The S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) continued to grind higher last week in light of the recent big spending federal budget. With a much anticipated improvement for the Australian economy moving forward, this could be an optimal time to pick up some ASX shares that offer investors both consistent dividends and potential capital upside.
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2 ASX shares with both dividends and growth potential
1. People Infrastructure Ltd (ASX: PPE)
People Infrastructure is a leading workforce management company delivering innovative solutions to workforce challenges faced by Australia's leading businesses. It provides managed workforce and staffing services with a key focus on healthcare and community care, information technology, and general staffing and specialist services. Its general staffing and specialist services business includes heavy and light industrial, mining, industrial services, food processing and transport.
The company has a strong track record of growth with revenue increasing 34% to $374 million and earnings before interest, tax, depreciation and amortisation (EBITDA) increasing 49% to $26.4 million in FY20. It has delivered a compound annual growth rate (CAGR) of 24.8% for revenue and 26.3% for EBITDA between 2015 and 2020. I believe there aren't many ASX shares that can beat this type of consistent growth while trading at a price-to-earnings (P/E) ratio of just 20.
A recovery in Australia's job market combined with the federal budget's infrastructure spending, JobMaker program and apprenticeship subsidy, could continue People Infrastructure's strong growth record. The company currently pays a fully franked dividend yield of 2.8%. I believe its modest dividend combined with earnings growth could mean the best of both worlds for investors seeking ASX shares both income and growth.
2. Money3 Corporation Limited (ASX: MNY)
Money3 is a specialist provider of consumer finance for the purchase and maintenance of vehicles in Australia and New Zealand. Its business model and unique approach to customer care attracts customers that are underserved by mainstream banks. The company estimates that 1 in every 450 registered vehicles in Australia and 1 in every 700 registered vehicles in New Zealand are financed by Money3.
Much like People Infrastructure, Money3 has a strong track record of growth with FY20 delivering a 35.3% increase in revenue to $124.0 million and 30.1% increase in normalised NPAT to $30.3 million. At the half year, its gross loan book had grown to $426.7 million but growth slowed significantly in the second half, driven by lower than expected new loan origination as a result of COVID-19 and tightened lending criteria. However, it is pleasing to see that many customers made efforts to increase loan repayments. Money3's overall loan book quality has not deteriorated over FY20 reinforcing the resilience of its business model.
Looking ahead, the company aims to expand its product reach into the near prime vehicle market, broadening its presence in sub-prime vehicle finance market via geographic expansion and accelerating growth through opportunistic acquisitions. I believe Money3's fully franked 3.50% dividend yield combined with its strong growth record makes it another prime candidate as an ASX share for income and growth.
