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By all accounts, 2014 looks set to be a great year for the S&P/ASX200 (ASX: XJO) (^AXJO). Low interest rates and returning confidence will help boost demand for riskier assets like stocks.

As a result high-yielding dividend plays will continue to be in demand but lesser known growth stories will also receive attention. So it’s a great time to start diversifying your portfolio to get the best of both worlds.

Although I’m normally bearish on resources stocks, BHP Billiton (ASX: BHP) looks set to post a strong recovery this year aided by some high commodity prices like iron ore and petroleum. I prefer it to Rio Tinto (ASX: RIO) simply because of its slightly better debt structure, higher dividend and diversification across assets including potash and oil.

Another blue chip stock that pays a great dividend is Telstra (ASX: TLS). Telstra will benefit from the long-term tailwinds of the technology and telecommunications sectors, and as the dominant player will continue to grow top and bottom lines – perfect for income seeking investors. In addition, its international and NAS business units continue to grow strongly.

Earnings-per-share (EPS) growth and high-dividend yields are a lethal combination for any portfolio. G8 Education (ASX: GEM) is a childcare centre operator which provides both growth and income. Although it trades on a price-to-earnings (PE) ratio of 32, profit is expected to grow significantly in the short term as the company expands throughout Australia.

Finding beaten-down companies is one of the best ways to make substantial capital gains whilst minimising downside risks. The best kinds of bargains are found when great companies take short-term setbacks. Cash Converters (ASX: CCV) reached a 52-week high of $1.565 before falling to just $0.75 before Christmas. It currently trades on earnings multiples of 11 and has a dividend yield of 4.1% fully franked.

This year, one company which will be fixed on my watch list is Newsat (ASX: NWT). It’s Australia’s only pure play satellite company and owns several orbital slots, which it hopes to fill with highly profitable satellites in the future. Despite being a $260 million company, its Jabiru-1 next-generation satellite is expected to generate US$3 billion of revenue over 15 years at 85% margins. Newsat plans to launch its first satellite this year.

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*Returns as of August 16th 2021

Motley Fool Contributor Owen Raskiewicz owns shares in Cash Converters. 

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