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3 small cap shares with growing dividends

I think the small end of the market is home to several quality dividend options for income investors to consider.

Three that stand out for me are listed below. Here’s why I like them:

Collection House Limited (ASX: CLH)

Earlier today this receivable management company lifted its purchase debt ledger investment guidance for FY 2018 due to favourable changes in the banking sector. Pleasingly, management believes it can generate a higher return on these investments thanks to improvements in collection efficiencies, technology adoption, and improved data analysis. If this proves to be the case, then I think Collection House could be well-positioned to deliver strong growth in earnings and dividends in FY 2018 and FY 2019. At present its shares offer a trailing fully franked 4.8% dividend.

Money3 Corporation Limited (ASX: MNY)

Thanks to its successful pivot away from payday loans to secured auto loans, I think Money3 is a company on the rise. Although the company’s loan book has been growing at an impressively strong rate, it still only has a very small share of the secured automotive finance market. If the company can continue its fine form, it could have a significant runway for growth ahead of it. This could allow it to grow its earnings and dividend at an above-average rate for the foreseeable future. At present Money3’s shares offer a trailing fully franked 3.9% dividend.

Rural Funds Group (ASX: RFF)

It may not be the most exciting investment but this real estate investment trust (REIT) could be a great option for income investors. The REIT has a diverse portfolio of farm assets that produce commodities including cotton, cattle, poultry, vineyards, macadamias, and almonds. Due to rental indexation being built into its rental contracts, Rural Funds has a lot of visibility on future cash flows and is able to grow its distribution at a solid and predictable rate each year. At present Rural Funds offers a trailing distribution yield of approximately 4.7%.

Finally, this mid cap dividend star has grown its dividend by 27% so far this year. I expect more of the same in FY 2019.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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