Finding top-quality ASX shares that you could buy for growth and income potential is difficult in the best of times. But with the coronavirus pandemic smashing both the growth and dividend-paying abilities of countless companies in 2020, this task is now far more difficult.
Income streams from former dividend heavyweights like the ASX banks, Transurban Group (ASX: TCL) and Ramsay Health Care Limited (ASX: RHC) have slowed to a trickle. And growth companies like Seek Limited (ASX: SEK) and REA Group Limited (ASX: REA) have had to pivot very quickly from prioritising growth to sandbagging their earnings.
Luckily, the following 2 ASX shares still offer prime opportunities for both growth and income, in my opinion. A large part of that is because they are exchange-traded funds (ETFs), rather than individual businesses. That means they are well-placed to capture the growth and income of an entire market, albeit with some drag from the companies that are still struggling.
Let’s look at my pick of 2 top ASX shares for growth and income.
1) Vanguard Australian Shares Index ETF (ASX: VAS)
This ETF from the reputable Vanguard Group is basic in nature: it simply tracks the largest 300 companies listed on the ASX. That means everything from Commonwealth Bank of Australia (ASX: CBA), Coles Group Ltd (ASX: COL) and CSL Limited (ASX: CSL) to Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). The ASX is a share market that has always delivered a healthy mix of growth and income, and I don’t see this changing anytime soon.
Vanguard has delivered an average of around 8.18% per annum in returns since its inception. It also currently offers a trailing dividend distribution yield of around 4.07%, which comes partially franked as well. The best thing about an index fund like Vanguard is that it automatically adds to winners while jettisoning losers, all while you don’t have to lift a finger. As such, I think Vanguard is a top growth and income AXS share to buy today.
2) BetaShares FTSE 100 ETF (ASX: F100)
This ETF is similar to Vanguard, but instead of tracking the largest 300 Aussie companies, F100 tracks the 100 top shares on the FTSE Index. The FTSE is the United Kingdom’s equivalent to the ASX. Ergo, the FTSE 100 tracks the largest 100 UK companies listed in London. You will find companies like AstraZeneca, GlaxoSmithKline, HSBC, Diageo, British American Tobacco and Royal Dutch Shell amongst F100 largest holdings. Like the ASX, the FTSE has a reputation for offering relatively high dividends. F100’s trailing yield doesn’t disappoint in this regard, currently offering a trailing 4.4% per annum on current prices.
This ETF’s price is still relatively low as well, still down 22% year to date which to me hints at the prospect of some potential growth in its future. The clouds covering the UK markets right now (such as the coronavirus and Brexit) will surely clear over the coming years. As such, I think F100 offers top prospects for both growth and income at its current price.
These 3 stocks could be the next big movers in 2020
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Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited, REA Group Limited, and SEEK 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.