When it comes to dividends, most investors will look for yield. While that is wise if you are in immediate need of income, if you afford to be patient you could be rewarded handsomely.
Two top ASX shares which have the potential to grow their earnings and dividends materially over the next decade are listed below. Here's why I think they could be dividend stars of the future:
Jumbo Interactive (ASX: JIN)
Jumbo is an online lottery ticket seller which is best known as the operator of the Oz Lotteries website. It also provides its software platform to a range of businesses and charities in the domestic and international markets. Its shares have come under pressure this year due to concerns over its slowing growth. However, this has been caused by its investment in growth opportunities and is expected to be temporary.
Management expects its margins to return to normal levels again in the near term and its earnings growth should accelerate thereafter. In the meantime, if Jumbo maintains the 36.5 cents dividend it paid in FY 2019 again this year, its shares will provide a 3.1% yield. I think this is an attractive yield already, but could grow materially in the future. Jumbo's investments are expected to play a key role in the company achieving its global ticket sales target of $1 billion in FY 2022. This will be around triple what it recorded in FY 2019.
Kogan.com Ltd (ASX: KGN)
This ecommerce company recently released a business update which revealed exceptionally strong sales and profit growth during the month of April. While the company is certainly getting a lift from store closures during the pandemic, I believe its growth will continue over the next decade thanks to the ongoing shift to online shopping.
I expect Kogan to pay a fully franked 19 cents per share dividend in FY 2020. While this is only a 2.15% yield right now, I believe this dividend will grow significantly over the next decade. This could make it well worth buying and holding Kogan's shares.
