Three Growth Shares With Growing Dividends

coins in nest Growth shares, as their name suggests, are growing their top and bottom-lines rapidly and require funds for expansion. So, dividends are a low priority for management and it’s often the case where rapidly-growing companies retain all earnings for future growth.

But yet, there are shares with double-digit growth rates that are at the same time, rewarding shareholders with fatter dividends. Let’s take at three such companies.

1. Japan Foods Holding (SGX: 5OI) – Price: $0.60, Price-Earnings (PE): 10.8, Dividend Yield: 4.2%

This Japanese-cuisine restaurant operator got its debut on the Catalist exchange on Feb 2009 at S$0.167 per share. Since then, shares have jumped 259% to S$0.60 (exclusive of dividends) with its impressive corporate performance thus far likely having a huge role to play in the share price growth. The chart below showcases the growth in earnings per share and dividends of the company, which clocked in at annualised rates of 16% and 96% respectively.

The company has operations in Singapore, Hong Kong, Malaysia, Indonesia and Vietnam. Some of the restaurant brands in the company’s stable include Ajisen Ramen, Menya Musashi, Aoba and Botejyu to name but a few. While industry peers like Food Junction Holdings (SGX: 529) and Tung Lok Restaurants (SGX: 540) are struggling with costs, management has shown a knack at managing expenses and the growing profits are a testament to that.

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2. Raffles Medical Group (SGX: R01) – Price: $3.02, PE: 28.0, Dividend Yield: 1.5%

Raffles Medical Group is a healthcare provider that runs its namesake Raffles Hospital, along with a host of medical centres and dental clinics. The company also has a presence in China, with three medical centres in Hong Kong and one in Shanghai.

Being a healthcare provider lends defensive characteristics to RMG’s business and its corporate results exemplify the fact. RMG’s top-line displayed year-on-year growth throughout 2007-2009 even as the worldwide economy imploded during the Great Financial Crisis taking place at the time. The chart below plots RMG’s  EPS and dividends from 2008 to 2012, which have grown at compounded rates of 15% and 16% per year respectively.

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3. ARA Asset Management (SGX: D1R) – Price: $1.735, PE: 21.1, Dividend Yield: 2.9%

Warren Buffett got his first-step toward being a billionaire by managing funds for others. ARA might just be taking a leaf out from his playbook, but with a twist. The company manages private real-estate funds, in addition to management of publicly-listed REITs like Fortune REIT, Suntec REIT and Cache Logistics Trust.

And just like Buffett, who made his investors rich, ARA has certainly beefed up the wallets of its shareholders with a 295% total return (inclusive of dividends) since the start of 2008. ARA’s 19% annual growth rate in EPS along with the 11% increase per year in dividends, as seen in the chart below, would surely have a huge hand in helping fuel its share price appreciation.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing owns shares in Japan Foods Holding.