Let's be honest. Most of us buy shares for capital gains. Not dividends.
But can't we have both?
With such good returns from the stock market in 2013, maybe asking for 4% dividends (or greater) and growing earnings per share (EPS) is too much? I think not.
Here are five established businesses with growing earnings per share and great dividend payouts.
RCG Corporation Limited (ASX: RCG) is the owner of The Athlete's Foot, Podium Sports and RCG Brands and is the distributor of popular footwear such as Saucony, Chaco, Cushe, Merrell, CAT and Sperry Top-Sider. RCG operates around 150 stores throughout Australia and New Zealand. In 2014 and 2015, earnings are expected to grow steadily but perhaps the biggest reason to invest in RCG is its 5.5% dividend yield! Which is expected to increase significantly in coming years.
Another small, but growing, company with a big dividend payout is Credit Corp Group Limited (ASX: CCP). Actually it's not that small, it's the biggest debt collection company in Australia. It will benefit from the rise in demand for cheap credit both here in Australia and over in the US where it is trying to kick-start its business. It has strong balance sheets with low levels of gearing and pays a 4.4% dividend fully franked.
For dividend stability, adding a company such as Telstra Corporation Ltd (ASX: TLS) to your portfolio is probably a good idea. Not only does Telstra yield 5.6% fully franked, but earnings per share will grow in the next four years. Its Network Application Services (NAS) and International divisions will be the catalyst for higher earnings in the coming decade.
Ok, compared to Telstra's mighty payout, a 3.6% dividend might not sound great. However, with some analysts expecting its 26 cent payout to rise by as much as 9 cents in 2014, Village Roadshow Limited (ASX: VRL) is a mid-cap stock which cannot be overlooked. Its forecast yield for FY14 is 4.9% with 100% franking. Its earnings are also expected to grow by around 10%.
Another company in the business of making happy investors and customers is Ardent Leisure Limited (ASX: AAD). It's the owner of theme parks such as Dreamworld and Whitewater World and many more entertainment assets such as Goodlife Health clubs and AMF and Kingpin bowling. In FY14 earnings are anticipated to increase on the back of a growing Main Event business in the US. It currently yields 4.8%.
Foolish takeaway
Each of these businesses are increasing earnings per share and pay a great dividend. In addition none of their share prices are demanding and long-term investors could easily find value in these timeless businesses.
