Some of the best returns for investors come from companies that are able to growth their profits consistently enough to steadily lift their dividend payouts. Stocks are after all priced on an expectation of their future cash flows discounted to reflect the uncertainty over those cash flows the further out in time you look.
If you can identify businesses likely to lift dividends over long periods you're likely to find yourself in the wealth-making sweet spot of growing income streams and capital growth.
Below are two businesses that could offer investors dividend growth over the 3 to 5 years ahead.
Bapcor Ltd (ASX: BAP) is the auto parts distribution business that is forecasting earnings per share growth in the region of 35% for the financial year ending June 30, 2017. It also has a track record of lifting its dividend by double-digit amounts and another couple of years of double-digit profit growth look attainable as the company executes multiple growth strategies. If so its shares may end up a steal at today's price of $5.23.
CSL Limited (ASX: CSL) is a stock that has perhaps the best track record on the ASX. In investing lead huskies tend to keep on winning and at the front of the pack is healthcare operator CSL. It's forecasting profit growth of 18% to 20% for the full year and lifted its underlying earnings per share a whopping 39% for the half year ending December 31 2016. Unsurprisingly it commands a high valuation, but for investors focused on high-quality companies growing dividends at healthy rates over the long term it's hard to go past.
