When it comes to ASX shares, I always like to think that growth today enables the dividend income of tomorrow.
Some ASX companies have arguably got most of their growth behind them and purely focus on delivering dividend income to their shareholders – Commonwealth Bank of Australia (ASX: CBA) and the other big banks come to mind here.
But for other ASX shares, there’s plenty of both growth and income left in the tank – and here you often find the real winners.
So here are 2 ASX shares that I would buy today for both capital growth and dividend income potential.
Altium Limited (ASX: ALU)
Altium is famous as one of the ASX WAAAX growth stocks. With breakneck revenue and earnings growth rates, ALU shares have rewarded their owners handsomely this year, rising from around $21.60 in January to today’s price of $35.25.
But I’m more excited about Altium’s dividend. Although this company’s payout is decidedly in its ‘fledgling’ days (with a current yield of 0.96%), this company has been growing it at an impressive rate. Back in 2012, Altium paid a 5 cents per share (cps) dividend, but last year rewarded shareholders with a 27 cps payout. This year, it was even better at 34 cps.
For investors who picked up Altium shares 2 years ago – well, they would already be sitting at a yield-on-cost of 2.65%. All this adds up to a company I would love to own for both growth and income.
Vanguard Australian Shares Index ETF (ASX: VAS)
Market-wide index funds are often under-appreciated for both the growth and income they can provide.
Since a fund like VAS holds shares in around 300 companies in various weightings, it receives dividend income from all of these stocks as well as any dividend increases that come with time. This income is passed straight thorough to VAS’s unit-holders. Its most recent distribution translates into a 4.08% yield on current prices.
On top of this, you are getting the average growth rates of all of these 300 companies as well, which includes growth stocks like Afterpay Limited (ASX: APT) and Xero Limited (ASX: XRO) as well as dividend stalwarts like National Australia Bank Ltd (ASX: NAB).
VAS has delivered a 22.3% return, year-to-date, and so is another stock I would own for ASX growth and income.
Here I think we have 2 stocks that will continue to reward shareholders with significant levels of both growth and income. Altium is your more speculative high-reward play here, but VAS can be well used as the core of any portfolio, in my opinion.
The post 2 ASX shares I’d buy for both growth and income appeared first on Motley Fool Australia.
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Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of Altium, National Australia Bank Limited, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019