These shares are growing their dividends at a solid rate…
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Are you looking to add some dividend shares to your portfolio in the near future? Then take a look at the ones listed below.
While the shares below don’t have the biggest yields, they have the potential to grow strongly in the future. Here’s why they could be top long term options for income investors:
The first ASX dividend share to look at is Bapcor. It is the Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service and solutions. It is also the name behind a number of retail brands such as Autobarn, Burson Auto Parts and Midas.
Bapcor was on form again in FY 2021 thanks to strong demand for used cars. This resulted in elevated sales across all its brands and underpinned strong sales and profit growth.
Positively, the company looks well-placed to continue its growth in the future. This is thanks to its strong market position and its expansion plans. The latter is being driven both domestically and in the Asia market.
According to a note out of Citi, its analysts are expecting Bapcor to grow its fully franked dividend to 23 cents per share in FY 2022 and then 25 cents per share in FY 2023. Based on the current Bapcor share price of $7.44, this will mean yields of 3.1% and 3.35%, respectively.
Citi has a buy rating and $8.25 price target on the company’s shares.
Collins Foods Ltd (ASX: CKF)
Another growing ASX dividend share to look at is Collins Foods. It is a leading quick service restaurant operator with a focus on KFC restaurants in Australia and Europe.
As with Bapcor, Collins Foods didn’t let the pandemic hold it back and delivered another strong result in FY 2021. The company reported a 12.4% increase in revenue to $1.07 billion and an 18.2% lift in underlying net profit after tax to $56.9 million. A key driver of this growth was its KFC Australia business, which reported a same store sales increase of 12.9%.
Macquarie is positive on its future and late last month upgraded its shares to an outperform rating with a $12.50 price target.
The broker has also pencilled in fully franked dividends per share of 23.3 cents in FY 2022 and then 26.5 cents in FY 2023. Based on the latest Collins Foods share price of $11.99, this will mean yields of 2% and 2.2%, respectively.
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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Collins Foods Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.