Investors are faced with a really difficult situation where the economy’s growth has dropped to a very slow rate and yields have been pushed so low that you just can’t a good yield.
But there are a group of mid-caps out there that have good growth plans whilst also paying a dividend, like these ones:
Webjet Limited (ASX: WEB)
Webjet is a leading travel business that is a big player in both the consumer and business space. Indeed, the B2B division called WebBeds is one of the biggest in the world and that’s where a lot of the earnings growth is coming from at the moment.
The company just held its AGM and said that in FY20 it expects to deliver total underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $157 million to $167 million, which would be growth of 26% to 34% over FY19, with organic growth of 16% to 23%.
If it can keep growing at double digit rates for the next few years then today’s price looks cheap. It’s trading at just 14x FY21’s estimated earnings. Webjet has been steadily growing its dividend and currently has a grossed-up dividend yield of 2.6%.
Bapcor Ltd (ASX: BAP)
Bapcor is the leading auto parts business is Australia and New Zealand with its Burson and Autobarn brands. It has recently expanded into truck parts and is also growing a Burson network in Asia which could be a good future profit driver.
I’ve been impressed by how consistently Bapcor has been able to grow same store sales and increase its operating profit margin. In some ways Bapcor is quite a defensive business because in a downturn people are more likely to replace a car part than buy a whole new car.
It’s currently trading at 17x FY21’s estimated earnings with a grossed-up dividend yield of 3.5%.
Reece Ltd (ASX: REH)
Reece is a bathroom, plumbing and piping business which runs a variety of divisions including bathrooms, HVAC-R, irrigation and civil.
It has recently acquired MORSCO in the US which opened up a huge new market. Its first quarter sales update was solid, although not amazing. Sales revenue was up 8.8% but first half EBITDA is expected to be in line with the result in the prior year.
I like that Reece’s earnings continue to diversify geographically and by earning more from different divisions like civil.
At the current prices I’d go for Webjet, I think it still looks cheap for its long-term growth prospects and its new technology offerings are likely to materially boost profit margins in the medium-term.
The post 3 ASX shares I’d buy today for growth and income appeared first on Motley Fool Australia.
But, these leading ASX shares could also be excellent contenders to offer dividends and capital growth over the coming years.
When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.
In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.
Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.
- Man bets $221,666 on one ASX stock
- Top analysts name their top 3 ASX blue chip shares for 2019
- 3 quality dividend shares to boost your income
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- 5 Stocks for Potentially Building Wealth After 50
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Webjet Ltd. 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