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:
Future Generation Investment Company Ltd (ASX: FGX)
This provides shareholders exposure to some of the best Australian fund managers, indeed it currently gives investors exposure to almost 20 different investment managers.
A key difference is that this vehicle doesn’t charge investors management fees or performance fees, instead it donates 1% of NTA to charities, which is a very admirable cause.
So far it has outperformed the market and it aims to provide investors with a growing stream of fully franked dividends, which it has done so since it started paying dividends.
It currently has a grossed-up dividend yield of 5.03%.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) that focuses on the large end of the Australian market.
Over the past year its portfolio has returned 15.4% before fees and taxes, outperforming the S&P/ASX 200 Accumulation Index by 5.8%, which is quite impressive.
It has only recently started paying a dividend but currently has a grossed-up dividend yield for FY18 of 6.2%.
Tassal Group Limited (ASX: TGR)
Tassal is Australia’s largest fish company, it’s a large salmon farmer and also owns a fish wholesale business.
Fish is increasingly being in demand due to changing food habits for both health and personal choice reasons. There is strong demand for Australian-produced food in Asia as well.
Tassal has managed to steadily increase its operating earnings over the past few years and has increased its dividend each year since 2011. It currently has a grossed-up dividend yield of 5.01%.
All three businesses have commendable dividends and I imagine there’s a good chance that the dividends will continue to be increased as time goes on. If I had to choose one it would be the Future Generation Company because of its charitable giving and also its objective of growing dividends.
Another business that could be a very good dividend buy is this top income stock which just increased its dividend by more than 25%.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.