Most shares are grouped into either being dividend shares or growth shares. I think there's a select few which offer investors a decent dividend yield and good growth prospects.
These businesses are normally ones that aren't experiencing explosive growth, but will deliver pleasing growth year after year.
Here are two that I think fit the bill:
Challenger Ltd (ASX: CGF)
Challenger is the clear market leader of annuities in Australia. It mostly sells annuities to retirees who are looking for a secure source of income from their capital. The number of retirees is expected to increase by 75% over the next 20 years, which should be a big boost to future earnings.
Fund management is a profitable business and there are a fair number of risks associated with Challenger's model, which is why Challenger trades at an attractive price/earnings ratio. The benefit of that means it's trading with a fairly attractive dividend yield.
Challenger has already seen its share price grow from $3.33 five years ago to today's $13.71 and I think there will be a lot more growth to come as the superannuation pool gets bigger.
It's currently trading at 20x FY18's estimated earnings with a grossed-up dividend yield of 3.59%.
NIB Holdings Limited (ASX: NHF)
I have been really impressed by how NIB has managed to grow over the last few years. The private health industry as a whole has struggled because premiums have been growing faster than wage growth. This has led many Australians, particularly younger ones, to question if the insurance is worth having.
Yet somehow NIB managed to grow total policyholders by 5.6% over FY17. Combined with the growth of premium NIB was able to reveal 7% growth of the total underlying revenue and 28.3% growth of earnings per share.
NIB has been growing the dividend nicely alongside the profit. In FY17 it grew its ordinary dividend by 28.8%.
It's currently trading at 25x FY17's estimated earnings with a grossed-up dividend yield of 4%.
Foolish takeaway
I think both shares are really good choices for investors looking for growth and income. Both are trading quite expensively at the moment, so I'd be inclined to pick Challenger at today's level.
