Written by Chris MacDonald at The Motley Fool Canada
Even though $10,000 may not appear to be a life-changing amount of capital, invested properly, this amount of money could provide solid returns for investors seeking yield as well as capital appreciation.
Now, whether it’s stocks, bonds, or other assets, investors have a number of decisions to make when deciding where to put some savings to work. Bond yields continue to fluctuate wildly. And while bonds do yield more than they have in a long time, if yields continue to remain high, little capital appreciation potential can be had by investors over the next five years.
That said, many top-notch stocks provide both income and growth at a reasonable valuation. These three stocks are among my top picks right now, in this regard.
Where to invest $10,000: Restaurant Brands
There are many reasons for this. Of course, as one of the largest fast-food organizations globally, with more than 29,000 restaurants, this conglomerate’s market power is notable. With the Tim Hortons, Burger King, Popeyes, and Firehouse Subs banners under its belt, Restaurant Brands is a well-diversified player in a defensive market segment.
Notably, the company’s strong earnings growth has continued of late, with same-store comparable sales seeing double-digit increases in Q1. Thus, the company’s 3.6% dividend yield, which pays investors to be patient, appears much more lucrative, given the capital-appreciation upside potential Restaurant Brands stock provides.
Constellation Software (TSX:CSU) is certainly not a company investors jump on for its dividend yield. This company’s small yield of around 0.5% is really just a token of good faith. Indeed, investors look to Constellation for its growth profile, which, over the long term, has been very impressive.
Constellation, together with its subsidiaries, builds, manages, and acquires global vertical market software businesses. This business has continued to grow exponentially, with Constellation now bringing in $1.4 billion per quarter, as of Q1. A 22% increase year over year, Constellation has proven this company can continue to grow at a rather impressive clip, despite its size.
As part of a well-balanced portfolio, Constellation is my top pick for investors looking for a growth position in this market.
Fortis (TSX:FTS)(NYSE:FTS) is a company I think is worth considering from both a yield and growth standpoint. Indeed, the company’s dividend yield is a key selling point. That’s because Fortis has raised its dividend distribution each and every year for nearly five decades.
This sort of dividend growth makes the company’s 3.6% dividend yield even more attractive. And with consistent cash flow growth comes expectations that the company’s distribution will continue steadily higher over time.
This regulated utilities company operates throughout North America. Transmitting, distributing, and generating electricity is what Fortis does. It’s a boring business. However, this is a business with a long-term track record of success which speaks for itself.
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Fool contributor Chris MacDonald has positions in Restaurant Brands International Inc. The Motley Fool recommends Constellation Software, FORTIS INC, and Restaurant Brands International Inc.