The Motley Fool

2 dividend growth stocks that could make you ridiculously rich

Grainger (LSE: GRI) stepped modestly higher in Wednesday business following the release of pre-close trading details, the FTSE 250 stock last up 1% on the day.

It declared: “We have delivered a strong trading performance in the second half of the year, with good results from sales and tightly controlled operational and finance costs.” As a result, it predicts adjusted earnings in the 12 months to September to rise to approximately £70m, from £53.1m a year ago.

Sign up for FREE issues of The Motley Fool Collective. Do you want straightforward views on what’s happening with the stock market, direct to your inbox? Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio. Click here to get started now — it’s FREE!

Grainger noted that sales of vacant properties were around 2% ahead of the September 2016 year-end vacant possession value, and during the 11 months to August, like-for-like rental growth across its portfolio registered at 3.7%.

Meanwhile, its private rented portfolio has reported growth of 3.2%, while the firm has witnessed annualised rental growth of 4.4% in its regulated tenancy portfolio.

Safe as houses

Grainger has a pretty erratic earnings history, certainly in recent times, and City analysts aren’t exactly falling over themselves to declare a recent upturn in the company’s bottom line – a 35% decline is pencilled in for fiscal 2017.

Still, this isn’t expected to prove an obstacle to the residential landlord keeping its progressive dividend policy on track. Grainger has hiked dividends at a compound annual growth rate of 18.6% over the past five years, and is expected to lift the reward to 4.83p per share in the outgoing period, from 4.5p in 2016.

And supported by an expected 5% earnings rise in the forthcoming year, the company is anticipated to introduce another meaty dividend rise, to 5.73p. However, yields over at Grainger are not likely to get hearts racing right now. These clock in at 1.9% and 2.2% for 2017 and 2018, respectively.

However, while Grainger’s operations – like its dividend yields – may not be the most exciting, the company provides the sort of stability that all income chasers crave. And with its strategic shift towards the private rented sector impressing so far, and its cost-cutting programme also clicking through the gears (it is on course to hit its £27.5m overhead reduction goal for the outgoing year), I believe the FTSE 250 giant remains a hot investment destination.

Mouth-watering yields

I also reckon Charles Taylor (LSE: CTR) is a great selection for both growth and dividend chasers.

You see, with the professional services provider increasingly spreading its tentacles far and wide, revenues at the business continue to shoot skywards. Between January and June, these rose 36.1% year-on-year to £100.7m. Charles Taylor also remains busy on the acquisition trail to keep business rolling in; just this month it sucked up compensation insurance claims administrator Metro Risk Management of the US for a fee that could rise to £1.8m.

Although Charles Taylor is predicted to endure an 8% earnings dip in 2017, the small cap is expected to snap back with a 6% rise in 2018. And the company’s sunny long-term profits outlook is expected to keep driving dividends skywards over the next couple of years at least – the 10.5p per share reward of 2016 is predicted to pound to 11p this year, and to rise again to 11.7p next year.

As a result, yields clock in at a formidable 4% and 4.3% for this year and next.

Super dividend shares to help you retire early

Charles Taylor is, of course, not the only stock carrying massive yields for this year and next. With this in mind I would like to point you towards this totally exclusive report that identifies a broad selection of FTSE 100 stocks waiting to turbocharge your investment returns.

The Motley Fool's 5 Shares To Retire On wealth report highlights a selection of incredible stocks with an excellent record of providing juicy shareholder returns. Among our picks are top retail, pharmaceutical and utilities plays that we are convinced should keep shelling out red-hot dividends.

Click here to download the report. It's 100% free and can be sent straight to your inbox.

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.