Could this ASX 200 share be a dividend gem hiding in plain sight?

A woman with a magnifying glass adjusts her glasses as she holds the glass to her computer screen and peers closely at it.A woman with a magnifying glass adjusts her glasses as she holds the glass to her computer screen and peers closely at it.

Most companies inside the S&P/ASX 200 Index (ASX: XJO) can attest to paying dividends to some extent. However, when I’m on the hunt for dividend gems, I’m looking for ASX shares that are rapidly growing their dividends.

It is often companies with a low dividend yield that are overlooked. But, when a low yield is combined with a blistering high rate of dividend growth, the long-term outcome can be shockingly good.

A yield of as little as 1% can become 6% equivalent over 10 years — assuming the same share price — if it increases by 20% each year.

That’s why I’d be taking a close look at this not-so-secret ASX tech share

ASX 200 dividend aristocrat in the making

Many will be familiar with the circuit board design software provider Altium Limited (ASX: ALU). The ASX tech share came to prominence during the heyday of Australia’s ‘WAAAX‘ shares. Though, few probably appreciate the dividend component of this mighty company.

At a paltry 1.2% dividend yield, Altium isn’t touting a bank-beating income profile. However, yield is only one aspect that could lead investors astray. Instead, I’d focus on the fact that this company has grown its dividend for 10 years straight, as shown below.

TradingView Chart

Not only has Altium simply grown its dividends… it has significantly grown its dividends. When looking at the ASX 200 shares that have delivered a 10-year compound annual growth rate (CAGR) on their dividends per share greater than 20%, Altium is one of only 10 companies that meet the high bar.

Unlike other companies that fall into this bucket — such as South32 Ltd (ASX: S32), Fortescue Metals Group Limited (ASX: FMG), and Northern Star Resources Ltd (ASX: NST) — Altium isn’t exposed to the extremely cyclical resource industry.

If Altium were to continue this trend for 15 more years, the ASX 200 share could potentially join a select group known as ‘dividend aristocrats’.

Look for continued growth

Altium is expected to release its first-half results for FY23 on 20 February. It will be important to see that the company is continuing to deliver on its growth ambitions. The ultimate target is US$500 million in revenue by 2026.

If the company can hit these milestones, I suspect Altium could become a highly prized ASX 200 dividend share.

The post Could this ASX 200 share be a dividend gem hiding in plain sight? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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