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:
Australian Vintage Limited (ASX: AVG)
This Australian wine company could be worth considering after its return to form in FY 2018. Last week the company behind the McGuigan and Nepenthe brand posted a net profit after tax of $7.7 million on revenue of $264.6 million. This was an increase of 79% and 16.9%, respectively, on FY 2017's result. A key driver of this growth was a 31% rise in North American sales thanks to a strong increase in demand from Canada. While the company does have significant exposure to the UK and could be impacted by any Brexit-related currency devaluations, if the British pound holds up then FY 2019 is likely to be another year of profit and dividend growth. At present its shares provide a 2.6% dividend yield.
Money3 Corporation Limited (ASX: MNY)
Another strong performer in FY 2018 was this financial services company. Money3 delivered a 10.1% increase in net profit after tax to $32 million thanks largely to a 16.6% lift in its secured auto loan book. This impressive performance led to the Money3 board declaring a final, fully franked dividend of 5 cents per share, taking its full year dividend to 9.5 cents per share. This was a 68.1% increase on FY 2017's dividend and equates to a yield of 4.6%. Pleasingly, management expects good growth in secured loan receivables again this year.
Paragon Care Ltd (ASX: PGC)
I think Paragon Care could be another good option for investors. The shares of this provider of integrated services to the health and aged care markets currently offer a trailing fully franked 4.2% dividend. While this is a generous yield already, I feel that this dividend could grow at a solid rate over the coming years thanks to the positive impact of a series of earnings accretive acquisitions and its leading position in a growing market.
