Although a big fat dividend yield is great to have in your portfolio, I think dividends that have the potential to grow significantly in the future are even better.
Three dividend shares which I think have the potential to grow at a strong rate over the coming years are listed below. Here's why I like them:
Collins Foods Ltd (ASX: CKF)
Despite the KFC operator's shares going on a solid run in the last few weeks, they still provide investors with a trailing fully franked 2.7% dividend. While this is not the biggest yield on the market, I believe it is capable of growing it significantly in the future thanks to its low payout ratio and ambitious expansion plans. Over the last five years Collins Foods has grown its dividend by an average of 21% per annum.
Greencross Limited (ASX: GXL)
This integrated pet care company's shares currently provide investors with a trailing fully franked 3.4% dividend. Over the previous five years the company has grown its dividend by an average of 19% per annum. While I don't expect its dividend to grow at such a strong rate over the next five years, I believe its market-leading position and in-store clinic roll out will still allow it to grow it an above-average rate.
Super Retail Group Ltd (ASX: SUL)
There has been a lot of talk about Amazon disrupting Super Retail's business in recent months. However, I believe the hard work management has done preparing for the retail behemoth's launch has put it in a great position to continue growing its bottom line and dividend. At present Super Retail's shares provide a trailing fully franked 5.9% dividend after growing it by an average of 7.8% per annum over the last five years.
