A lot of people talk about “income stocks” and “growth stocks” as if they were two different things … but they don’t necessarily have to be. When putting together a portfolio of dividend stocks that can pay off for the long haul, my biggest priority is to find both high income and the potential for significant capital gains.
That’s the best recipe for success in terms of maximizing your total return for years to come.
It also means thinking outside the box. You’re not always going to get the best income and growth by sticking with the same old blue-chips like Johnson & Johnson (JNJ) and Procter & Gamble (PG); sometimes it’s the smaller names that are the most promising.
Small-caps tend to be better-known as growth plays, but a number of them also offer hefty dividends as well. The trick is to make sure that the company has strong enough fundamentals to support that high yield — and several of my favorite dividend stocks fit that bill exactly.