While a big dividend yield is great, I think dividends with the potential to grow over the long-term are even better.
Take for example Blackmores Limited (ASX: BKL). This health supplements company's shares may only provide a trailing fully franked 1.8% dividend today, but for long-term shareholders it is a very different story.
In FY 2017 Blackmores paid out a dividend of $2.70 per share. This means that shareholders who bought in 10 years ago when its share price was $20.25 received a yield on cost of 13.3%.
This year the company is expected to pay out an estimated $3.30 per share dividend, which will equate to a yield on cost of 16.2% for these lucky shareholders. That's an almost 30% return on their original investment from just these two dividends alone.
With that in mind, I thought I would pick out two shares which I believe are capable of being another Blackmores over the next decade.
Altium Limited (ASX: ALU)
This printed circuit board (PCB) design software provider's shares currently provide an unfranked 1.6% dividend. Considering management is confident that it will nearly double its revenue to US$200 million by FY 2020, I think this is a dividend with significant growth potential. Especially with the Internet of Things expected to cause a massive increase in the number of connected devices in the future. These devices almost always require PCBs inside them, which should result in strong and growing demand for its software.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
This pizza chain operator's shares provide a partially franked 2% dividend at the moment. But I believe this has significant long-term growth potential due to the company's long runway for growth. Management is targeting a network of 4,650 stores by 2025, more than double its store count at the end of FY 2017. It also expects margins to improve greatly, ultimately boosting its overall profitability and its dividend.
