2 ASX shares that could be buys for both growth and dividends

Propel and Ansell are two ASX shares that could produce growth and dividends.

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There are some ASX shares that might be able to make both growth and dividends for investors.

Some businesses may have a reputation for growth, whilst other could be known for the dividends they pay.

However, there are a certain group of ASX shares that may be able to provide an attractive combination of both dividends and growth, like these two:

Propel Funeral Partners Ltd (ASX:PFP)

Propel is the second largest funeral operator in Australia and New Zealand. It operates under numerous brands after making a number of acquisitions since it started several years ago.

Death volumes grew by 0.9% per annum between 1990 and 2019. The death volumes are expected to rise by 2.7% per annum between 2019 and 2030, and then rise around 2% from 2030 to 2050. Propel says that the number of deaths is the most significant driver of revenue in the death sector.

In FY21, Propel’s funeral volumes increased by 4.6% to 13,916. The average revenue per funeral rose by 4.3% to $5,917, or 2.8% on the pre-COVID period. Whilst revenue rose by 8.7% to $120.4 million in the financial year, operating net profit grew by 7.6% to $15.3 million.

The Propel dividend was increased by 17.5% to 11.75 cents per share.

The ASX share continues to see organic growth. The FY22 first quarter saw revenue growth of 13%, with the business performing a record number of funerals in a quarter, with total funeral volume growth above 10% year on year.

In mid-September, the business announced more acquisitions totalling $17.6 million, which allowed the business to expand into Auckland and enter Adelaide.

At the current Propel share price, it’s valued at 29x FY23’s estimated earnings with a projected grossed-up dividend yield of 3.7% for FY23.

Ansell Limited (ASX: ANN)

Ansell is one of the world’s leading safety glove makers. It also makes other protective gear like protective body suits.

The ASX share saw enormous demand for its healthcare gloves during FY21. Whilst total sales increased 25.6% to $2 billion, the healthcare division experienced organic growth of 34.8% with volume growth for surgical and life sciences, whilst also benefited from a favourable pricing and mix benefit from exam and single use products.

Ansell’s earnings before interest and tax (EBIT) increased 56% year on year, with the EBIT margin increasing 330 basis points to 16.7%. The EBIT was pushed up by higher production volumes, the pricing and mix benefit, as well as operating leverage. However, the profitability benefits were partly offset by elevated labour and freight costs combined with an increase in inventory provisions.

However, Ansell has said that in the shorter-term for FY22, it is expected that there will be lower demand for areas that most benefited during the onset of COVID-19 like the chemical body production and undifferentiated exam and single use gloves.

Ansell warned that its supply may be disrupted because a number of suppliers and factories had to reduce or close their operations. This could impact sales and lead to consistent freight costs and shipping delays.

The ASX share also recently announced an $80 million greenfield investment over the next three years to build a new manufacturing facility in India. It will have the capability to produce a wide range of products, with an initial focus on surgical and life science gloves for the Indian domestic market and for export.

The Indian move will create “important” diversification in Ansell’s manufacturing footprint and create additional production capacity.

At the current Ansell share price, it’s valued at 13x FY22’s estimated earnings with a yield of 3.25%.

Should you invest $1,000 in Ansell right now?

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Propel Funeral Partners Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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