When it comes to shares with growing dividends, I think the small end of the market is a great place to look.
In this area of the market there are many companies on the rise with the potential to grow their dividends meaningfully in the future.
Three which I think are worth a closer look are listed below. Here's why I like them:
Duxton Water Ltd (ASX: D2O)
Duxton Water is a listed investment company with a difference. It provides investors with direct access to water through Australian Water Entitlements, a key production input into a number of agricultural industries. As we have seen this week from Nufarm Limited (ASX: NUF), Australia has been experiencing significantly dry weather conditions for an extended period. I believe this bodes well for Duxton Water and should put it in a good position to benefit from high temporary water prices through the 2018/2019 water year. At present the company's shares offer investors a trailing 3.8% dividend.
Money3 Corporation Limited (ASX: MNY)
Money3 used to be known as a payday loan company. Fortunately, the company has transitioned away from that controversial industry into secured auto loans. Pleasingly, this has been a success and appears to have positioned the company well for long-term sustainable growth. With the company already providing a decent yield of approximately 3.7%, it could be a real star of the future if it continues to grow its market share at a solid rate.
Paragon Care Ltd (ASX: PGC)
This provider of integrated services to the health and aged care markets could be another small cap option for income investors. It recently announced the acquisition of a similar business in New Zealand by the name of REM Systems. It came with a hefty price tag of NZ$54.4 million but is expected to be highly accretive to earnings in the future. If the transaction proves successful then I expect shareholders will be handsomely rewarded with dividend increases. Paragon Care's shares currently offer a trailing fully franked 3.7% dividend.
