Most investors who pick stocks on the ASX choose a particular company to invest in with one goal in mind.
If one is a retiree who relies on dividend income to pay their bills, it could be how much income potential that company might have.
Younger investors might instead consider how likely a company is to deliver market-beating growth so that they can build wealth as quickly as possible.
It's much rarer to find investors who are looking for a combination of these two attributes.
Saying that, there are ASX shares out there that can deliver incredible growth, as well as meaningful yield from dividend income.
These investments can often be some of the best that the ASX has to offer.
With that in mind, today, let's discuss two ASX stock picks that I think have the potential to deliver meaningful, market-beating capital growth, as well as healthy dividend income.
Image source: Getty Images
These ASX stock picks offer both growth and yield
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
First up is Washington H. Soul Pattinson, or Soul Patts for short. This investing house is one of my favourite ASX shares. This is the case precisely because this company has a very long track record of delivering both capital growth and rising dividend income.
On the capital growth front, Soul Patts manages a diversified portfolio of different assets on behalf of its shareholders. These include blue-chip stocks, private credit, and venture capital.
Soul Patts has historically been able to deliver market-beating growth with this portfolio. Last month, the company reaffirmed this with the following statement:
Over the past 20 years, Soul Patts has delivered a Total Shareholder Return of 11.7% per annum. That is 3% higher than the market every year.
When that is compounded over the last 20 years, a $1,000 investment in Soul Patts in 2004 is worth $9,200 today, reflecting an 820% increase. In comparison, the same investment in the All Ordinaries Accumulation Index would be worth $5,340 today, representing a 434% increase.
But Soul Patts is also a dividend powerhouse. You might not think so with the company's current yield of 2.77%. However, this stock currently has the ASX record for the most consecutive annual dividend pay rises, with Soul Patts hiking its dividend every single year since 2000, including in 2024.
All in all, I regard Soul Patts as a compounding machine, in both growth and income terms, and thus a great ASX stock pick today.
TechnologyOne Ltd (ASX: TNE)
Next up on the stock picks, we have an ASX 200 tech stock in TechnologyOne. In my view, this enterprise software provider is one of the most exciting growth stocks on the ASX.
Over FY2024 alone, TechnologyOne's revenues increased by 17% to $515.4 million, and its profits before tax increased by 18% to $1532.9 million.
Combined with TechnologyOne's near-250% share price rise over the past five years, no one can doubt this company's growth chops.
TechnologyOne is also a heavy-hitter when it comes to paying dividends. It has grown its annual payouts every year since 2014 for one. But the growth has been extraordinary. To illustrate, TechnologyOne went from doling out an annual total of 11.9 cents per share in 2019 to 2024's total of 22.4 cents per share.
As such, this is another stock I'd happily recommend to both growth and income investors today.
