It’s a rare ASX share which can give investors both growth and income. But that’s exactly what we’re trying to find today. Normally, investors either stick with a ‘growth strategy’ or an ‘income strategy’ but with Magellan High Conviction Trust (ASX: MHH) and NIB Holdings Limited (ASX: NHF) shares, we’re looking for both.
Why wouldn’t you want the benefits of a growing company and one that pays you income along the way?
Magellan High Conviction Trust
This Listed Investment Trust (LIT) from Magellan Financial Group Ltd (ASX: MFG) is geared for growth. It only invests in 8-12 companies that Magellan decides are the ‘best in the world’. Right now, this includes Alibaba, Alphabet, Microsoft and Visa.
I think this trust is a great long-term investment for both growth and income. It’s built to harness the potential of companies that compound earnings growth at market-beating levels. All of its holdings also operate in growth industries like e-commerce and cashless payments.
But there’s potential for income, too. MHH aims to pay a decent 3% distribution yield every year to its investors. You can either take this in cash or choose to reinvest it for a 5% discount – a nice perk. For its exposure to some of the best growth companies in the world as well as its shareholder-friendly dividend policy, I think MHH is a top buy today for both growth and income.
NIB is the second-largest ASX-listed health insurance provider after Medibank Private Ltd (ASX: MPL). Even though NIB shares have recovered substantially since March, the NIB share price remains well below its 52-week high of $8.20 today. Thus, I think it could be a great time to pick up this company on current prices ($4.69 at the time of writing).
NIB has a long history of providing both growth and income for ASX investors. Its shares have almost quadrupled over the past decade and it has grown its dividend meaningfully over the same period. Right now, NIB is offering a trailing 4.81% dividend yield, fully franked.
The private health insurance industry is facing a few headwinds in the coming years, including expensive premiums and falling membership from young Australians. But the importance of this industry towards government expenditure on healthcare will give providers like NIB accommodative government policy which, in my view, will ensure its prosperity in the years ahead.
Thus, I think this ASX company is a good long-term buy today for both growth and potential income down the road.
Where to invest $1,000 right now
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Magellan High Conviction Trust, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Visa. The Motley Fool Australia has recommended Alphabet (A shares) and NIB Holdings 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.
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