No, we aren’t talking about ASX banks like Commonwealth Bank of Australia (ASX: CBA) here. Although many ASX shares get lumped into the ‘growth’ or ‘income’ pigeon holes, often the best returning ASX shares give a healthy mixture of both – just look at Macquarie Group Ltd (ASX: MQG) shares and you’ll see.
So here are 2 ASX companies that I think are perfect examples of high-growth businesses spinning off good income on the side!
Brickworks Ltd (ASX: BKW)
Yes, Brickworks is one of the most prominent manufacturers of bricks and other construction materials in Australia, but that’s not their only dog in the fight. Through clever leveraging of its property assets, Brickworks has been able to create an additional stream of income for the company in renting out the land that it holds. In addition, Brickworks also has a 43% stake in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), worth $2.2 billion.
Both of these ‘side-hustle’ revenue streams help balance out the cyclicality of the construction business and have helped Brickworks pay out a dividend that’s been rising annually since 2008. Not bad for a company that has also seen share price appreciation of close to 40% over the past two years.
WAM Research Ltd (ASX: WAX)
WAM Research is a listed investment company (LIC) run by Wilson Asset Management and specialises in picking undervalued small- to mid-cap ASX shares. WAX has been able to do this with aplomb, having returned a healthy 16.4% per annum average return to investors since 2010. This includes WAM Research’s substantial dividends, which, on current prices, offer a 6.9% fully-franked yield (9.86% grossed-up).
Although WAM Research hasn’t been doing as well in recent times (3.1% over the past 12 months), it’s been a rough trot for the small-cap sector generally and I think WAX’s history and competent management will see a return to outperformance soon. Some of this LIC’s current top holdings include Xero Ltd (ASX: XRO) and Cleanaway Waste Management Ltd (ASX: CWY).
It’s all well and good to just focus on capital appreciation and not worry too much about dividends, but, as our Spanish-speaking friends (or anyone who loves tacos) might say, porque no los dos? (why not have both). These 2 ASX shares show you can!
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. 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.