Most investors seek quality stocks that will provide a combination of income in the form of dividends and an increase in the stock price over time. The investment becomes more valuable when it has a low-risk profile because the company's business is highly successful and has a proven history.
The key differentiating point for these types of stocks is that not only their business has established a name for itself for trust and reliability, but they have developed major competitive advantages. The competition then finds it very hard to compete.
Three such outstanding companies are mentioned below:
CSL Limited (ASX: CSL) – An Australian success story, CSL specialises in biotech drugs for the treatment of serious illnesses like cancer, heart disease, multiple sclerosis and anaemia. CSL has firmly established a name for its drug therapies, which are now being sold in all continents of the world.
Since listing on the Australian Stock Exchange (ASX) in 1994, its share price has risen by a compound annual growth rate (CAGR) of 25% until June 2015. CSL is a quality stable business that has not only seen its share price rise steadily over the years but has also a paid a regular dividend.
CSL is a mature business, with a proven successful business and quality products. The company continues to invest in research and development towards finding new treatments for serious illnesses. CSL's current dividend yield is 1.8%.
InvoCare Limited (ASX: IVC) – Funeral, cemetery and crematorium operator InvoCare is another quality business, with a steadily rising share price, combined with a regular stream of dividends.
A well known and established name in the funeral business, InvoCare is the largest private funeral business in the Asia Pacific region. The steady and growing nature of the funeral business continues to provide a regular stream of revenue and will likely to do so in the future. At the same time, low capital intensive nature of the funeral business ensures that margins remain healthy. InvoCare's current dividend yield is 3.3%.
Coca-Cola Amatil Ltd (ASX: CCL) – As the name suggests, Coca-Cola Amatil (CCA) produces Australia's best-selling cola brand. Apart from Coca-Cola, CCA sells a diversified range of soft drinks, water, sports drinks and other beverages and snacks.
CCA's business is based around a group of stable and highly successful beverage brands. This makes the revenue stream highly predictable and certain. The company also has a history of paying regular dividends, with current dividend yield standing at 4.6%.
Foolish takeaway
The above three stocks belong to the healthcare, food and funeral sectors. They are part of our very basic human needs, something that we cannot live without (although Invocare might have something to say about that – Ed). And on top of that, the three businesses have a solid history of success behind them.
Foolish investors seeking long-term growth in capital and regular dividend income might want to consider adding these stocks to their watch list.
