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Where to invest your Wesfarmers dividends

Later today eligible Wesfarmers Ltd (ASX: WES) shareholders will be paid the conglomerate’s interim and special dividends.

Whilst some shareholders may opt to take advantage of the company’s dividend reinvestment plan or use the funds as a source of income, others may wish to reinvest the funds back into the share market.

Here’s where I would reinvest these funds:

Accent Group Ltd (ASX: AX1)

Investors looking for even more dividends might want to consider this footwear-focused retail group. Despite difficult trading conditions, Accent has performed incredibly well in FY 2019. Thanks to solid like for like sales growth and increasing margins, in the first half the company delivered a 27.3% increase in net profit after tax to $32.2 million. This allowed the Accent board to lift its interim dividend by 50% to 4.5 cents per share, which means that its shares now offer a trailing fully franked 5.6% dividend yield.

Collins Foods Ltd (ASX: CKF)

I think Collins Foods would be a great option for investors looking for a combination of growth and income. It is a quick service restaurant operator with a growing network of KFC restaurants across Australia, Europe, and New Zealand. I’m bullish on the company due to its expansion opportunities in an underpenetrated European market. In addition to this, if the company’s rollout of the Taco Bell brand across a number of states is a success, it could be a significant boost to earnings. At present its shares offer a trailing fully franked 2.5% dividend yield.

Webjet Limited (ASX: WEB)

If you’re interested in investing in growth shares then this online travel agent could be well worth considering. I believe Webjet is a great long-term investment option thanks to the popularity of its numerous B2B and B2C brands and the ongoing shift to online travel booking. On Tuesday the company confirmed that it is on track to deliver at least $120 million EBITDA in FY 2019, which will be a 37% increase year on year.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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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