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How you can generate income and growth with these 3 stocks

The S&P / ASX 300 Index (Index: ^AXKO) (ASX: XKO) has gained just 4.1% this calendar year, not exactly what you would call mind blowing. If you are aiming to beat the index, and let’s face it, who isn’t, then buying stocks with a combination of potential growth and paying decent dividends should stand you in good stead.

The following three companies pay fully franked dividends above the index’s year-to-date return, and you have the bonus of potential growth in the years ahead (and growing dividends).

Data#3 Limited (ASX: DTL)

ASX-listed IT companies have been hit by a slowdown in spending on hardware, software and related IT consulting services, but that could be about to change. Data#3’s shares have lost 17% this year, but is still expected to pay a decent dividend of 5 cents in the 2014 financial year, and 6 cents in 2015. That puts the company on a prospective yield of 7.7%, fully franked.

DWS Ltd (ASX: DWS)

DWS, another IT services company, has seen its shares rise 2.9% this year (including 2%) in trading today. Forecasts suggest the company will pay a dividend of 9.9 cents next financial year, giving investors a 7.8% fully franked yield. A positive trading update in May has analysts forecasting 15% growth in earnings next financial year.

UXC Limited (ASX: UXC)

Shares in this IT consulting company have lost 20% this year, despite today’s 7.3% gain. Today the company announced that net debt at the end of June 2014 was just $4.4 million, against guidance of $34 million. The company also says it expects to report a profit before tax of around $25 million this financial year, and is expected to pay a 5.4 cent dividend in the 2015 financial year. That equates to a yield of 6.6%, again fully franked.

An even better bet than these three is our top dividend stock for the next 12 months…

Every year, Motley Fool investment advisor Scott Phillips hand-picks 1 ASX dividend stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

5 ASX Stocks for Building Wealth After 50

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