3 stellar stocks for the ultimate diversified portfolio

Build a portfolio that captures the best of all worlds.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

We are now halfway through the year and markets have again mirrored the superb gains of 2013. A gradual recovery in business confidence and historically low interest rates are diverting investor attention into assets such as stocks, where they are likely to reap higher returns.

With these low interest rates, income-hungry investors will only continue to demand dividend stocks, while ignoring the other side of the coin, growth. The diversification philosophy has been out for a great deal of time, but it has never been more important for investors to start diversifying their portfolios and gaining the best of both worlds. The following three companies are perfect for a nicely diversified portfolio offering both growth and dividends.

1. ResMed

The healthcare equipment giant is undoubtedly positioned for bumper returns in the next few years. ResMed (ASX: RMD) provides a range of medical equipment to remedy sleep apnea, a condition affecting approximately 20% of the U.S. population. ResMed's main demand driver is an increase in diagnosis rates which, given our ageing population and recent obesity problems, will act as a stimulant to diagnosis and generate long-term tailwinds to drive future earnings.

To me, ResMed looks like an excellent buy given that it trades at a modest forward price-to-earnings ratio of 19. While it only offers a dividend yield of 1.8%, its growth prospects unquestionably trump this weakness. ResMed is sure to make your diversified portfolio sizzle for the years to come.

FlexiGroup

The diversified financier is partnered with companies such as Harvey Norman, Flight Centre, Dick Smith and Officeworks. FlexiGroup (ASX: FXL) has undertaken some hefty restructuring charges to prepare itself for the longer term. It has lifted its IT investment until FY15 to improve approval process efficiencies and has made acquisitions its primary medium-term strategy, to offer a wider range of products in more locations.

FlexiGroup has had a wonderful track record of growing earnings. Yet, since the beginning of the year its share price has plummeted 30% as investors have become frightened by the slowdown in consumer confidence. However, FlexiGroup looks more than capable to grow both organically and through acquisition investments. The recent share price dip offers investors a great opening to take advantage of future price gains and its juicy 4.6% fully franked dividend yield.

Leighton Holdings

While stocks in the mining services sector seem to have lost their touch following the slowdown of demand for materials, Leighton Holdings (ASX: LEI) is definitely an exception. The geographically diversified mining services provider has recently been awarded about $4 billion worth of contracts by the government to operate the North West Rail Link.

Complementing this are Leighton's restructuring plans, which aim to efficiently reorganize its businesses to improve its cost position. The possibility of selling off some subsidiaries such as John Holland would also result in a significant reduction in its debt position.

Offering both an enormous dividend yield of 5.2% and proving to have continuing momentum within its business functions, Leighton is the final touch to our diversified portfolio. It may have gained some ground in the past year but at current prices I believe there is much more room for growth.

Motley Fool contributor Aryan Norozi does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »