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Why I’m considering these growing dividend shares

While I think that the recent solid but unspectacular results from banks such as Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) demonstrate why they could be good options for income investors right now, I’ll be the first to admit that I don’t expect their dividends to increase much in the coming years.

So if you’re on the lookout for dividends with the potential to grow strongly in the future I would suggest you check out these two:

Adairs Ltd (ASX: ADH)

Shares in the retail sector have come under significant pressure of late, not least those that have exposure to the softening housing market. This home furnishings retailer has been one of the worst performers with its shares losing over 22% of their value since this time last month.

This is despite management recently advising of strong same store sales growth and reiterating its sales and profit growth guidance of up to 14.3% and 13.7% respectively in FY 2019. So with its shares trading at a lowly 10x earnings and offering a trailing fully franked 7.1% dividend, I think it could be a great option for income investors. Ltd (ASX: KGN)

This ecommerce company’s shares have been absolutely smashed this year and are down over 72% from their 52-week high. This fall from grace now means that’s shares provide a generous trailing fully franked 4.6% dividend. I think this dividend could grow strongly over the next decade if the company can turn its performance around and continue its impressive growth.

However, due to last week’s disappointing and reasonably vague trading update, I would suggest investors hold out for its annual general meeting next week. Hopefully at that meeting management will provide a bit more colour on its expectations for the first half and beyond.

And finally, another dividend option which I believe has a long runway for growth is this top share.

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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!

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended ltd. 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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