It's quite hard to find shares on the ASX that have a perfect mix of income and growth.
To satisfy the growth aspect, I like to aim for businesses where the share price alone should match the growth of the market. I like the income part of the stocks that I'm considering to offer a grossed-up dividend yield that is higher than the interest rate offered in savings accounts.
If these businesses are growing at a fast pace, the dividend should grow nicely too. Here are three shares that I think should fit the bill over the long-term:
Challenger Ltd (ASX: CGF)
The Challenger share price has grown by 320% over the last five years and I think this could be somewhat repeated over the next five years too.
There is a large number of Australians reaching retirement age and this should translate into growing annuity sales for Challenger over the coming years.
Challenger has increased its dividend every year since the GFC and currently has a grossed-up dividend yield of 3.67%. Its shares are trading at 20x FY17's estimated earnings.
InvoCare Limited (ASX: IVC)
InvoCare is the leading funeral and cemetery operator in Australia with a market share of around 33%. The share price has grown by 86% over the last five years.
Sadly, the death rate of Australians is expected to increase significantly over the next two decades which could materially boost the profit, dividend and share price.
InvoCare is currently trading at 28x FY17's estimated earnings with a grossed-up dividend yield of 4.13%.
The job portal website operator has seen its share price grow by 150% over the last five years.
The world is becoming increasingly digital and how people find a job is no exception. Having Australia's largest job portal is a big advantage as it attracts the most jobseekers and employers, creating a pleasing loop and making it the first point of call for employers and jobseekers alike.
Seek is currently trading at 28x FY17's estimated earnings with a grossed-up dividend yield of 3.68%.
Foolish takeaway
All three of these businesses have a great chance of beating the market and providing good income over the next decade. At the current prices Challenger is my favourite choice due to its new distribution agreements which will be starting in the first quarter of FY18.
