Although I think the Telstra Corporation Ltd (ASX: TLS) dividend is an attractive option for income investors, I'll be the first to admit that the telco giant is unlikely to be in position to grow it meaningfully over the next few years.
So if you're in the market for dividends that have the potential to grow rapidly over the next few years, the two small-cap dividend shares listed below could be exactly what you're looking for.
Here's why I think income investors ought to consider snapping them up today:
Amaysim Australia Ltd (ASX: AYS)
Unlike Telstra, the arrival of the NBN is a major opportunity for this fast-growing telco company. Amaysim aims to build on its success in the mobile space by offering low-cost unlimited Amaysim-branded NBN plans. Whilst it is undoubtedly a highly competitive market, the company has cross-selling opportunities with the 800,000 households using its mobile services. While it is early days, I'm optimistic that the company will be able to gain a decent market share. This should put it in a position to grow its dividend at a solid rate over the coming years. At present its shares provide a trailing partially franked 4.5% dividend.
Baby Bunting Group Ltd (ASX: BBN)
Although its shares have rallied 20% higher over the last 30 days, they still provide a generous trailing fully franked 4.3% dividend. The baby products retailer's dividend isn't likely to grow much this year due to its expectation of flat earnings, but once the short-term headwinds it is facing subside, I expect strong growth in both earnings and its dividend. Baby Bunting has been the victim of its own success this year. The closure of competitors, and accompanying clearance sales, has led to competitive pressures. But once these competitors are out of the way, I expect the company will be free to gobble up more market share.
