When it comes to dividend shares a big juicy dividend yield is great, but I believe a good yield that has potential to grow substantially over the next few years is even better.
A great example of this would be TPG Telecom Ltd (ASX: TPM). Five years ago you could pick up TPG Telecom shares for $1.50.
At that point in time it provided a fully franked 5.5 cents per share dividend, the equivalent of a yield of 3.6%. Whilst this was a good yield, it was by no means comparable to that of rival Telstra Corporation Ltd (ASX: TLS) or the banks.
But this year when TPG Telecom pays out its estimated 16 cents per share dividend, investors that bought shares five years ago will receive a fully franked 10.6% yield on cost. No term deposit or savings account is going to beat that.
Five dividend shares which I think could make just as great as buy and hold investments as TPG Telecom are as follows:
Japara Healthcare Ltd (ASX: JHC)
Whilst this aged care operator will need to negotiate potential regulatory changes in the future, I believe its management team is capable of doing so. At present its shares provide a trailing fully franked 5.7% dividend. I believe the tailwind provided by Australia's ageing population will allow the company to grow both its earnings and dividend substantially over the next decade.
Mantra Group Ltd (ASX: MTR)
Thanks to the tourism boom that Australia is experiencing I expect demand for Mantra's properties will increase over the next few years. I expect this to result in higher occupancy levels and increased room rates, allowing the company to grow its bottom line and distributions. Its shares are expected to provide a fully franked 4.7% dividend this year according to CommSec.
Vocus Group Ltd (ASX: VOC)
I believe the rollout of the NBN is a huge opportunity for Vocus to increase its home broadband market share significantly over the next few years. This should allow it to continue to grow its earnings at a strong rate for the foreseeable future. At 13x trailing earnings and providing a trailing fully franked 3.8% dividend, Vocus could be an absolute steal at the current share price.
