MENU

3 growing dividend shares with yields over 5.5%

Income is a very important part of returns for a lot of people. Dividends are generally less volatile than share price movements and can represent some, if not all, of a person’s income in retirement.

If I were to invest in dividend shares I’d want to go for businesses that have reliable dividend histories and have every chance of growing at a good rate over the coming years.

But, the potential dividend ideas also have to pay a good yield, or else I may as well keep cash in the bank.

Here are three ideas:

WAM Research Limited (ASX: WAX)

WAM Research is my favourite listed investment company (LIC) run by Wilson Asset Management. It purely looks at the quality of the underlying business rather than trying to find any value arbitrage like some of the other WAM LICs.

Over the past five years WAM Research’s portfolio has returned an average of 17.4% per annum, before fees. The LIC turns this market-beating performance into a growing stream of fully franked dividends for shareholders.

It has increased its dividend every year since the GFC and it currently has a grossed-up dividend yield of 8.87%.

Tassal Group Limited (ASX: TGR)

Tassal is Australia’s largest fish business with large salmon farms in Tasmania’s waters and a wholesale fish business as well.

Thankfully, Australian diets are steadily improving, which includes eating more salmon. Tassal is steadily selling more fish each year which is leading to growing operating earnings.

The bonus for income investors is that growing profits results in growing dividends. Tassal trades with a low price/earnings ratio, which helps boost the grossed-up dividend yield to 5.7%.

Arena REIT No 1 (ASX: ARF)

Arena is one of the larger real estate investment trusts (REITs) on the ASX. It aims to invest in properties in growing industries. This has resulted in it owning a lot of childcare buildings and a few medical buildings.

I like Arena because it has a long weighted average lease expiry (WALE), a growing earnings profile and a forward-thinking strategy.

It has grown steadily over the past five years and now has a trailing distribution yield of 5.84%.

Foolish takeaway

For investors looking purely for quality dividends my choice would have to be WAM Research. Even though it is trading on a significant premium to NTA it has the biggest dividend by far and is steadily increasing it.

Another exciting dividend stock is this top business which just increased its dividend by more than 25%.

Breaking news: ASX companies set to raise dividends!

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.

Click here it's FREE!

Motley Fool contributor Tristan Harrison owns shares of ARENA REIT STAPLED and WAM Research 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.