I think it is fair to say that many of Australia's most popular dividend shares are going through an awkward stage at the moment.
While I still think the banks are great options for income investors, I wouldn't expect much by way of growth from them over the next couple of years.
Whereas at the small end of the market I think there are a number of growing shares which could increase their dividends meaningful in the future.
Three which I think investors should take a closer look at are as follows:
Baby Bunting Group Ltd (ASX: BBN)
This could be a bit of a controversial pick as I expect Baby Bunting could cut its dividend this year before going on to grow it a strong pace over the next few years. This is because the baby product retailer has been a victim of its own success and has suffered from the clearance sales of competitors this year. But once this short-term headwind eases, I expect the retailer to win the vacated market share and profit greatly. At present its shares offer a trailing fully franked 4.9% dividend.
Duxton Water Ltd (ASX: D2O)
Duxton Water is a listed company that provides investors with direct access to water through Australian Water Entitlements, which are perpetual rights to Australia's limited water supply. Its shares are currently trading at a slight discount to its NTA of $1.23 and provide a trailing partially franked 3.9% dividend. As I believe this dividend could grow at a steady pace over the next decade, it could make it one to hold onto for the long-term. Current market indications are for high temporary water prices through the 2018/2019 water year compared to prices in the current year, which could bode well for the company in FY 2019.
Money3 Corporation Limited (ASX: MNY)
After successfully transitioning away from payday loans to secured auto loans I think this financial services company is well worth a closer look. Especially considering how profitable it has found the auto loans business to be and how small its current share of the market is. Money3's shares offer a trailing fully franked 4% dividend.
