I think that ASX shares with international exposure could be a good way to produce both growth and income for investors who want to diversify their portfolio.
When you look at the ASX there seems to plenty of shares that fit into one of two categories. They are either domestically-focused businesses with low growth and (usually) a high dividend yield like miners or banks such as Commonwealth Bank of Australia (ASX: CBA). Or there are growth shares that are highly priced with international growth plans such as Afterpay Ltd (ASX: APT).
I believe there are some ASX shares that can give a decent income whilst also giving exposure to great international shares with good growth. Here are three of those ideas:
Share 1: Magellan Global Trust (ASX: MGG)
This is a listed investment trust (LIT) which invests in the best businesses in the world. Magellan Global Trust can turn some of the capital return growth that it makes into distributions to shareholders. The ASX share targets a 4% distribution yield, so that’s the income part covered.
The shares that it’s invested in have strong economic moats. Some of the shares it’s invested in are: Alibaba, Alphabet, Atmos Energy, Facebook, Mastercard, Microsoft, Reckitt Benckiser, Tencent, Visa and Xcel Energy.
Since inception in October 2017, its net portfolio performance (after fees) has been 12.5% per annum, outperforming the MSCI World Net Total Return Index (AUD) by 1.5% per annum. Those numbers are to the end of May 2020, which includes the COVID-19 sell-off.
Over time, the best businesses in the world can act like compound growth machines. A benefit of Magellan Global Trust is that it can invest anywhere in the world, it’s not limited to a particular country or weighting with its share investments.
Share 2: PM Capital Global Opportunities Fund Ltd (ASX: PGF)
This is a listed investment company (LIC) which looks to invest in businesses which are good value.
Some of the shares that it currently owns include European homebuilder Cairn Homes, Bank of America, Visa, MGM China, KKR & Co, Siemens and Freeport-McMoRan Copper.
The ASX share currently has a grossed-up dividend yield of 6.3%. Part of the reason why the yield is quite high is because the current share price of $0.90 is at a 23% discount to the net tangible assets (NTA) at 19 June 2020, which was the latest weekly NTA disclosure. I think that represents great value. PM Capital aims to grow the dividend over time. I believe that’s an attractive feature and will help close the NTA discount.
Some of the shares that the LIC owns has been sold off heavily due to COVID-19. At them moment its net performance is only showing a return of 8.1% per annum since inception. But I believe today’s share price offers very compelling value.
Share 3: WAM Global Limited (ASX: WGB)
WAM Global is the international version of WAM Capital Limited (ASX: WAM). It looks for undervalued growth companies listed overseas which could deliver good returns.
The investment team at Wilson Asset Management are happy to change the portfolio as conditions change. At the moment some of the biggest holdings are: Tencent, Amazon, Activision, Auto Zone, CME Group, Costco, Dollar General, Hasbro, Hello Fresh, Intuit, Logitech and Microsoft.
The ASX share currently has an annualised grossed-up yield of 4.5%. This yield will probably grow in time, just like it has at the other WAM LICs.
One of the things that I like about WAM Global is that it isn’t afraid to go to fairly high levels of cash during volatile periods. Cash is good for protection and opportunities. At the end of May 2020 it had a cash weighting of 14.8%.
It’s currently trading at a 17.3% discount to the 31 May 2020 NTA.
Foolish takeaway
I like each of these shares for what international diversification they offer. I think all of them are trading at good value, particularly PM Capital Global Opportunities Fund which is valued at a large NTA discount.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- Ramsay Health Care and 1 other ASX share I would buy for both growth and income
- If I won the lottery I’d buy these 6 ASX shares
- How I would build a balanced portfolio worth $100,000 with 10 ASX shares
- Got $20,000? These are the ASX shares I’d buy during COVID-19
- Have $1,000? You should pick one of these 8 ASX shares
Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS and PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post 3 top international ASX shares for growth and income appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2NoEjsG
Leave a Reply