AMP, ASX, Wesfarmers: High dividend yields plus high growth

Here are 3 stocks forecast to grow their dividends at an impressive rate.

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The S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is now up nearly 19% over the past 12 months. It's an impressive one-year result, yet many would argue it hasn't been driven by fundamental earnings growth.

Given the lack of earnings growth from many companies, many investors have described the recent stock market rally as a "chase for yield," implying that stocks haven't been driven higher because of improving earnings but rather by investors focusing on buying stocks with high dividend yields, particularly the big banks and Telstra (ASX: TLS).

With the market now at a multi-year high, the demand for high dividend yield stocks is arguably as high as ever, given the prospect for near-term earnings growth still appears lacklustre. Many yields have of course shrunk as share prices have moved higher, however here are three stocks that are each trading on high forward yields and, according to Morningstar's consensus estimates, will grow their dividends at an impressive rate in the coming year.

AMP (ASX: AMP) is currently trading at $4.67 and paid 23.5 cents per share (cps) in dividends in financial year (FY) 2013. Morningstar is forecasting a 9.4% increase in the FY 2014 dividend to 23.5 cents, which implies a forward dividend yield of 5.5%.

ASX (ASX: ASX) shares are current selling for $34.78. Last financial year the stock exchange operator paid 172.4 cps in dividends. Morningstar is forecasting a 10% increase in the dividend to 189.4 cps in FY 2014, which suggests the stock is trading on a forward dividend yield of 5.4%.

Wesfarmers (ASX: WES) is currently priced at $41.14. The dividend is forecast to increase by 7.5% from 200 cps to 215 cps. For the diversified conglomerate this implies the stock has a forward dividend yield of 5.2%.

Foolish takeaway

With the S&P/ASX 200 currently trading on a forward dividend yield of 4.2%, these three blue chip stocks are all trading on a higher than market yield based on Morningstar's forecasts. Given the growth profiles of each of these large-cap stocks is perhaps better than average, they could be good investment options for yield seeking investors.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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