If you are asked ‘do you invest in ASX shares?’, and you answer yes, the next question usually goes something along these lines: ‘are you a growth, value or dividend investor?’
Yes, we share market enthusiasts tend to pigeonhole every investor’s personal strategy into one camp or another, even though most strategies are unique in their own way.
So it’s in this light that I want to talk about 2 ASX shares that I think could fit neatly into a growth investor‘s portfolio, but just as happily in an income-focused strategy. In my eyes, if ticking one box is good, then ticking both must be better!
Why I would buy Altium Limited (ASX: ALU) shares for growth and income
Altium has a reputation as one of the hottest growth shares on the ASX. This printed circuit board software designer is one of the A’s in the WAAAX club and has a future-facing product offering and business model. And Altium has the growth numbers to back it up, too. It is on track for its 50,000 customer target and has been growing revenue and earnings at a double-digit clip over the past few years.
But what many investors don’t realise about Altium is its track record of dividend growth. Altium shares already offer a starting yield of 1.1% today. But this company has been growing its dividend at breakneck speed over the past 5 years. Back in 2015, Altium paid out 16 cents per share in dividends. Over the past 12 months, the company has returned 38 cents per share in dividends. Put simply, I like where this is going and I think Altium has plenty of both capital and income growth left in its tank.
Why I would add Vanguard Australian Shares Index ETF (ASX: VAS)
A vanilla, plain-Jane index fund like VAS is often underestimated by growth and income investors alike. But I think the ASX 300 (which VAS tracks) offers both. Getting exposure to the top 300 public companies in Australia means buying everything from CSL Limited (ASX: CSL) and Commonwealth Bank of Australia (ASX: CBA) to Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). In other words, it’s a mix of growth and income shares.
Because the ASX 20 has the most weighting in the index, this ETF does have a tilt towards income over growth – exemplified by VAS’s trailing dividend yield of 4.23%. But I like this index because it throws in another 100 small-cap, growth companies on top of the S&P/ASX 200 Index (ASX: XJO). Some small companies grow into large companies – growth that an index fund like VAS can capture well. As such, I think any ASX investor would be well-served by having this fund as a foundation of a portfolio.
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Returns As of 6th October 2020
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 Altium, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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