Buying ASX shares for both growth and income is one of the best ways to invest, in my view. Nothing is better than holding a growth share that you’re reasonably sure has a bright future ahead of it, and being paid to hold it while you wait for this bright future to come to light. Finding these kinds of ASX shares can be tricky, but today let’s discuss 2 that I think fit the mould nicely.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is an ASX financial share that focuses on the funds management business. Over the past decade or so, this company has managed to grow into the largest fund manager in Australia. This is no mean feat or accident. Magellan is helmed by one of the best fund managers in the country, billionaire Hamish Douglass.
A keen follower and disciple of the legendary investor Warren Buffett, Mr Douglass has built his reputation on buying and holding what he sees as the best companies in the world. And this reputation has been an absolute asset for Magellan. This is a company that has managed to grow its funds under management (FUM) by 26% over the 2020 financial year to nearly $100 billion (a feat made devilishly tricky by the pandemic). As of August, Magellan’s FUM stands at $100.87 billion.
This growth has helped push Magellan shares up by close to 80% since 23 March, although the shares are still underwater for the whole year so far. Magellan is also a generous income share. On current prices, investors can expect a trailing yield of 3.89%, which comes partially franked and was increased by 16% over FY19’s dividend in FY20.
Adding all of these factors together, I think Magellan is a top share to buy for both growth and dividend income.
iShares S&P 500 ETF (ASX: IVV)
Our second growth and income share is this exchange-traded fund (ETF) from BetaShares. IVV tracks the American S&P 500, one of the most popular indices in the world. The S&P 500 holds 500 of the largest companies in the US. You’ll find tech titans like Apple Inc (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT) at the top of this ETF, but it also includes a diverse range of American companies like Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), healthcare giant Johnson & Johnson (NYSE: JNJ), oil companies like Exxon Mobil Corporation (NYSE: XOM) and carmaker General Motors Company (NYSE: GM).
Unlike the ASX, the S&P 500 has a reputation for growth over income, which is reflected in its average return of 17.15% per annum over the past 10 years. Nevertheless, IVV also offers a small dividend yield of 1.78% per annum on current prices. As such, I would be very happy to own IVV for both growth and income over the coming years.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
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In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Johnson & Johnson. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Microsoft. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and recommends the following options: long January 2021 $85 calls on Microsoft, long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). 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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