Finding ASX shares that offer both growth and income prospects today is a lot harder than it used to be.
Former dividend growth stars like Ramsay Health Care Limited (ASX: RHC) and Medibank Private Ltd (ASX: MPL) have been forced to cut their dividend this year, breaking multi-year (multi-decade in Ramsay's case) streaks of growth.
Other former dividend heavyweights like Westpac Banking Corp (ASX: WBC) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have canned their dividend completely in 2020 so far.
So where to find the kind of dividend growth shares that can offer both growth and income in 2020? Well, I've found 2 ASX shares that I think offer just that
2 ASX growth and income shares:
1) Washington H. Soul Pattinson & Co Ltd (ASX: SOL)
Soul Patts (as its more commonly known) is one of the oldest companies on the ASX. It was incepted prior to Federation and officially listed on the ASX (then the Sydney Stock Exchange) back in 1903. What attracts me to Soul Patts is the company's unrivalled history as a dividend payer. The company has paid a consistent dividend for over 40 years and has increased this dividend every year since 2000 (including in 2020). It is able to pull this off because it has a wide asset base of its own.
Soul Patts is an investing conglomerate, holding its own portfolio of ASX shares. These include substantial stakes in TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC) and Brickworks Limited (ASX: BKW). It also has a portfolio of unlisted assets, which include retirement villages and swimming centres.
If Soul Patts can pay a dividend through the global financial crisis as well as the 2020 coronavirus crisis, I think it can handle anything. Thus, I think Soul Patts' shareholders can expect plenty of dividends as well as some growth for many years into the future.
2) iShares S&P 500 ETF (ASX: IVV)
This exchange-traded fund (ETF) is another option for investors to consider for both growth and income. IVV tracks the S&P 500 index, which is the most popular index in the world. It holds 500 of the largest companies listed in the United States.
Legendary investor Warren Buffett has called it a 'slice of America'. Any US company you can think of is probably in the S&P 500. The FAANG stocks like Apple and Amazon.com are there, as well as established companies like Coca Cola, American Express, Visa, Microsoft, Johnson & Johnson, Procter & Gamble and (of course) Buffett's own Berkshire Hathaway. Even Tesla might be joining its ranks soon.
The S&P 500 is an index known for prioritising growth over dividend income. Indeed, IVV's trailing dividend yield today is only around 1.73%. But that hasn't stopped IVV returning an average of 16.38% per annum over the past 10 years. As the index grows into the future, the dividends should follow. So for a growth and income share today, I think IVV is another top choice for ASX investors.
