Sometimes its tough to strike the right balance between growth and income. Indeed, most investors tend to focus on one or the other, as opposed to creating a portfolio that provides them with a decent income while also having the potential to post impressive capital gains.
With that in mind, here are four stocks that, together, offer impressive dividends as well as exciting future prospects.
As far as income plays go, few stocks in the FTSE 100 can match SSE (LSE: SSE). Thats because it currently yields a hugely impressive 6% and, better still, dividends per share are all set to rise by at least the inflation rate over the medium term.
This may not sound like such an appealing option when inflation is less than 2%. However, with the scale of quantitative easing having the potential to push the inflation rate much higher over the medium term, SSEs planned dividend increases could become a real asset. Indeed, they could help to maintain your income levels in real terms moving forward.
While also offering a respectable yield of 3.6%, AstraZeneca (LSE: AZN) comes with huge capital growth potential. Thats because its drugs pipeline is undergoing nothing short of a transformation right now.
Certainly, the companys bottom line is due to be hit by continued fallout from the current patent cliff, with earnings forecast to fall by 13% this year and by 6% next year. However, looking beyond that, numerous acquisitions have made AstraZenecas pipeline a hot ticket. Indeed, further bids from global rivals are a very real possibility, which would clearly be good news for shareholders.
Few companies offer the potent mix of income and growth that Santander (LSE: BNC) does. It currently yields a whopping 7.4% and offers huge growth potential. For instance, earnings per share (EPS) are due to increase by 23% in the current year and by 21% next year. This is well ahead of the market average and shows that Santander is a true growth play.
Of course, investors are being asked to pay a premium for such strong growth potential, with shares in Santander currently trading on a price to earnings (P/E) ratio of 15.6. This is much higher than the FTSE 100s P/E of 13.8. However, when Santanders growth forecasts are taken into account, it equates to a price to earnings growth (PEG) ratio of just 0.6, which shows that for the level of growth on offer, Santander trades at a reasonable price.
With a yield of 3.3% and forecast growth in earnings of 9% next year, Unilever (LSE: ULVR) seems to strike the right balance between growth and income. Indeed, the consumer goods play seems to have a very bright future ahead of it.
For instance, customer loyalty in its brands is constantly increasing in the developing world, where Unilever has invested vast amounts of time and money to ensure the long term growth of its products. This exposure (emerging markets account for over half of Unilevers revenue) could prove to be highly beneficial for investors moving forward, as greater wealth and consumer spending are anticipated across the developing world. As a result, shares in the company could deliver impressive gains over the medium term.
Of course, SSE, AstraZeneca, Santander and Unilever aren’t the only companies that could add income and capital growth to your portfolio. That’s why we’ve put together a free and without obligation guide to where we think the smart money is headed.
The guide is simple, clear and actionable – you can put it to use on your portfolio right away. It could help to boost your dividends and add to your capital gains, thereby making 2014 and beyond an even more prosperous period for your investments.
Click here to access your copy – it’s completely free and comes without any further obligation.
Peter Stephens owns shares of AstraZeneca and SSE. The Motley Fool UK owns shares of Unilever. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.