A lot of the biggest and most popular blue chip dividend shares on the local market at the moment such as National Australia Bank Ltd (ASX: NAB) and Telstra Corporation Ltd (ASX: TLS) are struggling to grow their payouts.
In fact, both these two companies have been tipped to slash their dividends in FY 2019.
Because of this, I would suggest investors looking for growing dividends look further down the market into the small cap space.
Three shares in this area of the market which I believe are capable of growing their dividends strongly over the coming years are listed below. Here’s why I like them:
Adairs Ltd (ASX: ADH)
I think that income investors ought to consider this home furnishings retailer. At present Adairs’ shares offer a generous trailing fully franked 5.3% dividend. The good news is that I believe management’s successful focus on homemaker stores and its thriving online business have positioned it perfectly to grow this dividend at a strong rate again in FY 2019.
Noni B Limited (ASX: NBL)
Another retail share that I believe could grow its dividend meaningfully over the next few years is Noni B. The women’s fashion retailer was an impressive performer in FY 2018 and was able to increase its total dividend by a massive 225% to 13 cents per share. While I wouldn’t expect growth of that level in FY 2019, I believe the acquisition of a number of brands from Specialty Fashion Group Ltd (ASX: SFH) could give its earnings and dividend a sizeable boost. Noni B’s shares currently offer a trailing fully franked 3.4% yield.
Supply Network Limited (ASX: SNL)
Supply Network is an after-market parts supplier to the commercial vehicle industry. Thanks to another strong performance from its Truck Parts segment, in FY 2018 the company grew net profit after tax by 20.7% to $8.2 million. This allowed the board to grow its dividend by 35% to 13.5 cents per share, which equates to a trailing fully franked 3.4% yield. Over the next two years the company is targeting compound organic growth of 8%, which I feel should mean further dividend increases for shareholders.
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 owns shares of and has recommended Supply Network Limited and Telstra Limited. The Motley Fool Australia owns shares of National Australia Bank 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.