Don't miss these 5 overlooked dividend shares

Five great dividend shares flying under the radar.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to dividends the first names that pop into income investors' heads are shares such as Woolworths Limited (ASX: WOW). But the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is blessed with a plethora of dividend shares for investors to choose from. A few that I think could be flying under the radar are:

  • Automotive Group Holdings Ltd (ASX: AHG)

Automotive Group Holdings currently pays a fully-franked 5.2% dividend. Considering that, according to CommSec, the company has grown its dividend on average by 9% each year for the last 10 years, I think it's safe to presume that it will perform well in the future. What I also like about the diversified automotive retailing and logistics group is that it has consistently produced a return on equity of approximately 14% in the last few years, while growing its shareholder equity substantially from $454 million in 2012 to $672 million today.

  • Fantastic Holdings Limited (ASX: FAN)

Fantastic Holdings is a furniture retailer that has been overshadowed by competitor Nick Scali Limited (ASX: NCK) in recent years. Still, the company expects to announce revenue growth of 15.7% year over year to $270m next week for the half year. If analysts are to be believed, the forecast 2016 dividend of 14 cents will yield a fully-franked 7.6%. Recent resignations of the CEO and CFO have raised a few eyebrows, so it does cast an element of doubt over the dividend. But with little debt and a strong cash balance the company is more than capable of paying it out.

  • McMillan Shakespeare Limited (ASX: MMS)

McMillan Shakespeare is a provider of salary packaging, novated leasing, and fleet and asset management through a portfolio of brands which includes Maxxia, RemServ, Interleasing, and Holden Leasing. Despite being up by around 5% during trading on Wednesday its shares still trade on a forward price-to-earnings ratio of 10.5, with a forecast dividend yield of 6.8% in 2016 according to analysts. The same analysts believe that earnings will grow at 13% per annum for the next two years, which makes these shares a very tempting investment.

National Storage, as the name implies, owns and operates self-storage units. Its shares currently yield a fully-franked 5.6% dividend which looks set to grow by around five to six percent next year. Management advised in its half year report that it will payout between 90 and 100 per cent of earnings, which it expects to come in at 8.7 to 8.8 cents per share. Storage demand in Australia has grown by 2.3% per year for the last five years according to IbisWorld, and looks set to remain steady in the years ahead.

Retail Food Group currently pay a 5.5% dividend which again is fully-franked. The thing that I like most about Retail Food Group is that through its portfolio of franchises the company is able to produce consistent earnings. As disposable income levels grow in Australia, thanks in part to low fuel costs, consumers have money burning a hole in their pocket. Franchises such as Gloria Jean's, Donut King, and Michel's Patisserie, should all hopefully benefit from this. As such I expect earnings to grow strongly, and its dividend, which has grown each year for the last nine years, to continue growing as well.

Foolish takeaway

I feel these five shares offer investors great alternatives to the usual blue-chip dividend shares. Which could be a very good thing for income investors considering rumours of the banks and miners being under pressure to cut their dividends.

Motley Fool contributor James Mickleboro has no financial interest in any company mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Retail Food 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 Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »