In a few short months, this financial year will be coming to a close. This might be an opportunity to start going over the stocks you have in your portfolio, weeding out the ones that clearly have not gone according to plan and looking at the list with fresh eyes.
You will probably want to restock it with quality companies that have catalysts for further growth. If they offer a decent dividend, then all the better. To really get ahead with your returns, you need stocks that have a strong base of earnings.
Investment fund manager Perpetual Limited (ASX: PPT) would be a good choice as the financial markets and general economy improve. Its fees may depend on the investments they have in successful companies and it is very particular about which stocks make the grade for consideration.
It achieved a 24% return on investments in FY2013 and its share price is up about 9% in the last three months. It has a 3.2% dividend yield.
Looking for something familiar to invest in, you may not have to go much farther than Woolworths Limited (ASX: WOW). It has a long-term growth model that could be suitable for any portfolio. It is well managed and business performance is top class with return on equity and return on capital at 26% and 20% respectively.
Its share price has tripled over the past 10 years and its current dividend yield is about 3.8%. It hit an all-time high of $36.96 last month and is $36.15 currently. Could the next 6-12 months see it at new highs as it expands its supermarkets and Big W, Masters and Dan Murphy’s stores into new communities?
Another stock that could propel earnings is the energy producer Oil Search Ltd (ASX: OSH). Although the PE ratio is about 45, long-term investors should look further out into the future. Its PNG LNG project is almost complete and revenue from that should start flowing in. It has other projects in the region, so this may be a good mid or long-term growth story.
I remember when it used to be about $0.80c a share, but I didn’t buy any because it was still at earlier stages of its development. Not long after that it rose to $2 a share. That is now very cheap compared to its present $8.53 price.
I think these three stocks would complement a portfolio because they have business growth, sizeable earnings and the ability to expand over a good number of years. Those are some of the key factors for better investment returns.