One thing that I like to look at when assessing income shares is a company's ability to grow its dividend in the future.
After all, a company that can grow its dividend at an above-average rate can turn an average yield into a fantastic yield in just a few years.
Three shares which I believe could be capable of achieving this are listed below:
Amaysim Australia Ltd (ASX: AYS)
While I'm not especially bullish on the telco industry as a whole, I do think that Amaysim is better positioned than most to grow at a solid rate in the coming years. This is due to its diversification away from just offering mobile phone plans. Amaysim now provides low-cost unlimited Amaysim-branded NBN plans and energy plans through its Click Energy business. I believe this puts it in a great position to continue growing its dividend which currently provides investors with a trailing partially franked 4.4% yield.
Baby Bunting Group Ltd (ASX: BBN)
Although I'm a touch doubtful that this baby product retailer will be able to increase its dividend this year, I believe once the short-term headwinds it faces ease it will resume its strong growth. Baby Bunting has been a victim of its own success this year and has been impacted by clearance sales from closing competitors. But once these clearance sales are out of the way, I expect Baby Bunting will be free to gain even more market share and deliver solid earnings and dividend growth. At present its shares provide a trailing fully franked 4.6% dividend.
Helloworld Ltd (ASX: HLO)
At present this travel company's shares only offer investors a trailing fully franked 2.9% dividend. But with management confident that demand for its integrated service offering will continue to develop and grow, I believe Helloworld has the potential to become a dividend star in the future. In FY 2018 EBITDA is forecast to increase upwards of 21% year-on-year and I expect its dividend will grow at a similarly strong rate.
