When investors think of dividend stocks, they think of the big banks, Telstra Corporation Ltd (ASX: TLS) and a handful of other S&P/ASX 200 (INDEXASX: XJO) blue chips.
That's fine when they're cheap, but at current market prices they're not cheap and the risk of making a capital loss in the short to medium term is very real.
Not only that, if you truly consider yourself to be a long-term investor (i.e. you invest for 10 years or more), looking outside the 'usual suspects' is a must.
Below, I've listed five ASX growth stocks which may not pay big dividends right now, but are likely to prove to be fantastic investments to hold for both capital gains and dividends, in the long run.
- Ozforex Group Ltd (ASX: OFX) is a $580 million company which does exactly what its name suggests. Foreign exchange. Being a newly listed company, it recently lived up to its pro-forma results forecasts and declared a modest dividend. In the coming year however, analysts are expecting earnings growth and a strong dividend increase, putting the company on a forecast yield of 3.9% fully franked.
- Cover-More Group Ltd (ASX: CVO) is also a new market entrant. It is a travel insurance provider and its shares trade on a relatively high earnings multiple. However the company is forecast to pay a growing dividend stream in coming years and currently trades on a forecast dividend yield of 4.1%.
- Slater & Gordon Limited (ASX: SGH) is Australia's number one personal injury law firm. Its shares have risen very strongly over the past year as the group's UK expansion begins to take hold. As a result I believe the shares are more geared towards capital gains than dividend yield. However, I'm gladly willing to forgo a larger dividend if it keeps growing the way it has. It yields 1.4% fully franked at today's prices.
- Collins Foods Ltd (ASX: CKF) owns and operates KFC, Sizzler and Snag Stand stores. Although the group is currently rebranding it's poorly performing Sizzler fast casual dining restaurants, the group's KFC and Snag Stand operations remain well placed for future growth. Despite rising 45% in the past year, shares currently trade reasonably cheap and are forecast to pay a dividend yield of 5%, fully franked.
- Hills Ltd (ASX: HIL) is a higher-risk proposition than the other stocks on this list because it has recently undergone a dramatic transformation from a steel producer to technology consolidator. It has recently acquired a suite of businesses ranging from network security to providing television sets in hospitals. At current prices it is forecast to pay a 4.7% fully franked dividend.
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