I think the small side of the market is a great place to look for dividends with the potential to grow strongly over the next decade.
Three which I think are worth a closer look are listed below. Here’s why I like them:
Adairs Ltd (ASX: ADH)
This home furnishings retailer could be a great small cap dividend share to consider buying this month. An impressively strong full year result in FY 2018 allowed the Adairs board to declare a total dividend of 13.5 cents per share, up 68% year on year. This works out to be a trailing fully franked 6% yield at the last close price. Considering the early success the company has had with its homemaker store strategy and its thriving online business, I expect this dividend could continue growing strongly over the next couple of years at least.
Money3 Corporation Limited (ASX: MNY)
Another top performer in FY 2018 was this financial services company thanks to the strong growth of its secured auto loans business. Money3 posted a 16.6% increase in its secured auto loan book during the year, ultimately leading to a 10.1% increase in net profit after tax to $32 million. The positive performance allowed the Money3 board to increase its dividend by 68% to 9.5 cents per share. This means that its shares now offer a trailing fully franked yield of 4.4%. Pleasingly, I believe this could grow again in FY 2019 after management advised that it was expecting good growth in secured loan receivables.
Wellcom Group Limited (ASX: WLL)
Wellcom is a production and content management company which could be worth a closer look. In FY 2018 it posted full year revenue of $108 million and net profit after tax of $11.7 million. This was a 9% and 10% increase, respectively, on FY 2017’s result and was driven partly by a number of new contracts wins. Based on its normalised dividend (excluding a special dividend) of 21 cents per share, Wellcom’s shares currently offer a trailing fully franked 4.2% yield.
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Wellcom Group 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.
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