For growth and dividends, you can’t beat this stock

Most Australian investors are focused on the big banks, from Commonwealth Bank (ASX: CBA), which reports today, to Westpac (ASX: WBC). But they’re missing a much more promising – and arguably, reasonably priced – finance company.

Spotlight on FlexiGroup

Consumer finance player FlexiGroup (ASX: FXL) has a $1.3 billion market cap and is in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO), but it’s lesser known. It’s also, perhaps, harder to understand. The company has historically had a focused business in consumer point-of-sale leases through retailers like Harvey Norman (ASX: HVN), but more recently, has expanded into interest-free credit cards and “no interest ever” loan services.

The outcome is that the company’s business is far less tied to consumer spending than it once was, and that it could continue to grow for years to come as it wins more market share in the interest-free credit card and loan space. This market position also allows the company to earn additional revenue through lucrative cross-selling to its customer base.

A chance for capital gains and fully franked dividends

Over the last five years, net profits have grown from $32.3 million to $65.8 million, much faster than the top line, and management is targeting 17% to 19% growth in 2014. With so many ASX shares looking seriously overpriced relative to their growth potential, it’s exciting to see Flexigroup shares trading for a far more reasonable multiple of about 19 times trailing earnings.

In short, if investors are looking for ‘growth at a reasonable price’ they might do far worse than Flexigroup shares, which also pay a fully franked dividend with a yield over 3%.

Looking for another solid dividend play? Look no further! Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool writer/analyst Catherine Baab-Muguira owns no shares in any company mentioned in this article.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

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.