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.
Lastly, here's another quality share that I believe is capable of growing its dividend at a strong rate over the coming years.
You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!
Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.
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.