I love the idea of investing in ASX shares that can provide a mixture of capital growth and passive income. If you're looking for two stocks that cost under $50 per share, I've got two I'd love to share with you.
Profit-making companies are attractive because they can pay out some profit as a dividend and re-invest the rest for more growth.
Here's why I really like — and own — the two ASX shares below.
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Metcash Ltd (ASX: MTS)
Metcash currently has a share price of $3.56. It supplies IGA supermarkets around Australia, as well as the liquor businesses Cellarbrations, The Bottle-O, IGA Liquor, Porters Liquor, Thirsty Camel, Big Bargain Bottleshop and Duncans.
It recently announced that it's buying Superior Food, a leading Australian food service distribution business. Metcash said food service (which supplies businesses) was a "large and growing market".
For me, what's most exciting is the company's hardware division which includes Mitre 10, Home Timber & Hardware, Total Tools and more. It's buying Bianco Construction Supplies, a construction and industries supplies business servicing the South Australia and Northern Territory. It's also buying Alpine Truss, one of the largest frame and truss operators in Australia.
When we put these divisions together, I think Metcash has solid earnings, which are leveraged to population growth.
I believe that an eventual rebound of construction and renovation activity will provide a helpful backdrop for Metcash's hardware earnings to grow materially.
In my opinion, the ASX share has a low price/earnings (P/E) ratio for the quality of the business. According to the projections on Commsec, the Metcash share price is valued at 12.5x FY24's estimated earnings with a possible grossed-up dividend yield of 8.1%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson currently has a share price of $34.21. Since the start of 2020, it has risen by more than 50%, though past performance is not a guarantee of future returns.
It owns a diversified portfolio of different assets, including ASX shares, unlisted businesses, credit/bonds, property and so on.
I like the diversification that this company offers, and it regularly adds to its portfolio. This ensures a portfolio focus on sectors with long-term return potential for shareholders.
Soul Pattinson has been a listed business since 1903, which shows it has excellent longevity. The ASX share has paid a dividend every year since 2000, and it has grown its annual dividend per share each year since 2000.
I think it's one of the most likely Australian businesses to be around in 20 years because of that diversification element. While I wouldn't call it cheap, I think it's an excellent long-term ASX share to buy.
