4.8% yield: Expert picks 2 ‘high quality’ ASX shares to buy now

Ever since the market turned against high-growth shares in November last year, many experts have urged investors to stick with “quality”.

While the definition of quality does vary depending on who you speak to, attributes that are commonly thrown up include decent cash flow, market dominance, profitability and resilience to economic downturns.

Considering this, if you’re looking for ASX shares to buy, you may be interested in what Bell Potter investment advisor Christopher Watt had to say this week.

He picked out two stocks that he labelled “high quality”, which he wouldn’t be shy about buying right now:

‘Significant upside’ for ‘high quality portfolio’

Real estate company Mirvac Group (ASX: MGR) currently pays out a dividend yield of 4.8%, which is pretty handy at a time when so many investors are seeking income.

Watt told The Bull that “one of Australia’s biggest residential developers” is a buy at the moment.

“Mirvac appeals for its high quality portfolio of assets with low financial leverage and exposure to apartments, which, we believe, may be a favourable part of the residential market in the near term.”

Mirvac has a lot of work coming up, he added.

“It has significant upside from a $30 billion development pipeline, despite potential for declining asset values.”

The Mirvac share price has lost almost 30% so far this year, but many in the wider professional community agree with Watt.

According to CMC Markets, nine out of 14 analysts currently rate Mirvac shares as a strong buy.

‘Reliable earnings’ with expansion in mind

The Lottery Corporation Ltd (ASX: TLC) is fortunate enough to operate in an industry that sees stable demand regardless of economic cycles.

Watt said it is a “high quality business with reliable earnings”. 

“It posted a record fiscal year 2022 result, with revenue up 9.4% on the prior corresponding period.”

The Lottery Corp increased its profit margins, he noted, and has expansion in mind.

“The company is targeting new domestic and overseas acquisitions,” said Watt.

“In our view, The Lottery Corporation has strong earnings characteristics across its lotteries and Keno divisions. Cash generation is attractive.”

Wilsons head of investment strategy David Cassidy said earlier this month that he favoured services providers like The Lottery Corp over companies that made goods, considering the economic uncertainty.

“We prefer service companies…, which should benefit from pent-up demand for these services after COVID restrictions.”

Eight out of 13 analysts surveyed on CMC Markets currently rate The Lottery Corp shares as a buy.

The post 4.8% yield: Expert picks 2 ‘high quality’ ASX shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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