As the year comes to an end, most investors are probably wondering what next year will bring. The future is uncertain, as always, but making sure the companies you own are good quality is a decent place to start.
Concerns over valuations have pushed some of the higher growth shares down to cheaper levels recently. Market favourites like CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) still look far from cheap. On the other hand, here are 2 companies with decent growth, trading on much lower multiples, which look likely to keep delivering growing dividends…
Bapcor Ltd (ASX: BAP)
Shares in the automotive parts distributor have fallen around 20% since early October. The company continues to perform well with net profit increasing by 32% during FY2018, which allowed it to increase the dividend by 19%.
Management has forecast for a still solid 9% to 14% profit growth during this financial year. Given the low payout ratio of 50%, there is plenty of scope for another healthy boost to the dividend. Since the first full year result in 2015, the company has grown its dividend at double-digit rates each year.
Bapcor is a strong player in its field and trades on a price-to-earnings multiple of just 20. The current dividend yield is 2.3%, fully franked.
Accent Group (ASX: AX1)
This footwear retailer’s shares are also down around 20% from a few months ago. And again, this is a company that is doing just fine. It’s delivered earnings growth of 13% per annum over the last 5 years, continues to increase its store count, and online sales are growing strongly.
Accent is a well managed company with strong brands and a history of reliable growth. The company just announced a profit upgrade for the first half and the CEO has also bought another 250,000 shares, which can only be seen as a positive sign.
The dividend has grown at a double-digit rate over the last 5 years and given the solid outlook, there’s a good chance of another decent increase this year. Accent trades on around 16 times earnings and a dividend yield of 4.9%, fully franked.
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Motley Fool contributor Dave Gow owns shares of Accent Group, Bapcor, and Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Accent Group and Cochlear Ltd. 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.
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