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3 growth and income stocks for a blue-chip retirement

While there are many different styles of investing, with value, income and growth being the most popular ones, it seems there is no single way to make money on the stock market.

Indeed, at times one style performs better than the others, and vice versa.

However, it seems to me that a focus on all three elements can be achieved, with investors seeking growth at a reasonable price (plus a great income) tending to perform well over the long run.

Certainly, it is not a fail-safe method, but it does seem to combine the styles so as to provide balance and diversity within a portfolio.

With that in mind, here are three stocks that offer growth at a great price, with a top notch income included in the mix, too.

Wesfarmers Ltd (ASX: WES), which owns retailers such as Coles, K-Mart and Target, recently released an upbeat set of results that showed it is making encouraging progress. Indeed, most of its brands delivered strong sales growth in the first quarter, with Bunnings and Officeworks leading the way with growth of 11% and 8% respectively.

However, there could be much more growth to come in subsequent quarters, since Wesfarmers is expected to increase its bottom line at an annualised rate of 13.9% over the next two years. This puts it on a PEG ratio of just 1.57, which shows that it offers growth at a very reasonable price.

Furthermore, with a potential move into financial services via an acquisition being mooted, Wesfarmers could deliver even better growth over the medium to long term, with a fully franked yield of 4.5%, it also ticks the income box.

AMP Limited (ASX: AMP) is one of the financial stocks that Wesfarmers is rumoured to be considering taking over. Indeed, it’s not all that surprising, since AMP is performing well and has considerable long-term growth prospects, which are set to be significantly aided by its 19.9% acquisition of China Life Pension Company.

However, trading on a P/E ratio of 17.9, AMP may appear to be somewhat overvalued. When its growth potential is taken into account, though, it’s clear to see why Wesfarmers may be interested in acquiring it, since it has a PEG ratio of just 0.56. AMP appears to strike a strong balance between income, value and growth, with a partially franked yield of 4.1%.

Transurban Group (ASX: TCL) has seen its share price rise by 48% over the last five years, which easily outdoes the ASX’s 20% rise over the same time period. However, it means that shares in the toll road and tunnel operator now trade on a P/E ratio that would undoubtedly scare off the vast majority of value investors.

Indeed, Transurban has a P/E ratio of 40.5, but following the acquisition of five tollways in Brisbane, it seems to be well placed to deliver strong growth moving forward. For example, the company is expected to increase earnings at an annualised rate of 27% over the next two years. This puts it on a PEG ratio of 1.5, which is appealing and means that further share price growth could lie ahead.

Of course, another major appeal of Transurban is the relatively steady nature of its revenue and profit streams, which allows it to pay a generous dividend to shareholders. Shares in the company currently yield a partially franked 4.5%, which maintains its appeal as an income stock, too.

With consideration for the growth, income and value appeal of a company, I think that everyone can profit from investing in the stock market. Furthermore, there is one ASX stock that I believe could outperform Wesfarmers, AMP and Transurban in 2015 and beyond…

The company in question has been named as The Motley Fool’s Top Stock For 2015 and offers a potent mix of income, value and growth potential. As a result, it could boost your returns and make 2015 and beyond an even more prosperous period for your investments.

Simply click here, enter your email address, and we’ll send you all the details – it’s completely FREE!

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

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