MENU

Three top stocks for growth and dividends

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%.

Looking for even more income ideas? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.