I'm always on the lookout for ASX shares that are delivering rapid dividend growth.
These quick dividend growth shares are usually the ones that are generating excellent profit growth and are also rewarding shareholders along the growth journey.
Here are two rapid dividend growth shares on the ASX:
MNF Group Ltd (ASX: MNF)
MNF Group is a leading voice over internet protocol (VoIP) business. Its share price has been hit hard since reporting season with a poorly timed share purchase plan (SPP) and the acquisition of the operating businesses of Inabox Group Ltd (ASX: IAB).
MNF has grown the annual dividend from 4.5 cents per share in FY14 to 8.35 cents per share in FY18.
MNF is predicting earnings per share (EPS) growth of at least 25% to 20.4 cents by FY20. With a targeted payout ratio of 50% of profit, that means the dividend should grow by at least 22% to 10.2 cents per share. This would give a grossed-up dividend yield of at least 3.55%.
Altium Limited (ASX: ALU)
This electronic PCB software business is transforming its industry with new products and continuous upgrades. The growth of the Internet of Things is giving Altium a major boost and now it wants to become the clear world leader.
It's rewarding shareholders along the way with excellent dividend growth. In 2014 its dividends amounted to 12 cents per share and in 2018 it has just paid out 27 cents per share – more than doubling the payout!
With an excellent balance sheet and long-term profit growth ahead, dividend growth seems likely. However, the current yield is only 1.2% so it may take a while before you're getting more income than from the bank.
Foolish takeaway
These two shares have delivered rapid dividend growth and are on course for even more growth. At the current prices it's clear the MNF Group is the better value buy today, however over 10 years Altium may be the one to deliver the biggest returns.
