Why I own these two income champions

Like most investors, I love dividends. I mean, what's not to like? A regular cash payout on your investment that hopefully increases every year. Who would turn that down?

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However, I'm also well aware that not all dividends are the same and some are more attractive than others. So, when picking dividend stocks, I'm looking for more than just an attractive dividend yield. I consider the company's growth potential, payout ratio and record of investor returns, as well as other fundamental factors such as balance sheet strength.

Rapid growth

Air Partner(LSE: AIR) is one stock that meets all of my dividend criteria and more. For a start, the shares support a dividend yield of 5.2% which, if history is anything to go by, will increase substantially over the next few years. The payout is up by 37% in five years and management recently hiked the company's interim payout by 10%.

Alongside the attractive dividend, Air Partner is pursuing a growth strategy. Bolt-on acquisitions are helping the business grow and diversify away from its traditional business of jet brokering. Earnings per share expanded 30% year-on-year during the first half of the year as acquisitions contributed to growth. The company has plenty of firepower to pursue further acquisitions as well. Net cash rose 270% during the first half to £5.2m.

Perhaps the most attractive thing about Air Partner is the flexible nature of the company's business. Jet brokering isn't capital intensive, and a small capital outlay can generate huge returns. There's no need for investment in planes or other projects that require huge upfront capital investment. The company's five-year average return on capital employed is over 20%, which is nothing short of impressive.

Special dividends

I'm attracted to Lancashire Holdings (LSE: LRE) as a dividend investment due to the company's record of returning cash to investors.

Lancashire has turned its back on the traditional dividend model of paying shareholders a regular payout every six or three months.

Instead, the company offers investors a token payout four times a year and one special payout. By structuring the dividend this way, the group has much more financial flexibility, which is needed to navigate the insurance market without any negative surprises. Further, the company is under no obligation to make the special payout, so if management decides to hold back cash, the market won't suddenly dump the shares. This year many dividend champions have seen the value of their shares crash after reducing dividends to investors. With Lancashire, the chances of this happening are reduced.

The company just announced a $0.75 per share special payout for the year, and since inception, the group has returned $2.7bn to investors, 104.9% of total comprehensive income. Based on current exchange rates, the special payout translates into a yield of just over 8%.

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Rupert Hargreaves owns shares of Lancashire Holdings and Air Partner. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.