There are plenty of S&P/ASX 300 Index (ASX: XKO) shares among the country's leaders in their fields. Because of their earnings growth potential today, they can provide pleasing passive income and potential capital gains.
The best businesses typically have the quality to capture a sizeable portion of their industry's growth each year, so they're well-placed to increase profit and margins annually.
I'm quite excited about the potential of the two stocks I'm going to talk about, particularly because of the possibility of an interest rate cut or two in 2025.
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Charter Hall Group (ASX: CHC)
Charter Hall describes itself as a leading property investment and funds management group. It manages properties across several sectors, including office, industrial and logistics, retail, and social infrastructure. It's also a part-owner of shares-focused fund manager Paradice Investment Management.
The high interest rates have hurt the ASX 300 share, which suffered from devaluations of $6.1 billion in FY24.
But, the outlook is appealing for growth. It has a $12.5 billion property pipeline, with $4.9 billion in committed developments. It's using its tenant relationships and the scale of its portfolio to create development opportunities for both tenants and investors, enhancing its "value-add" capacity.
Charter Hall's managing director and CEO, David Harrison, said:
With evidence emerging of a slowing economy and inflation trends moderating, we consider ourselves well positioned to take advantage of a lower interest rate environment as it emerges. We see current market pricing as offering attractive long-term returns for stabilised core real estate products and value-add development and opportunistic strategies and it's our expectation that capital deployment will increase to take advantage of market conditions.
We also remain close to our tenant customers. Our sale and leaseback capabilities combined with our development experience make us uniquely positioned to partner with our tenants and help them meet 1 Scope 1 and Scope 2 emissions for assets under our operational control.
The ASX 300 share is expecting to grow its distribution by 6% in FY25, which translates into a guided distribution yield of 3.2%, excluding the likely franking credits.
Wesfarmers Ltd (ASX: WES)
Of the ten biggest ASX 300 shares available to Aussies, Wesfarmers is one of the most likely to grow its profit and dividend in FY25 and future financial years.
The company is the name behind some of Australia's biggest retailers, such as Bunnings, Kmart, Officeworks, Target, and Priceline. It also operates in sectors such as chemicals, energy, fertilisers, industrial, safety, and healthcare.
Wesfarmers' Kmart and Bunnings have done an excellent job of growing their presence in Australia, both with new stores and expanding their product ranges to new categories. For example, Bunnings recently expanded into auto care.
The ASX 300 share recently announced the closure of Catch following ongoing operating losses, but the e-commerce capabilities and warehouse capacity will be transferred to Kmart Group so that it can better fulfil online orders.
The scale of Kmart and Bunnings allows those retailers to offer customers good-value products that appeal in this high cost-of-living environment. I think this is key and could drive the profit and dividends higher in the 2025 financial year.
According to UBS forecasts, in FY25, Wesfarmers could grow profit to $2.65 billion and hike the dividend per share to $2.01. That'd be a grossed-up dividend yield of 3.8%, including franking credits.
UBS projects that the dividend per share will reach $2.77 by FY29, while the net profit is forecast to rise to $3.6 billion.
The ASX 300 share is not cheap, but the signs are promising that Wesfarmers can continue to achieve good results.
