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3 small cap dividend stars for income investors

When it comes to shares with growing dividends, I think the small end of the market is a great place to look.

In this area of the market there are a number of companies on the rise with the potential to grow their dividends significantly in the future.

Three which I think are worth a closer look are listed below. Here’s why I like them:

Money3 Corporation Limited (ASX: MNY)

Money3 is a secured auto loans company on the rise. Although the company has been growing its market share at a strong rate, it still only has a 2% share of the secured second-hand automotive finance market. If the company continues its strong form and keeps winning more and more share of the market, then I suspect its earnings and dividend growth will continue to remain strong. Money3’s shares currently offer a trailing fully franked 4.3% dividend.

Paragon Care Ltd. (ASX: PGC)

Paragon is a provider of integrated services to Australia’s health and aged care markets. I think that these two markets have exceptionally strong organic growth potential over the next couple of decades, which could make Paragon worth considering. Especially given the opportunities it has to accelerate its growth through acquisitions. This could put Paragon in a position to grow its dividend meaningfully over the next few years. At present Paragon Care’s shares provide a trailing fully franked 4.1% dividend.

Shriro Holdings Ltd (ASX: SHM)

Shriro is a kitchen appliance and consumer products company which has been growing its bottom line and dividend at a solid rate over the last few years. Despite this, its shares continue to trade at a lowly 9x trailing earnings. The good news for income investors is that this means that its shares provide a trailing fully franked 7.8% dividend at this level. If the company’s international expansion goes well, I believe this dividend could continue to grow for many years to come.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Paragon Care 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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