With the recent market slide, many of the ASX’s most promising companies are trading for increasingly reasonable valuations, given their future growth prospects. Even better, many of these stocks pay generous, fully franked dividends. Here’s a look at three companies offering a combination of growth and income to prospective shareholders.
Idea # 1: Telstra
Telstra’s (ASX: TLS) domestic mobile business may only grow slowly from here, yet some significant future growth is likely to come from the company’s fast-growing overseas businesses as well as its cloud-computing and data centre services. Still, Telstra shares have been swept up in the market fall, and are now trading for 16 times earnings – a reasonable price tag for such a well positioned business. The 6% dividend yield, fully franked, provides a further solid basis for future returns.
Idea # 2: Premier Investments
Premier Investments (ASX: PMV) is the company behind fast-growing retail concepts including Smiggle, Dotti and Portmans. And the growth is translating to the bottom line: In the first half of 2013, Premier saw net profits after tax increase 20%.
What’s more, the company boasts experienced management and a large cash balance that could be used to make acquisitions for further growth. Despite these strengths, shares are trading for just 13 times earnings, or on an EV to EBITDA basis of 6. Premier shares also pay a fully franked dividend in the 5.5% range.
Idea # 3: Flight Centre
Er, what market fall? Flight Centre shares have doubled in the last year, against a 17% return in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) over the same period. Still, an investment in this company may still be a good bet. The company’s international expansion, especially into the U.S. and China, offer a pathway to future growth while Flight Centre also enjoys a market-leading position in Australia and the UK – some of the world’s most travel-mad nations. Shares currently trade for 19 times earnings while the fully franked dividend comes in just under 3%.
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Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned in this article.