dividend yield is 8.96%.
Telstra Corporation Ltd (ASX: TLS)
The old faithful blue-chip dividend stock is almost at a multi-year low of $3.34. The lower the price gets the more likely it is to have reached the 'bottom' and won't fall any further.
Management have said that the dividend will now be linked to the underlying earnings of the business. The problem is that the earnings could actually drop a little lower from here due to compressed margins as a result of the NBN.
But, on the positive side of the argument, 5G will be coming within the next year or two and it's expected that this could improve Telstra's revenue due to the large number of additional devices that will require data such as automated cars. Demand for data is only going to keep growing.
Telstra's current projected dividend of 22 cents per share equates to a grossed-up dividend yield of 9.38%.
NAOS Absolute Opportunities Co Ltd (ASX: NAC)
This LIC has easily outperformed the market since inception. The portfolio has grown by an average of 19.34% per annum over the past three years, before fees.
Aside from the odd benchmark, this is a high-performing company that is willing to pay out a sustainable growing dividend from its profit reserves.
Assuming another 2.75 cents payment in six months, it's trading with a grossed-up dividend yield of 7.86%
Foolish takeaway
Of course, dividends are not guaranteed and any of the above businesses could reduce the dividend if profits don't perform to expectations. If I had to pick two of the three, I'd be happiest to invest in WAM Capital shares and then the Naos LIC. I think both investment teams have the capability to continue outperforming the market.
