4 Stocks to Mix and Match for Dividends and Growth

When holding a stock long term, the intelligent thing to do is to look for a good mix of both dividends and growth potential.

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A lot of TSX stocks offer both decent dividends and growth potential. The “mix” differs significantly from one stock to another. Some stocks lean more toward dividends, while others offer a more substantial long-term growth potential.

However, if you are looking for the ones that may offer you the best of both worlds, especially if you buy them at the right time and valuation, there are four stocks that you should start your search with.

Telus

Telus (TSX:T) is one of three telecom giants that dominate the telecom and internet market in Canada and one of the promising 5G stocks in the country. The company offers most of the characteristic services of a telecom company in Canada, but it’s also expanding its range, especially in digital healthcare.

It’s a thriving new avenue with a lot of growth opportunities, especially for a telecom company like Telus that already has an extensive reach in the country. It’s also in the home security market segment.

As for its return potential, the company is a strong contender in both dividend and capital appreciation. Its overall returns in the last 10 years have been nearly 180%. The price appreciated almost 81% in the last decade, and the stock currently offers a decent 4.7% yield.

Granite REIT

Industrial REITs in Canada have had a better run than many other commercial real estate segments, and Granite REIT (TSX:GRT.UN) is the prime example of this phenomenon. The massive slump, which the whole real estate sector is experiencing right now, has had a significant impact on the return potential of the stock.

But if you consider its performance in a relatively normal market (before the pandemic), the stock rose almost 94% in five years. And if you combine that growth potential the stock might display when the sector is normalized again with the current 4.3% yield, which is relatively high compared to the REIT’s typical yield (thanks to the slump), Granite becomes a powerful pick for mixing dividends with growth.

Algonquin Power and Utilities

Algonquin Power and Utilities (TSX:AQN) is a substantial investment for multiple reasons. The first is the stability it offers as a utility company. From a consumer standpoint, utilities are the primary expense, and little (if any) spending is prioritized over it, making the revenue stream of utility businesses stable in almost all economic climates.

Then there is the fact that Algonquin is also a power-generation company that’s already leaning quite heavily in favour of renewables, making it a good choice from an ESG (environmental, social and governance) investing perspective as well. Its capital-appreciation potential is decent enough, as evident from its 10-year price growth of over 117%. And it’s currently offering a juicy 4.8% yield.

Quebecor

The media and telecom company Quebecor (TSX:QBR.B), with a solid consumer base in Quebec, has offered excellent performance since the recovery from the Great Recession. A significant portion of this growth is covered in the last decade, during which the stock appreciated over 194%.

It’s a strong dividend stock as well, with a stable history and a 4.5% yield. It’s not in the same league as telecom companies like Telus, but its regional presence gives adequate stability. Its other businesses, media, sports, and entertainment, also make up a significant portion of the revenue to make the overall financial mix healthy for the long term.

Foolish takeaway

All four companies are Dividend Aristocrats and are offering dividend yields well above 4%. The collective capital-appreciation potential is also strong enough to offer you over 10% growth a year in a healthy market.

So, a portfolio of just these four companies might help you easily double your capital in a decade and offer a sizable enough passive income, assuming you invest a significant sum in the portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends GRANITE REAL ESTATE INVESTMENT TRUST and TELUS CORPORATION. The Motley Fool has a disclosure policy.

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