Many investors often believe they have to choose between dividends and capital growth. However, this ASX 200 insurance company has a long track record of delivering both.
That company is Steadfast Group Ltd (ASX: SDF).
It is Australia's largest general insurance broker and underwriting agency network. Steadfast focuses on small to medium enterprise (SME) businesses, which require the expertise of insurance brokers and agencies to assess and manage their commercial risks.
Steadfast has a track record of expansion through strategic acquisitions. In 2024, it acquired ISU Group, a major network of independent agencies in the US, and Sure Insurance, a specialised underwriting agency.
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Recent results
Last week, Steadfast released its FY25 results.
The company delivered EBITDA of $591.4 million, an increase of 12% on the prior corresponding period (pcp). Nearly 9% of that was derived from organic growth, while 3% was attributed to acquisitions.
Management guided for FY26 EBITDA of between $650 and $665 million.
Investors can have it all
As mentioned, Steadfast has an enviable track record of delivering both attractive dividends and strong capital gains.
Despite being down 4% over the past year, the ASX 200 stock is up around 86% over the past 5 years.
The company also offers a current dividend yield of 3.14%. While that's not the biggest yield on the ASX, it's still relatively attractive. Steadfast's dividends are also fully franked, providing a further boost.
Is Steadfast a buy today?
One expert believes this is an attractive entry point for investors.
After reviewing its FY25 results, Macquarie Group Ltd (ASX: MQG) released an updated research note.
The broker reiterated its outperform rating on the stock.
The broker said, "the ability to maximise returns on a US roll-out is key to SDF's long-term value".
Macquarie also highlighted Steadfast's acquisition capacity, noting that the company can borrow a further $365 million while remaining within the maximum gearing ratio of 35%.
The broker's price target remains unchanged at $7.
Steadfast shares closed at $6.22 yesterday. This suggests the company will deliver capital growth of 13% over the next 12 months.
Combined with Steadfast's dividend yield of around 3%, that's a total return of around 15% over the next year.
Investors who achieve a 15% annual return will double their money in 5 years.
Foolish Takeaway
With the ASX 200 just below record highs, investors may be finding it challenging to find value in an expensive market. However, with a history of moderately high dividends and strong capital growth, this ASX 200 company could appeal to a wide range of ASX investors. Those who want attractive passive income while growing their capital may want to look closely at Steadfast shares.
