I love an ASX share that offers both growth and income potential. Many ASX shares are pigeon-holed into just one of these two categories. Since many ASX growth shares don’t even pay a dividend, this is understandable.
But don’t make the mistake of thinking that just because a company is paying a substantial dividend, it doesn’t offer concurrent growth prospects as well. So here are two ASX shares that I think offer investors both growth potential and dividend income today.
Rural Funds Group (ASX: RFF)
Rural Funds is an agriculturally-focused real estate investment trust (REIT). This means the company primarily focuses on owning and renting out land and property — in this case, farmland.
Rural Funds owns farms that produce cotton, wine, beef cattle, almonds and macadamias, and leases those farms to many different clients — some of them blue chip ASX companies like Treasury Wine Estates Ltd (ASX: TWE). The average weighted lease of these tenants is more than 11 years, which gives us as investors a lot of certainty.
If this doesn’t sound like a growth company to you, then think again. According to a report in the Australian Financial Review (AFR), prime farmland delivered a total return of 14.9% for the 12 months to March 2020, helped by a falling Aussie dollar and strong commodity prices. That’s a tailwind Rural Funds gives plenty of exposure to.
As an REIT, this company also offers strong income potential as well. On current prices, Rural Funds is offering a trailing distribution yield of 4.18%. Since the company aims to increase this distribution by around 4% per annum, I think this is an investment with lots of future income prospects.
WAM Global Ltd (ASX: WGB)
Listed investment company (LIC), WAM Global, is another top pick for both growth and income in my view. It invests in a diversified portfolio of internationally-based and ‘undervalued’ growth companies, which (as of 30 June) include growth names like Tencent Holdings, Hasbro, Microsoft and EA Games.
WAM Global uses the profits from investing in these growth shares to fund a healthy and growing dividend. Just last week, WAM Global announced a 100% increase to its final dividend, which brought it up to 4 cents per share. On an annualised basis, this gives WAM Global a forward, grossed-up dividend of 5.64% on its current share price.
As such, I think WAM global is another great company for both growth and income exposure today.
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More reading
- Why I would buy Coles and these ASX dividend shares today
- Is the Treasury Wine share price a buy?
- Beat low interest rates on savings accounts with these ASX dividend shares
- A top ASX dividend share to buy next week
- Why the Digital Wine Ventures share price is surging today
Motley Fool contributor Sebastian Bowen owns shares of WAMGLOBAL FPO. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. 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.
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