Investors are faced with a really difficult situation where the economy's growth has dropped to a very slow rate and yields have been pushed so low that you just can't a good yield.
But there are a group of mid-caps out there that have good growth plans whilst also paying a dividend, like these ones:
Webjet Limited (ASX: WEB)
Webjet is a leading travel business that is a big player in both the consumer and business space. Indeed, the B2B division called WebBeds is one of the biggest in the world and that's where a lot of the earnings growth is coming from at the moment.
The company just held its AGM and said that in FY20 it expects to deliver total underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $157 million to $167 million, which would be growth of 26% to 34% over FY19, with organic growth of 16% to 23%.
If it can keep growing at double digit rates for the next few years then today's price looks cheap. It's trading at just 14x FY21's estimated earnings. Webjet has been steadily growing its dividend and currently has a grossed-up dividend yield of 2.6%.
Bapcor Ltd (ASX: BAP)
Bapcor is the leading auto parts business is Australia and New Zealand with its Burson and Autobarn brands. It has recently expanded into truck parts and is also growing a Burson network in Asia which could be a good future profit driver.
I've been impressed by how consistently Bapcor has been able to grow same store sales and increase its operating profit margin. In some ways Bapcor is quite a defensive business because in a downturn people are more likely to replace a car part than buy a whole new car.
It's currently trading at 17x FY21's estimated earnings with a grossed-up dividend yield of 3.5%.
Reece Ltd (ASX: REH)
Reece is a bathroom, plumbing and piping business which runs a variety of divisions including bathrooms, HVAC-R, irrigation and civil.
It has recently acquired MORSCO in the US which opened up a huge new market. Its first quarter sales update was solid, although not amazing. Sales revenue was up 8.8% but first half EBITDA is expected to be in line with the result in the prior year.
I like that Reece's earnings continue to diversify geographically and by earning more from different divisions like civil.
Foolish takeaway
At the current prices I'd go for Webjet, I think it still looks cheap for its long-term growth prospects and its new technology offerings are likely to materially boost profit margins in the medium-term.
