If you’re investing with a time-frame of more than 10 years then it’s almost definitely worth aiming for growth over income.
The most promising growth companies will often pay out a smaller percentage of their profits as a dividend whilst having good plans to grow the company over the coming years.
The three companies below could have the perfect combination of potential growth and income for long-term investors:
Costa Group Holdings Ltd (ASX: CGC)
Costa is one of Australia’s largest food producers with a market capitalisation of $1.44 billion. It grows a wide variety of fresh produce including citrus fruit, tomatoes, berries, mushrooms and avocadoes.
Management are expanding Costa’s growing capacity in Australia, China and Morocco. The planned growth could provide healthy returns over the next few years.
Costa is trading at 56x FY16’s earnings with a grossed-up dividend yield of 3.17%.
TPG Telecom Ltd (ASX: TPM)
TPG is one of Australia’s largest telecommunications providers with a market capitalisation of $5.46 billion.
Its mobile business could soon rapidly explode thanks to its spectrum ownership in Australia and Singapore. Management have done a great job of growing the business to its current size and there’s every chance that its latest moves will provide further profit growth.
TPG is trading at 13x FY17’s estimated earnings with a grossed-up dividend yield of 3.75%.
Hansen Technologies Limited (ASX: HSN)
Hansen is a software and billing provider to a number of utility and telecommunications businesses around the world. It currently has a market capitalisation of $635 million.
The Hansen share price has fallen by 26% since October 2016, which gives investors a good chance to buy into this expanding, defensive business at a beaten-down price.
Hansen is currently trading at 24x FY16’s earnings with a grossed-up dividend yield of 2.89%.
TPG is clearly trading at the cheapest earnings multiple and may be the best value, but the other two have their appealing factors as well. I’d be happy to invest in all three at the current prices for the long-term, though I have my eye on Costa the most.
5 stocks under $5
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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of Hansen Technologies and TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.