Buying ASX shares for both growth and dividend income can be a tricky game. Only the strongest companies can afford to invest in their business at the same time as paying out dividends. So if you find a company that can manage both of these difficult feats, you know you might be onto a winner. So here are 2 such shares that I think offer this duality to investors today:
2 ASX shares to buy for growth and dividends today
Telstra Corporation Ltd (ASX: TLS)
Telstra is our first growth and dividends share to buy today. This might be something of a controversial pick. Telstra is not a company known for its strong growth prospects in recent years. In fact, it’s earnings have been going backwards for a while now due to the rollout of the national broadband network (nbn). However, I think there are a few strong growth avenues opening up for the telco, the best of which is 5G.
5G promises to offer superior speed and latency over the current 3G and 4G technology in use. It also offers the prospect of making the internet of things (IoT) into a reality. I fully expect Telstra to have the country’s best 5G network for the foreseeable future due to the heavy investment the company has been making over the past few years. If all goes well, this should convert 5G into a lucrative earnings stream for Telstra over the next decade.
But Telstra is also known for its dividends. The company recently all but confirmed that its current 16 cents per share dividend payouts would be continuing into FY2021. That would give Telstra shares a forward dividend yield of 5.81% on current prices. That’s a big fat tick in the income box as well.
MFF Capital Investments Ltd (ASX: MFF)
This is another share I would buy for both growth and income today. MFF is a Listed Investment Company (LIC) that invests mostly in a mid-sized portfolio of US shares. It’s largest current holdings are US payments giants Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA). It’s run by one of the best fund managers in the country in my view – Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay. I like MFF right now as it’s more of a contrarian play.
AS of 16 October, the company still has around 23% of its assets in cash, which it could deploy effectively if global markets were to take a dive in the short to medium-term future. The company has a stellar track record of growth behind it, but is also working on building its dividend income chops. The company has paid out 6 cents per share in dividends over the past 12 months, giving it a trailing yield of 2.12% today. However, the company has told investors that it wants to increase this payout to 10 cents a share over the next few years. As such, I think MFF is another top ASX share to hold for both growth and dividends.
Where to invest $1,000 right now
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Sebastian Bowen owns shares of Magellan Flagship Fund Ltd, Mastercard, Telstra Limited, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard and Visa. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Mastercard. 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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