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Have £2,000 to spend? These small-cap dividend growth stocks could help you retire early

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The rate at which UK-based Robert Walters (LSE: RWA) is growing business across the globe is nothing short of stunning.

Its rising might in overseas territories has proved to be the fulcrum behind annual earnings rising by double-digit percentages over the past several years. It will also prove to be particularly important as economic conditions in its home territory remain challenging under the weight of Brexit.

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I would even go so far as to say that Robert Walters is a share that could help you to retire rich, however our European Union withdrawal goes. The recruitment specialist generates just a quarter of group gross profits from these shores, while around 40% are created from the fast-growing regions of Asia Pacific.

Far-Eastern Promise

Indeed, Robert Walters’s growing influence in these far-flung places, where economic growth rates dwarf those of developed economies and population levels are booming, convinces me that investors can here can look forward to brilliant profits growth in the long term and even help you to retire early.

Gross profits from Asia Pacific leapt 16% (at constant currencies) in 2018 to £159.1m, a result that powered comparable profits at group level some 15% higher to £392m. The small-cap enjoyed another year of record performances in Japan, Hong Kong, Taiwan and Mainland China, in addition to accelerating growth in South-East Asia with Indonesia, Thailand and the Philippines all generating operating profit growth of more than 50%.

With trading in Europe (excluding the UK) also remaining strong — gross profits here leapt by an even-better 24% in 2018 to £100m, because of candidate shortages — it’s not a shock that City analysts are predicting more chunky profits growth through to the end of 2020, at least. This gives income chasers much to cheer about too, as dividends are expected to keep sprinting skywards. Subsequent dividends of 15.8p and 17.6p per share for this year and next are expected to yield an inflation-beating 2.6% and 2.9%, respectively.

In my opinion, Robert Walters’s long-running record of delivering healthy profits and dividends increases isn’t properly reflected by the market, judging by its ultra-low forward P/E ratio of 12.2 times. And this makes it a steal right now.

Dividends galloping higher

Now 4Imprint Group (LSE: FOUR) doesn’t boast the sort of great value as Robert Walters. Heck, its corresponding earnings multiple of 18.9 times actually sits a little way above the widely-regarded value terrain of 15 times and below.

Still, this is a small price to pay in my book given the rate at which revenues are swelling here too. In 2018, sales at the promotional product creator jumped 18% to $738.4m, putting it well on the way to break through the $1bn barrier by 2022.

4Imprint has turbocharged marketing spend to improve revenues. Further investment here, as well as moves to expand its Oshkosh distribution centre in Wisconsin, is also setting it nicely for the foreseeable future. It’s no surprise the number crunchers are expecting dividends to keep ripping higher along with earnings. The full-year payout is predicted to rise from 53.15p per share in 2018 to 59.2p in 2019, and 67.8p next year. Yields subsequently sit at a chubby 2.8% and 3.2%, respectively, and cement my view that the business is a great stock to load up on today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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