Some investors may be drawn to some of the biggest dividend yields on the ASX like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and G8 Education Ltd (ASX: GEM). I can understand why. Current big yields seem like a quick way to get big income. However, patient investors could invest in the future dividend stars and see their income rapidly rise and perhaps overtake the old blue chip income after five or so years. Here are three future dividend ideas: WAM Microcap Limited (ASX: WMI) WAM Microcap is one of the newest…
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Some investors may be drawn to some of the biggest dividend yields on the ASX like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and G8 Education Ltd (ASX: GEM). I can understand why. Current big yields seem like a quick way to get big income.
However, patient investors could invest in the future dividend stars and see their income rapidly rise and perhaps overtake the old blue chip income after five or so years.
Here are three future dividend ideas:
WAM Microcap Limited (ASX: WMI)
WAM Microcap is one of the newest listed investment companies (LICs) to be launched by Wilson Asset Management. It focuses on the smallest companies on the ASX, even smaller than the ones that WAM Capital Limited (ASX: WAM) normally goes for.
It has generated a very impressive return in this financial year. The portfolio has grown by 28.4% before expenses and fees in FY18 to the end of January.
WAM Microcap is going to pay a 2 cents per share dividend next month, so assuming another 2 cents six months later its current grossed-up dividend yield is 3.78%. However, I wouldn’t be surprised if the dividend payout rose to a yield of at least 7% in future years.
National Veterinary Care Ltd (ASX: NVL)
National Veterinary Care is a fast-growing vet business that is acquiring other clinics to increase its scale and profit.
It has only recently started paying a dividend and currently has a trailing grossed-up dividend yield of 1.59%. However, I expect as the profits grow the dividend will go up in line with the earnings per share (EPS) growth and could also go higher as the dividend payout ratio is increased to, say, 50%.
BWX Limited (ASX: BWX)
BWX is one of the world’s largest natural beauty brand companies. Its Sukin range of products is proving very popular in Australia and abroad.
The company made a number of acquisitions over the past year or so. The acquisitions, combined with lower-than-expected Sukin growth, hurt the share price after BWX reported. This had the effect of boosting the dividend yield.
However, the company is expected to grow at a strong rate and that means the dividend could grow nicely as BWX’s profit increases.
It’s currently trading with a grossed-up dividend yield of 2.04%.
I believe all three shares are exciting opportunities and will be big dividend payers in the years to come, plus I think they will all beat the market over the next five years at the current prices.
This is another stock that's growing its dividend at a strong rate, I'm glad I own some shares in it.
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Motley Fool contributor Tristan Harrison owns shares of BWX Limited, NATVETCARE FPO, WAM Capital Limited, and WAM MICRO FPO. The Motley Fool Australia owns shares of and has recommended BWX Limited and Telstra Limited. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended G8 Education 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.