Over in the United States (US), the distinction between growth shares and dividend income shares is far starker than on our own ASX. Perhaps because they don’t have the same dividend franking system that we enjoy, US shares tend to only start paying a dividend when their growth opportunities begin to narrow.
Apple, for example, only started paying a dividend in 2012 (5 years after the iPhone debuted). Other massive tech companies like Amazon.com, Alphabet (also known as Google) and Facebook still offer no income to their shareholders to this day.
But perhaps fortunately for Aussie investors, no such canyon exists between ‘growth’ shares and ‘dividend’ shares down under. The lure of fully franked dividends is too much for many ASX companies (and their shareholders) to ignore.
So here are 2 ASX share that I believe offer a healthy mix between growth prospects and dividend income potential.
Cleanaway Waste Management Ltd (ASX: CWY)
On the surface, Cleanaway seems like a pretty boring company. It operates within the rather unappealing waste management sector and basically cleans up our waste and garbage for a crust. But it’s this ‘boring’ nature that makes Cleanaway such an attractive investment opportunity, in my view. No matter our level of societal and commercial sophistication, we’re always going to produce waste of various kinds, through thick and thin, boom and bust.
Waste management used to be a fractured and decentralised market, but Cleanaway has done a phenomenal job of accumulating market share and scale through contracts with local governments all around the country. This has resulted in its share price rising from 70 cents in 2015 to $2.17 at the time of writing.
But Cleanaway has also been quietly growing its dividend payouts as well. Right now, this dividend will net you a yield of 1.80%. Considering Cleanaway has been growing this dividend by an average of 12.13% per annum since 2015, I think it’s a good future dividend bet to make.
WAM Global Ltd (ASX: WGB)
WAM Global is a listed investment company (LIC) that aims to hold a portfolio of undervalued growth shares from around the world (hence the name). It is modelled after WAM Capital Ltd (ASX: WAM), an ASX-focused LIC that has returned an average of 15.7% per annum (after fees and taxes) since its inception in 1999.
Some of the names WAM Global is currently investing in include Tencent Holdings, Costco, Activision Blizzard and HelloFresh. It only started life back in 2018, but since then, WAM Global has already built up a strong track record of dividend payments, the last of which came in at 6 cents per share (annualised).
On current prices, WAM Global shares are offering a dividend yield of 2.58%. Since the last dividend increase came in at 50%, I have high expectations for WAM Global in becoming a dividend heavyweight in the years to come, with plenty of capital growth thrown in.
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Returns As of 6th October 2020
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and WAMGLOBAL FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. 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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