Many investors will have either income or growth in mind when considering where to invest any spare savings into the share market. In fairness many prefer dividends due to the perceived guarantee of return on investment and thanks to the tax effective benefits of the franking credit system that now looks almost certain to continue without reform in most of our lifetimes.
But what if you could get income and growth?
After all this is the investing sweet spot that can turbocharge returns and lead to ballooning share portfolio balances. So here are two businesses that have caught my eye recently to tick these boxes.
Accent Group Ltd (ASX: AX1) is the footwear retailer behind some of Australia’s most popular stores in HypeDC, Platypus, Skechers and The Athlete’s Foot. It also has exclusive distribution rights for popular brands such as Merrell, Caterpillar and Dr Martens. Thanks in part to some strong same-store sales growth it’s forecasting around 10% EBITDA growth over the 6 months to June 30 2019 and has paid out 8.25 cents in fully franked dividends over the last 12 months.
At today’s price of $1.38 that equals a trailing yield of 5.9% and it’s also forecasting double-digit profit growth in FY 2019. You cannot ask for much more than that as an investor.
Bapcor Ltd (ASX: BAP) is another business that has fallen out of favour sentiment wise with investors over 2019. That could be due to a forecast for it to only hit the bottom end of prior guidance for net profit growth to come in between 9% to 14% in FY 2019.
Still 9% profit growth is a solid effort given Australia’s soft consumer-facing trading environment and at $5.57 this afternoon the stock offers a trailing yield of 2.9%.
Again for a business with a consistent track record of growth this is a decent yield and the stock could go onto beat the market over the next 2 to 3 years at least.
Of course it must be noted that both these businesses carry considerable risks and could produce negative returns in the event of disappointing trading updates, as such they should only be considered as part of a balanced investment portfolio.
However, I’d happily buy both of them today at aforementioned prices if I were after dividends and some growth potential.
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You can find Tom on Twitter @tommyr345
The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Accent Group. 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