Yesterday, I compiled a list of 10 companies – all listed on the ASX – that investors could look to buy for compelling dividend returns. Although dividend-paying companies form an important element to any share portfolio, investors looking for even stronger returns should also expose themselves to companies offering solid growth prospects.
Indeed, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) remains well below its high of around 5,996 points from earlier this year. As such, now could be a great time to load up on some of these companies, then sit back and watch them grow.
Here are 10 you could consider today…
|Company||Current Price||% below 52-week high||Forward Price-Earnings (P/E) Ratio||Grossed up Dividend Yield (Forecast)|
|REA Group Limited (ASX: REA)||$45.90||10.7%||26.3x||2.8%|
|JB Hi-Fi Limited (ASX: JBH)||$17.90||20%||12.4x||7.5%|
|XERO FPO NZ (ASX: XRO)||$14.73||42.5%||N/A||N/A|
|Greencross Limited (ASX: GXL)||$6.61||33.2%||15.5x||4.8%|
|SEEK Limited (ASX: SEK)||$12.75||32.9%||23x||4.2%|
|Burson Group Ltd (ASX: BAP)*||$3.64||5.5%||21.4x||5.2%|
|Retail Food Group Limited (ASX: RFG)||$4.46||44.3%||10.8x||8.3%|
|Senetas Corporation Limited (ASX: SEN)||$0.142||35.5%||28.4x||N/A|
|oOh!Media Ltd (ASX: OML)||$3.14||4.8%||26.2x||1.8%|
|Flight Centre Travel Group Ltd (ASX: FLT)||$38.45||18.8%||14.5x||5.9%|
*[All estimates from Morningstar data, except for Burson Group. Estimates for Burson Group have been taken from Yahoo! Finance. Due to there not being an estimate for the company’s dividend, I have based an estimate on its payout ratio from 2015, being 78.2% of earnings (according to its Annual Report)].
As can be seen, all 10 companies mentioned above have fallen from their 52-week high prices – some of them considerably – offering investors a chance to buy at a discounted price. Many of them also offer solid dividend yields which is simply the icing on the cake.
If I were to buy two of them today however, I would likely choose Xero and Retail Food Group.
Xero is a cloud-based accounting software provider which has demonstrated its enormous growth potential. However, it is still burning a lot of cash (it’s not yet profitable, hence why it doesn’t have a P/E ratio) and this appears to be a concern for short-sighted investors. That’s why I think now could be a great time for long-term investors to load up.
Retail Food Group has also been sold down heavily since it hit $8 a share earlier in the year. However, the company has a strong history for integrating new brands into its network (it owns brands such as Gloria Jean’s coffee, Brumby’s, Donut King and Pizza Capers), while it has also grown sales and earnings strongly.
Indeed, this was my most recent purchase and I would strongly consider going back for another slice of the pie at its current price tag.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Ryan Newman owns shares of Burson, Retail Food Group Limited, Senetas. Ltd., and Xero. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.
The Motley Fool Australia owns shares of Burson and Xero. 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 Bruce Jackson.
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