Investors often struggle with trying to determine whether they should invest in growth vs income stocks. Fortunately, the market provides ample options for investors to choose from.
More importantly, there are more than a few options that can cater to both. This effectively eliminates that growth vs income question. So then, what stocks should investors turn to?
A defensive core, juicy yield and an appetite for growth
Utility stocks are regarded as some of the most defensive options on the market, and Fortis (TSX:FTS) is a key utility for investors to consider.
Part of the reason Fortis is so defensive is thanks to its lucrative business model. In short, Fortis provides utility services that are backed by long-term regulated contracts. Those contracts set out the compensation that Fortis receives and often span decades in duration.
In other words, as long as Fortis continues to provide service, it generates a stable and recurring revenue stream. And it’s that stable revenue stream which lets Fortis invest in growth and pay out a handsome dividend.
For the growth vs income question, that’s an important distinction. Utilities have a reputation for being boring investments that lack real growth appeal. That view stems from the reliable revenue that they generate.
In the case of Fortis, however, that couldn’t be further from the truth. Fortis has taken an aggressive stance on growth, which is a key reason the utility is one of the largest on the continent.
Turning to income, Fortis offers a juicy quarterly dividend with a 3.71% yield. The stock has also provided annual upticks to that dividend for over 50 consecutive years without fail.
This stock just screams opportunity
Are you invested in Manulife (TSX:MFC)? Not only is Manulife the largest insurer in Canada, but it also boasts a huge growth opportunity and a tasty yield right now.
Manulife has turned its growth focus to international markets over the years, particularly Asia. This shift coincided with a massive wealth explosion in those developing markets.
This led to a massive influx of new customers with generational wealth, wanting the financial products that Manulife offers. The result has been stellar growth of the stock while maintaining a juicy quarterly yield. During that past year, that opportunity has helped propel Manulife’s stock up significantly.
More importantly, despite that rise, there’s still potential for the stock to rise even further.
As of the time of writing, Manulife offers a respectable 4.11% yield. Manulife has also provided generous upticks to that dividend over the years, including a 10% uptick announced earlier this year.
Invest in a telecom stock for growth and income
Canada’s big telecom stocks are viewed as some of the best long-term options, and not just for those looking to answer that growth vs income question. That appeal can be traced back to the reliable and increasingly necessary service offered.
Rogers Communications (TSX:RCI.B), in particular, boasts an impressive suite of core subscription services, which includes the largest wireless segment in the country.
In addition to its subscription-based business, Rogers also boasts a significant media presence, and that includes a healthy share of MLSE.
The impact of that segment on revenue is often understated. In fact, sports and media saw revenue increase a whopping 24% year over year recently. More importantly, Rogers recently inked a 12-year broadcasting deal with the NHL, which will continue to drive those revenue numbers higher.
In short, Rogers is a well-diversified telecom with multiple revenue streams that help the telecom to pay out a juicy quarterly dividend while continuing to invest in growth.
Turning to income, Rogers’ juicy quarterly dividend currently works out to an impressive 5.59%. And while the company stopped providing annual bumps several years ago, the payout remains competitive and sustainable.
Growth vs income: Why settle?
No stock, even the most defensive, can attest to being without some risk. That’s why the importance of diversifying cannot be stated enough.
Fortunately, the stocks mentioned above boast juicy yields, defensive moats, and stellar growth appeal.
In my opinion, one or all of the above should be core holdings in any long-term diversified portfolio.
Buy them, hold them, and watch your future income grow.
