As an investor I'm on the pedantic side as I'm not interested in businesses unless I think they've got good profit growth prospects, sound balance sheets, and management teams aligned to shareholders' interests.
So while there are plenty of 'blue-chip shares' on the local market most of them I won't cover much as I don't rate them investment grade.
However, there are a few local businesses I'd rate as income and growth bets, although all share market investing comes with a lot of risk.
Let's take a look at three businesses I've covered regularly before and how they're travelling today.
Macquarie Group Ltd (ASX: MQG) recently told investors it expects profits for the half-year ending September 30 2019 to be around 10% up on the prior corresponding half. Curiously though it still expects full year FY 20 profits to be "slightly down" on FY 19. I expect its new CEO is staying conservative as it's natural not to want to deliver a downgrade in your first year running the show. Macquarie is also stepping up its investment push into the renewable energy and infrastructure space.
If we assume it can keep dividends flat at $5.75 per share in fiscal 2020 it offers a yield of 4.6% plus partial franking credits at $124 a share. Existing shareholders are also eligible to participate in a share purchase plan at $120 a share.
Scentre Group Ltd (ASX: SCG) might seem an odd choice given the rise of online shopping, but I still expect the Westfield shopping centre operator will offer defensive investors handy returns. Importantly at $3.98 the stock has not been bid up too high on 16x forecast earnings with a 5.7% yield. I would not want to pay that for a REIT ordinarily, but given cash rates are at 1% it looks an ok option for income and hopefully a little growth.
Magellan Financial Group Ltd (ASX: MFG) is the international equities manager that is now beginning to show the benefits of scale and operating leverage, I expect there's potentially more ahead on this front.
Today it revealed funds under management (FUM) climbed around 3% over August 2019 to a record $92.09 billion. As it scales FUM flows become less relevant versus market movements or currency moves, while the operating leverage (revenues rising faster than costs) in the business amplify. FY 2019's 35% profit climb showed this effect in action.
At $53.23 it offers a trailing yield of 3.5% and looks set to deliver another half-year of double-digit underlying profit growth to December 31 2019. If investment performance remains strong the stock has legs in my opinion.
