The Motley Fool

3 ASX shares I’d buy today for growth and income

The current share market fear has caused a wide number of shares to trade at lower prices. I think there are a number of good ASX shares that offer both growth and income worth buying.

Here are three of those ideas:

MNF Group Ltd (ASX: MNF)

MNF has seen its share price drop by 12% over this period despite recently re-affirming its FY20 guidance. Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between $36 million to $39 million.

At the end of December 2019 MNF had $38.6 million of cash and a further $30 million of undrawn debt facilities. It’s in a strong position. MNF is seeing high demand across its three operating segments of Global Wholesale, Domestic Wholesale and Direct. The demand is high for conferencing applications.

The dividend over the past 12 months amounts to a grossed-up dividend yield of 2.2%. Quite a bit better than a term deposit these days.

Challenger Ltd (ASX: CGF) 

Challenger has seen its share price decline by 52% because of the coronavirus. However, it recently reconfirmed that it’s on track to achieve its guidance of net profit before tax of $500 million to $550 million. This guidance includes the impacts of lower funds under management (FUM).

The annuity leader is expected to keep growing FUM into the future with new rules about retirement income, the ageing population and the long-term growth of superannuation.

Challenger’s dividend has remained reliable – meaning no cuts – going back to before the GFC. There’s no dividend growth right now but I think Challenger could keep paying a solid dividend. Its current grossed-up dividend yield is 10.1%.  

Costa Group Holdings Ltd (ASX: CGC)

Agriculture is one of the industries tipped to do fairly well over the next 12 months. Costa has been hit hard by the drought, but there’s now rain in regional Australian areas and this should help produce.

Food prices have risen materially, particularly citrus fruit, which is one of Costa’s main food categories.

The company still has impressive international growth plans for the future, which it will soon hopefully be able to execute on.

The trailing grossed-up dividend yield amounts to a 2.6% dividend yield.

Foolish takeaway

I’m attracted to all three shares at the current prices, I think they look cheap. Of the three I’d probably go for Challenger because of its defensive investment portfolio, it reaffirmed guidance and it has a habit of paying a solid dividend. A 10% dividend yield would be a strong short-term return from Challenger.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MNF Group Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and COSTA GRP FPO. The Motley Fool Australia has recommended MNF Group Limited. 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.

Related Articles...