Looking for that perfect mix of income and growth stocks? The market provides plenty of options to consider, including some truly superb income and growth stocks. Irrespective of whether you are new to investing or a seasoned pro, these three options should be on every investor’s radar.
Option #1: The landlord-tenant opportunity
RioCan Real estate (TSX: REI.UN) is one of the largest REITs in Canada. Historically, RioCan’s portfolio comprised mostly of commercial and retail properties. In recent years, however, that make-up has shifted to include mixed-use residential properties.
Adding mixed-use residential properties is nothing short of genius, as it caters to the two biggest issues facing the home market: real estate prices and availability.
While interest rates are finally cooling the market, the average price of a home in Canada’s major metro areas remains unaffordable. This effectively prices out both first-time homebuyers and prospective landlords from the market.
RioCan’s growing mixed-use segment is the answer. The properties are situated along major transit lines, close to the amenities that younger residents seek out. It also provides a diversified revenue stream comprising hundreds of properties rather than a single unit for would-be landlords.
That diversified revenue stream also means that RioCan can pay out a generous distribution, that is paid out on a monthly cadence. That distribution currently boasts a yield of 5%, making it one of the better-paying, superb income and growth stocks on the market.
Option #2: The stable huge utility
When seeking out superb income and growth stocks, Hydro One (TSX: H) is an option that should be near the top of any list. Hydro One is the largest electricity and distribution provider in Canada. In fact, in some of the local markets, the competition controls little more than a rounding error.
Apart from the incredible stability offered by a utility, Hydro One also boasts incredible growth. Year to date, the stock is up 10%. Over the trailing 12-month period, that increases to 18%. Looking back over a two-year period that growth rises to 30%. And looking back a full five years shows that growth doubled to nearly 60%.
That trend looks set to continue. In the most recent quarter, the utility earned $255 million, or $0.43 per share. By way of comparison, in the same period last year, the company earned $238 million, or $0.40 per share.
In other words, Hydro One is one of the superb income and growth stocks for any portfolio. Buy it, forget about it, and let it grow.
Option #3: The big, old bank
It would be nearly impossible to assemble a list of superb income and growth stocks and not mention one of Canada’s big banks. The big banks boast a stable, mature business at home with reliable earnings, and a growth-focused agenda internationally. Both contribute to a handsome dividend that has decades (and, in some cases, more than a century) of solid growth.
But which bank should you add to your portfolio?
That bank to consider buying is Bank of Montreal (TSX: BMO)(NYSE: BMO). Not only is BMO the oldest dividend-paying company in Canada (over 190 years), but it also boasts solid income and growth prospects.
On the growth side, BMO announced the acquisition of U.S.-based Bank of the West late last year. That multi-billion-dollar deal will add multiple U.S. state markets to BMO’s growing portfolio. It will also add millions of new customers, billions in deposits, and hundreds of branches.
Turning to income, BMO offers investors a juicy quarterly dividend that currently earns a yield of 4.35%. Investors not ready to draw on that income yet can reinvest it until needed, allowing it to grow further.
Final thoughts
No investment is without risk, and that includes the three options mentioned above. Fortunately, the superb income and growth stocks noted above are market leaders that also offer some defensive appeal.
In my opinion, this makes them great options for any well-diversified portfolio.
