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Growth and dividends are stereotyped as incompatible qualities within the same stock.
ASX stocks considered high growth typically represent companies that reinvest their cash back into the business to fuel expansion.
On the other hand, companies that pay high dividends can afford to do so because they are not reinvesting them in growth.
So what happens when you come across a business that is both growing and delivering a big return?
You buy it and hold on for life.
ASX stock with ‘impressive financial results’
That’s exactly what Cyan Investment Management is doing with a building materials supplier Big River Industries Ltd. (ASX: BIS).
Portfolio managers Dean Fergie and Graeme Carson told clients in a note that Big River’s reporting season update was nice.
“Building products manufacturer and distributor Big River was… [a] holding that produced impressive financial results, with FY22 revenues up 45% to $409 million and underlying profitability up 191% to $22.7 million.
The market pushed the stock price up 11% from August.
Then came the cream on top.
“Shareholders were rewarded with a final dividend of 10.0 cents per share, bringing the payout for the full year to 15.5 cents, equating to a fully franked yield of approximately 7 percent.”
Despite this August party, Cyan portfolio managers are holding onto the stock for further growth.
“After meeting with Big River this week, the company does not view Fiscal 22 as a one-time event, with business momentum and margin expansion continuing in Fiscal 23.”
Strength in a Volatile Year
In a year when most non-mining stocks were hammered, Big River’s share price showed remarkable resilience. The stock has been stable over the past 12 months.
Analyst coverage of the company, with a market capitalization of $178 million, is sparse.
But according to CMC Markets, at least the Moelis Australia team agrees with Fergie and Carson, viewing Big River as a solid buy.