How to Unlock Growth and Income Together in the ASX 200 Landscape

May 01, 2025 02:41 PM AEST | By Team Kalkine Media

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How to Unlock Growth and Income Together in the ASX 200 Landscape — Image source: Shutterstock

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Highlights

Blend growth with income via strategic investment

Use self-generated dividends for income flexibility

Expand portfolio across ETFs and commodities

Balancing between capital growth and income generation is a common dilemma for investors, especially in the current climate shaped by market volatility and rapid shifts in commodity prices. The key is finding a strategy that doesn’t require compromising one goal for the other — and that's where a combination of traditional dividends and self-generated income from share sales becomes a compelling option.

A classic example is the surging price of gold. Exchange-traded funds (ETFs) such as Global X Physical Gold ETF (ASX:GOLD) and BetaShares Gold Bullion ETF - Currency Hedged (ASX:QAU) offer direct exposure to gold’s price performance, but neither pays out dividends. However, by periodically selling a portion of the holdings, investors can effectively “manufacture” their own dividend yield. For instance, an initial $10,000 investment in (ASX:GOLD) earlier this year might now be valued at around $12,000. Selling a small portion to realise a 4% yield would still preserve the bulk of the holding and retain exposure to future gold price gains.

This flexible approach allows for tailoring income to specific needs and tax strategies. For example, deferring the sale until a year passes can make gains eligible for the capital gains tax discount, creating a more tax-efficient income stream than traditional dividend payouts.

This method also empowers broader portfolio choices. Investors can consider growth-oriented companies or ETFs that don't necessarily offer high yields. ETFs tracking oil prices like BetaShares Crude Oil Index ETF - Currency Hedged (Synthetic) (ASX:OOO) and even environmental themes like VanEck Global Carbon Credits ETF (Synthetic) (ASX:XCO2) fall into this category. By not relying solely on income-producing stocks, investors can explore a more diversified and modern investment landscape.

Even traditional listed investment companies like Argo (ASX:ARG), which may provide a modest yield, become more appealing under this strategy if they demonstrate strong capital growth potential.

For those navigating the ASX dividend stocks space, the franking credit system further enhances after-tax returns. This is particularly relevant for Australian investors leveraging fully franked dividends to offset tax liabilities.

Ultimately, investors can enjoy both worlds — dynamic capital growth and flexible income — through a self-directed approach, making use of broader instruments available across the S&P/ASX 200 and beyond.

This strategy offers adaptability and control, empowering investors to adjust their yield targets in line with market conditions and personal financial goals.

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