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Should you buy these ‘secret’ dividend stocks today?

For investors on the hunt for brilliant dividend growth, then AIM-listed Sanderson Group (LSE: SND) may well fit the bill.

Supported by a steady stream of earnings rises, the software provider has lifted shareholder rewards at a pretty impressive rate in recent times (dividends have been raised at a compound annual growth rate of 12.5% during the four fiscal years up to September 2016).

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If broker projections are to be believed, another hefty hike — to 2.6p per share from 2.4p — is on the cards when the Coventry company reports for fiscal 2017. And for the current year another rise is forecast, a 2.9p payout currently being expected, meaning that Sanderson sports a chunky 4.2% yield.

What’s more, this prediction could also be considered pretty well protected, Sanderson boasting dividend coverage bang on the widely-regarded security benchmark of two times.

Revenues rising

Now City analysts are expecting things to have become a bit more trickier at Sanderson more recently and a 2% earnings slip is expected for the 12 months ending September. However, this is expected to be a one-off result.

Sanderson advised today that revenues are predicted to have risen to £21.5m in the past year from £21.3m a year earlier. And news on the company’s order book suggested that sales should continue chugging northwards. This rose to an “optimal” £5m last year from £3m in fiscal 2016, with order intake clocking in at £13.7m versus £12.3m previously.

The City believes that earnings should bounce back immediately in fiscal 2018, and they predict a bottom-line bump of 5%. Moreover, this forecast results in a mega-cheap forward P/E rating of 11.8 times. Those seeking so-called value dividend stocks may want to take a close look at Sanderson in my opinion.

Picture perfect

But whether or not you fancy snapping up some Sanderson, I reckon Photo-Me International (LSE: PHTM) is a share that is definitely worthy of your attention.

With profits growing by robust double-digit percentages over the past five years, the photo booth play has increased the annual dividend by a whopping compound annual growth rate of 19.5% over the period. And the number crunchers are expecting further expansion on both counts.

Even though earnings growth is expected to cool to 5% in the year to April 2018, this is not predicted to prove a barrier to further significant payout growth — an 8.4p per share reward is currently predicted, up from 7.03p last year and which translates into a bumper 4.7% yield.

And for next year, helped by an estimated 6% earnings rise, a 9p dividend is forecast, driving the yield to an impressive 5.2%.

While Photo-Me rocks up on a slightly expensive prospective P/E ratio of 17.7 times, this does little to take the sheen off for me, given the probability of sustained earnings and dividend growth long into the future.

Last week it announced that its entry into the laundry market and photo booth expansion programme continued to deliver the goods, helping revenues to rise 11.2% during May-September. And with these programmes still having plenty of gas in the tank, I believe investors should enjoy sustained profits and dividend growth.

A £1m portfolio could be closer than you imagine

While I like the look of both Photo-Me and Sanderson right now, they are by no means the only shares out there that could make you a fortune.

Our analysts have been hard at work identifying a selection of the best FTSE 100 dividend stocks in the retail, pharma and utilities sectors, companies we are convinced should really kick-start your investment income. And they are revealed in The Motley Fool's  5 Dividend Winners To Retire On wealth report.

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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.