I think it can be very important to identify the growth shares that are also rapidly growing their dividends. For any investment you have to consider how you are going to access the value that your investment is creating. Is there a danger that management are going to blow the money on an expensive vanity project that goes wrong? Are those businesses going to commit to share buy-backs and/or growing dividends? If they are re-investing for growth then you want to be fairly certain that the money is being put to good use. Here are three ASX200 shares that are…
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I think it can be very important to identify the growth shares that are also rapidly growing their dividends.
For any investment you have to consider how you are going to access the value that your investment is creating. Is there a danger that management are going to blow the money on an expensive vanity project that goes wrong?
Are those businesses going to commit to share buy-backs and/or growing dividends? If they are re-investing for growth then you want to be fairly certain that the money is being put to good use.
Here are three ASX200 shares that are rapidly growing their dividends:
Altium Limited (ASX: ALU)
The electronic PCB design software business just grew its dividend by 23% in the recent half-year result to 16 cents per share. That’s quite amazing when you consider that the entire annual dividend paid in 2015 was 16 cents per share.
In 2012 the software-as-a-service business paid a total of 10 cents per share and appears to be on track for an annual dividend payment of at least 32 cents in FY19.
Not only is its profit growing very well, but long-term Altium shareholders are receiving a hefty yield for their initial purchase cost.
REA Group Limited (ASX: REA)
The real estate portal business decided to increase its interim dividend by 17% to 55 cents per share. In 2014 the online classifieds business paid a total of 57 cents per share for the whole year.
REA Group’s dividend history is very impressive if you go back to its first payment of 10 cents per share for FY09. The last twelve months of dividends amounts to $1.17, it has come a long way in a decade.
Appen Ltd (ASX: APX)
Machine learning data provider Appen is the newest of the three onto the ASX but its rise has been perhaps the most impressive.
In the recent result it increased its dividend by 33% to 4 cents per share. In 2015 its first dividend payment was only 1.2 cents per share, and 2016 amounted to 5 cents per share.
The importance of quality data for AI and machine learning is only going to keep growing.
The great thing about all three of these businesses is that they all have compelling potential long-term profit growth, which should lead to continued good dividend increases.
I wish I could go back in a time machine and invest significantly in all of them, but at the current prices none of them are cheap. If I could only pick one it would be Altium, but that’s more because I think it has the longest growth runway rather than a call on today’s valuation.
These top ASX shares are trading at much better value, so it would probably be better to go for one of those at today’s prices.
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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium and Appen Ltd. The Motley Fool Australia has recommended REA 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.