If you’re looking to invest in companies with growing dividends, then you may want to check out the ones listed below.
They may not offer the biggest yields right now, but they could widen materially over the next decade. Here’s what you need to know:
Kogan is of course one of Australia’s leading ecommerce companies. It offers everything from electronics, furniture, and even vehicles through its Kogan Cars brand. The company has also bolstered its offering further with the acquisitions of Matt Blatt and Mighty Ape. The latter has added ~750,000 active customers, predominantly in the New Zealand market.
Kogan has been growing strongly over the last few years thanks to the shift to online shopping. This has been particularly the case in FY 2021 due to the pandemic accelerating the shift. For the six months ended 31 December, Kogan reported a 97.4% increase in gross sales to $638.2 million and a 250.2% lift in adjusted net profit after tax to $36.5 million.
The good news is that Kogan appears well-placed for long term growth as more spending ends up online. One broker that expects this to lead to growing dividends is UBS.
It is forecasting a 32 cents per share dividend in FY 2021 and then a 39 cents per share dividend in FY 2022. Based on the latest Kogan share price of $12.47, this equates to fully franked 2.55% and 3.1% dividend yields.
And while UBS currently has a neutral rating on its shares, its price target of $15.10 is notably higher than where it trades today.
Sonic Healthcare Limited (ASX: SHL)
Another ASX dividend share that is growing at a strong rate is this leading medical diagnostics company.
Thanks partly to increased demand for COVID-19 testing, Sonic released its half year results in February and revealed a 33% increase in revenue to $4.4 billion and a 166% jump in first half net profit to $678 million.
Positively, COVID testing demand remains strong and is expected to stay this way until at least the end of the year. This appears to have put the company in a position to continue its positive form into FY 2022. In addition, the company has a very strong balance sheet, giving it the opportunity to accelerate its growth with acquisitions.
Credit Suisse is a big fan of the company and has an outperform rating and $40.00 price target on its shares.
The broker is also expecting a 93 cents per share partially franked dividend in FY 2021 and a 97 cents per share dividend in FY 2022. Based on the current Sonic Healthcare share price, this will mean yields of 2.6% and 2.7%, respectively.
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Returns As of 15th February 2021
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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