The Motley Fool

Where I would reinvest my dividends

This week the shares of a number of dividend favourites including Insurance Australia Group Ltd (ASX: IAG), QBE Insurance Group Ltd (ASX: QBE), and Wesfarmers Ltd (ASX: WES) go ex-dividend for their respective pay outs.

While there may be still a few weeks until these dividends land in shareholders’ bank accounts, I think now is as good a time as ever to plan what to do with these funds.

Two shares that I would consider reinvesting these funds into are listed below:

Aristocrat Leisure Limited (ASX: ALL)

If you’re a fan of growth shares then I think this gaming technology company would be a great option. For a long time Aristocrat Leisure’s main source of revenue has been its pokie machines. This remains the case today but may not be in a few years thanks to the impressive growth of its Digital segment. In the first half of FY 2018 the company’s Digital segment delivered revenue of $428.5 million, up 230.6% on the prior corresponding period. This means it accounted for 26% of its overall revenue. But with 8.3 million daily active users of its digital portfolio and several key releases in the pipeline, I believe its growth can continue at a strong pace for some time to come. In light of this and the strength of its core business, I feel 27x estimated forward earnings is more than fair for a company with such a positive outlook.

National Storage REIT (ASX: NSR)

Investors interested in earning even more income might want to consider National Storage. It is a leading real estate investment trust which has been growing its network of self-storage units throughout Australia and New Zealand this year. It recently advised of plans to acquire eight new high-quality self-storage assets, bringing its total network to 130 facilities. I believe this puts the company in a position to take advantage of the increasing demand for self-storage services due to population growth and downsizing from baby boomers. Its shares currently offer a trailing distribution yield of approximately 5.4%.

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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 Wesfarmers Limited. The Motley Fool Australia owns shares of Insurance Australia Group Limited. The Motley Fool Australia has recommended National Storage REIT. 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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