Whilst a big dividend yield is undoubtedly great, I'm a bigger fan of dividends that have significant long-term growth potential.
Three shares which I feel could provide exactly that are listed below. Here's why I think income investors should consider them as buy and hold investments today.
Altium Limited (ASX: ALU)
Although this software-as-a-service company's shares yield an unfranked 2.4% dividend at present, I believe this can grow significantly in the future. After all, management believes demand for its printed circuit board design software will enable it to double its revenue to US$200 million by FY 2020. I expect there's a good chance its dividend will also be doubled, potentially making it an opportune time to snap up shares.
Collins Foods Ltd (ASX: CKF)
This KFC operator has increased its dividend for five consecutive years and looks set to do it again this year. After increasing its interim dividend by a third to 8 cents, its shares now yield a trailing fully franked 3.1% dividend. With the company intent on expanding aggressively in the European market, I believe Collins Food could be in a position to continue growing its dividend at an above-average rate for at least the next few years.
InvoCare Limited (ASX: IVC)
This leading funeral services company has an impressive track record for dividend increases and has now grown it each year for over a decade. As a result, its shares provide investors with a trailing fully franked 2.9% dividend today. With the company commanding a market-leading position in a defensive and arguably recession-proof industry, I believe there's a good probability of InvoCare continuing to increase its dividend for the next decade. This could make it an ideal option for income investors.
