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 many companies on the rise with the potential to grow their dividends meaningfully in the future.
Three which I think are worth a closer look are listed below. Here’s why I like them:
Duxton Water Ltd (ASX: D2O)
Duxton Water is a listed investment company with a difference. It provides investors with direct access to water through Australian Water Entitlements, a key production input into a number of agricultural industries. As we have seen this week from Nufarm Limited (ASX: NUF), Australia has been experiencing significantly dry weather conditions for an extended period. I believe this bodes well for Duxton Water and should put it in a good position to benefit from high temporary water prices through the 2018/2019 water year. At present the company’s shares offer investors a trailing 3.8% dividend.
Money3 Corporation Limited (ASX: MNY)
Money3 used to be known as a payday loan company. Fortunately, the company has transitioned away from that controversial industry into secured auto loans. Pleasingly, this has been a success and appears to have positioned the company well for long-term sustainable growth. With the company already providing a decent yield of approximately 3.7%, it could be a real star of the future if it continues to grow its market share at a solid rate.
Paragon Care Ltd (ASX: PGC)
This provider of integrated services to the health and aged care markets could be another small cap option for income investors. It recently announced the acquisition of a similar business in New Zealand by the name of REM Systems. It came with a hefty price tag of NZ$54.4 million but is expected to be highly accretive to earnings in the future. If the transaction proves successful then I expect shareholders will be handsomely rewarded with dividend increases. Paragon Care’s shares currently offer a trailing fully franked 3.7% 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 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.