When it comes to picking dividend shares I think investors ought to consider some of the quality options at the small-end of the market.
After all, some of these shares have the potential to grow their dividends significantly over the next few years, whereas some of their large cap rivals may at best hold their pay outs steady.
Three small cap dividend shares that I think investors ought to consider today are listed below:
1300 Smiles Limited (ASX: ONT)
I think that this dentist operator could be a good option for investors. Despite the industry experiencing tough trading conditions at present, the company was able to deliver a solid 4% increase in half-year net profit after tax last month. This led the dental practice operator to declare an interim fully franked dividend of 12 cents per share. Which means that its shares provide a trailing fully franked 3.7% yield based on its last close price. I think this makes 1300 Smiles worth considering today.
Collins Foods Ltd (ASX: CKF)
I think this KFC operator’s recent expansion into an underpenetrated European market will provide it with a long runway for growth that ultimately leads to sizeable increases in its earnings and dividend. This could make it a great option for patient investors. At present the company’s shares provide investors with a trailing fully franked 3.3% dividend.
Money3 Corporation Limited (ASX: MNY)
Last month this growing financial services company delivered a 12.3% increase in half-year net profit after tax to $15.5 million thanks to strong growth in its secured auto loans business. This increased its gross loan book to $292.8 million and share of the second-hand automotive finance market to 2%. It also allowed the company to raise its interim dividend by 80% to 4.5 cents per share, meaning Money3’s shares now provide investors with a trailing fully franked 4.1% yield. I expect the company to continue to win more market share over the coming years, putting it in a position to grow its dividend strongly.
Finally, this mid cap dividend share could arguably be the best on the market. Do you own it yet?
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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended 1300SMILES Limited and 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 Scott Phillips.