One of the biggest challenges facing investors is where to focus their portfolio: on income or growth. Often, investors will focus on one area for some time before switching objectives. But what if there was a stock you could buy that caters to both growth and income needs?
Fortunately, there are several such stocks, some of which investors are already familiar with.
Hello growth and hello income
The stock that can provide for both growth and income needs is Bank of Nova Scotia (TSX: BNS)(NYSE: BNS). Canada’s banks are notoriously great long-term investments for a few reasons.
Unlike many of its peers that looked to the U.S. market, Bank of Nova Scotia opted to focus its expansion efforts further south to Latin America. Specifically, the bank chose the markets of Mexico, Columbia, Peru, and Chile. Those four nations are party to a trade bloc known as the Pacific Alliance.
The Pacific Alliance is charged with improving trade between its member states while eliminating tariffs. By focusing on establishing a branch network across the region, Scotiabank became a familiar face in the region. More importantly, that market access also provided (and continues to provide) the bank with stellar growth potential.
Turning to income, Scotiabank currently boasts a juicy 4.29% yield. The bank has been paying out dividends for an incredible 188 years, making it the ultimate buy-and-forget investment. The bank has also provided annual bumps to that dividend going back years. That practice was suspended during the pandemic and was recently reinstated.
As such, income investors can expect Scotiabank to resume those dividend hikes soon. This makes an already great investment that much better, particularly in times of volatility.
When income doubles, growth can too
Another great stock is to consider is Suncor (TSX: SU)(NYSE: SU). Suncor is one of the largest energy companies on the planet. In fact, the integrated nature of Suncor’s business allows it to benefit across multiple channels during favourable times such as the current environment.
For those unfamiliar with Suncor, the company owns approximately 1,500 Petro Canada retail locations as well as operates an impressive network of refineries and oil production facilities.
When the pandemic started and oil prices bottomed out, Suncor slashed its dividend and focused efforts on becoming more efficient. To say those efforts have been successful would be an understatement.
Oil prices have surged in the past year, as have gasoline prices. This has led Suncor to post superb financial results, which, coupled with increased efficiency, makes Suncor a superb option for growth and income needs.
Specifically, in the most recent quarter, Suncor reported an operating profit of $1.043 billion, with funds from operations (FFO) coming in at $2.6 billion. As a reminder, in the same period last year, at the height of the pandemic, Suncor reported a loss of $388 million.
The stellar results resulted in Suncor providing investors with a 100% dividend hike. This effectively restores the dividend to its pre-pandemic rate. The company is also looking to do a substantial buyback, which will drive up earnings further.
This makes Suncor a great stock for both income- and growth-minded investors.
Final thoughts: Your growth and income needs
Both Suncor and Bank of Nova Scotia are stellar investment options. Either investment will satisfy the growth and income needs of investors in any well-balanced portfolio.
Buy them, hold them, and let your portfolio grow.
