ASX shares that can provide a combination of dividends and capital growth could be exactly what investors need in 2024.
Over the long term, I hope my holdings grow in underlying value, which usually requires an increase of profit. We don’t know which businesses are going to do well, but their setup and plans may make it more likely.
If I were buying today, these would be two of my picks:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This is my top pick on the ASX for long-term growth because it operates as an investment house that invests in various assets and industries.
Some of its current investments include bonds, agriculture, telecommunications, resources, swimming schools, financial services, electrification and plenty more.
Not only can its current investments grow in value, but the company continues to make additional investments with its excess cashflow each year. It receives dividends from its portfolio, which it then uses to pay for its expenses and pay dividends.
The ASX share has paid out a growing dividend – which has grown every year for 24 years – and WHSP has grown the value of its portfolio in that time significantly. Total dividends have grown at a compound annual growth rate of 9.6% during those 24 years.
In the ten years to 30 April 2024, WHSP has delivered an average total shareholder return (dividends plus share price growth) of 11.3% per year, which excludes franking credits.
Including franking credits, it currently has a dividend yield of 4.1%.
Collins Foods Ltd (ASX: CKF)
Collins Foods has fairly simple business operations – it is the franchisee of hundreds of KFC outlets across Australia and Europe, and also operates close to 30 Taco Bells in Australia.
The ASX share doesn’t own the brands, that belongs to Yum! Brands. There are two main ways it can grow – add more outlets to its network and grow sales at the existing stores. Both of those factors are positive right now.
In the HY24 result, KFC Australia saw same store sale (SSS) growth of 6.6% and it’s on track to open nine to 12 new restaurants in FY24. KFC Europe’s HY24 SSS growth was 8.8% in HY24, with the integration of eight additional KFC restaurants in the Netherlands. It expects to open another three new outlets in the Netherlands in the second half.
I’m not expecting the level of financial growth in HY24 to continue, but that result saw underlying net profit increase 28.7% to $31.2 million and the half-year dividend increased by 4.2%.
Including franking credits, it has a dividend yield of 4.2% currently.
