Forget BHP Billiton Limited (ASX: BHP) shares; Gentrack Group Ltd (ASX: GTK) shares, BWP Trust (ASX: BWP) shares and Thorn Group Ltd (ASX: TGA) shares could offer something extra.
Not your 'usual suspects'
If you are looking for dividend income, chances are, BHP Billiton, Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) shares were some of the first names to cross your mind. There's nothing wrong with their dividends. In fact, they look fantastic.
However, there are two reasons everyone invests in shares: dividend income and capital growth (that is, share price increases). Unfortunately, at today's share prices I truly believe many of the 'usual' blue-chip dividend shares lack the ability to grow their profits as fast as some smaller, nimbler, ASX companies.
As you'll read below there are risks and not every small-cap company is a standout buy. However, here are three ASX dividend shares you might consider adding to your watchlist today.
3 ASX dividend shares you've never heard of
1. Gentrack Group: Gentrack is a $250 million Kiwi software company, specialising in developing systems for large utilities and airports. The sticky nature of its contracts means Gentrack's revenue is quite reliable, enabling it to pay a big percentage (currently 85%) of its profits as dividends to shareholders. Its shares currently yield a dividend of 3.16%.
2. BWP Trust: BWP owns some of the properties underlying major retail businesses like Bunnings Warehouse and Harvey Norman Holdings Limited (ASX: HVN). It collects rents from these tenants and pays a dividend to shareholders. Despite BWP's simple business model and consistent revenue stream, however, the company is not risk-free. For example, it is subject to movements in interest rates and property prices. Nonetheless, in the year ahead analysts are forecasting a 6% dividend.
3. Thorn Group: You may not have heard of Thorn Group, but chances are you've heard of its subsidiary, Radio Rentals. The company is a specialist in short-term financing, loans and cash flow management. Recently, the company was forced to make a provision for potential compensation associated with poor lending practices, which may affect its final dividend payment. Nonetheless, analysts continue to forecast annual dividends of more than 6% in the year ahead.
Buy, Hold or Sell
Investing in smaller companies is not for everyone. Sometimes their share prices can dance all over the place for no reason at all, and their dividends are not as reliable as payments from the likes of Telstra. However, with a view to the long-term, we should all be looking to add some quality small-caps to our watchlists.
From these three shares, Gentrack is the only company I'd buy at today's prices. However, both Thorn and BWP are tempting at these levels.
