Many of the most popular high-yielding dividend shares on the local market appear to be struggling for growth at the moment. This could either limit dividend increases in the future or even put pressure on their current pay-outs.
In light of this, I think it could pay for investors to be a little forward thinking and look for the dividend stars of the future.
Here are three candidates:
Collins Foods Ltd (ASX: CKF)
This KFC restaurant operator’s shares currently offer investors a trailing fully franked 3.1% dividend. I believe this dividend could grow strongly over the next decade if the company’s sizeable expansion plans in an underpenetrated European market are a success. In addition to this, at 19x trailing earnings I think its shares are great value given the company’s current growth profile.
Lovisa Holdings Ltd (ASX: LOV)
This fast-growing jewellery company’s shares have been on fire over the last 12 months. Unfortunately this means that they now only provide a trailing fully franked 1.9% dividend. But given the success of the retailer’s business model and its international expansion plans, I wouldn’t be surprised to see this dividend double within the next five years. After all, as well as sizeable opportunities in Europe and Asia, the company has just stepped foot into the U.S. market. If that is a success then I see no reason why it wouldn’t one day be able to operate many times more stores there than it does in Australia. At present Lovisa has 152 stores (47.5% of its network) operating in Australia.
Macquarie Telecom Group Ltd. (ASX: MAQ)
Don’t let the word “telecom” put you off, this is a company that has adapted to the modern age and looks set to prosper because of it. Macquarie Telecom is one of a number of companies that has been profiting greatly from the seismic shift to the cloud. Its data centre business has been booming over the last 12 months and looks set to continue doing so for some time to come thanks to rising demand. Macquarie Telecom’s shares currently offer investors a trailing fully franked 2.7% dividend.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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.