Many investors like to categorise many ASX shares as either dividend shares or growth shares.
The problem is that many dividend shares don’t come with much growth and many growth shares don’t come with much of a dividend.
Perhaps there’s an equilibrium to be found with shares that offer a decent amount of growth and a decent yield.
With that in mind, here are two ideas:
DuluxGroup Limited (ASX: DLX)
DuluxGroup is the business behind many of the country’s most recognisable home improvement brands including Dulux, British Paints, Selleys, Cabot’s, Yates, Hortico, Parchem, B&D and Lincoln Sentry.
This company has quietly and steadily been increasing its operating profit every year for the last several years.
Slow growers aren’t seen as sexy growth shares. Yet, a business that grows earnings at around 10% every year compounds wealth at a solid rate. A new factory will further increase profit margins for DuluxGroup in the coming years.
Australia’s population will continue to grow, which means there are more properties that could use one of DuluxGroup’s products.
DuluxGroup is currently trading at 19x FY19’s estimated earnings with a grossed-up dividend yield of 5.2%.
National Storage REIT (ASX: NSR)
National Storage is the largest self-storage provider in Australia and New Zealand with 130 locations across the two countries.
It has steadily grown its underlying rental earnings each year thanks to growth in occupancy and revenue per square metre. The revenue per available square metre (REVPAM) has grown from $202 at June 2016 to $216 at December 2017.
Australia’s rising housing costs have helped improve the rate that National Storage can charge and it has also increased the demand for units. National Storage’s operating earnings have grown consecutively over the past several years.
I’m wary of any business with a lot of debt on its balance sheet at the moment, National Storage reported at the end of December 2017 that its gearing had reduced to 35% from 37%. Hopefully it keeps falling considering global interest rates are now rising.
National Storage is trading at 18x the low end of management’s estimated underlying earnings for FY18 with a distribution yield of 5.5%.
I wouldn’t expect exciting growth from either of these businesses but they are slow-and-steady performers that can be part of a defensive portfolio looking for better growth and income than cash.
Another business that could be an excellent dividend and growth idea is this top ASX stock which is on track to grow its dividend by more than 25% this year.
You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended National Storage REIT. 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 Scott Phillips.