3 ASX Small-Cap Shares Offering Both Strong Growth Potential and Attractive Dividend Yields - Kalkine Media

October 05, 2023 07:15 AM AEDT | By Team Kalkine Media
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In the dynamic world of investments, the elusive combination of robust growth potential and alluring dividend yields is often considered the holy grail for investors. In a recent revelation, IML, an Australian equities fund manager, has spotlighted a trio of ASX small-cap stocks that appear to embody this sought-after harmony. These small caps, deemed high-quality with strong balance sheets and pricing power, are projected to thrive in the next 12-24 months, presenting a tantalizing proposition of growth potential coupled with attractive dividend yields, promising more stable and fruitful total returns for investors.

ASX Small-Cap Constellations

  1. GUD Holdings Limited (ASX: GUD)
    Revving Up Auto Parts Advancements IML recognizes GUD's heightened business quality, particularly accentuated after the strategic acquisition of APG. This move has resulted in a more diversified and resilient earnings base. Positioned to benefit from a substantial backlog of new car orders and the escalating popularity of SUVs and 4WDs, ASX GUD is anticipated to demonstrate robust and sustained growth. Currently priced around 14 times FY 25 earnings with a dividend yield exceeding 4%, GUD represents a compelling investment opportunity, balancing growth potential with dividend attractiveness.
  2. Kelsian Group Ltd (ASX: KLS)
    Navigating New Horizons for Growth Formerly known as Sealink, Kelsian's recent acquisition of All Aboard America is considered a transformative move, providing a sturdy platform for growth, especially in the expansive US market. IML sees the shares of Kelsian as attractively priced, trading at 12 times FY25 earnings, accompanied by a fully franked dividend yield of 5%. The addition of increased US earnings further enhances the value proposition, positioning ASX KLS as an intriguing investment with a blend of defensive and low-risk earnings growth.
  3. Regis Healthcare Ltd (ASX: REG)
    Advancing in Aged Care IML perceives a favorable shift in the winds for Regis Healthcare as headwinds in the aged care sector begin to reverse. With the imminent surge of Baby Boomers reaching the average assisted living age of 84, Regis, fortified with a robust balance sheet, is strategically positioned to meet the burgeoning demand by constructing new facilities. Currently trading at just over 8 times FY 25 operating EBITDA and boasting a dividend yield of 5.6%, ASX REG emerges as a compelling value proposition within the small-cap realm.

In Conclusion: Small-Cap Treasures Uncovered

Within the realm of ASX small caps, GUD Holdings, Kelsian Group, and Regis Healthcare stand out as potential gems, offering investors a unique synthesis of growth prospects and enticing dividend yields. As investors navigate the ever-evolving landscape of the Australian stock market, these small-cap stars present an intriguing opportunity for those seeking a harmonious blend of growth and income. The unveiling of these small-cap marvels adds an exciting chapter to the narrative of potential treasures within the vibrant ASX arena.



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