By focusing on identifying stocks which can provide your portfolio with both growth and income, you are essentially covering both bases in terms of the contributors to your overall investment returns.
A one-eyed focus on just growth or income can be a dangerous strategy for investors to have. Income alone is unlikely to fully provide the levels of returns you need to grow your portfolio so that you can retire comfortably; meanwhile just focussing on growth could lead you to own a high risk portfolio of unprofitable yet potentially high growth stocks.
Arguably a better strategy is to own stocks which tick both boxes – stocks with high, maintainable dividends, but also with expectations for above average earnings growth. Here are three stocks that could fit that bill.
1) AMP Limited (ASX: AMP) has a current yield of 4.5%, enjoys the tailwind of a growing superannuation industry and importantly has also begun expanding into the enormous financial services sector in China.
2) Origin Energy Limited (ASX: ORG) has a current yield of 3.5% but with a massive step change from its LNG Projects expected to boost earnings and dividends the future growth profile of the company is well above average.
3) Coca-Cola Amatil Ltd (ASX: CCL) was forced to reduce its final dividend for 2013. The outlook for 2014 is for a further reduction, however this would still equate to a yield of 5% should a full year dividend of 46 cents per share be paid. While the domestic soft drinks business may remain under pressure for the foreseeable future, the expanding beer business and the Indonesian business provides an attractive growth profile for the group.
