Money Matters - Simplified

Let This Winning Combination Make You Wealthy

Most people look for one of two things from their
investments. They either want something that will provide
them with a

stable stream of income, or they want an investment that

grow in value over time. If you can discover a single
investment that gives you both income
andgrowth potential, you've pretty much found the
Holy Grail of investing.

Looking for income

Income investors are
generally known as a fairly conservative lot. They gravitate toward
bonds and other fixed-income investments that generally give them
little or no opportunity to see their principal grow. Although free of
default risk, ultra-safe investments like Treasury bonds and
FDIC-insured bank CDs can't protect your portfolio from the ravages of inflation over time. In addition, most income-producing investments generate a substantial tax hit.

Moreover, even those income-seeking investors who are willing to put their money in the stock market often tend to stick with solid, stable, low-growth companies.
They don't have much pizzazz, but they do provide a constant stream of
income without quite the same level of volatility you'll find in more
aggressive stocks. Companies like GlaxoSmithKline (NYSE: GSK), Waste Management, and Duke Energy (NYSE: DUK) have actually seen earnings and revenue contract in recent years -- but they have good histories of paying dividends over the long run.

Searching out growth

On the other hand, many growth investors are anything but conservative. Often taking big chances
by investing in companies early on, before they've had an opportunity
to prove themselves, growth investors suffer a lot of big losses. But
when they hit big -- as they have on stocks like (Nasdaq: AMZN) and Google (Nasdaq: GOOG) -- the humungous gains they earn more than make up for their prior losses.

The problem, though, is that growth stocks like Amazon and Google
don't provide any income to their investors. In order to generate cash,
you have to go out and sell shares. Discount brokers have made it far
easier to sell shares in a cost-effective manner, so that's not as big
a deal as it used to be -- but it's still inconvenient to have to make
a transaction and create a taxable event just to get some spending cash
from your portfolio.

Have your cake and eat it, too

Is there
a way for you to get the best of both worlds -- solid income as well as
potential growth? I went looking for companies that offer both past and
future earnings growth, along with healthy current yields and a history of raising dividends over time. Here are some of the stocks I came up with:


Current Yield

5-Year Dividend Growth Rate

3-Year Past EPS Growth

5-Year Est. EPS Growth

Abbott Labs (NYSE: ABT)





Colgate-Palmolive (NYSE: CL)










Hudson City Bancorp





Nokia (NYSE: NOK)





Sources: Yahoo! Finance, Motley Fool CAPS, As of Nov. 4.

As you can see, stocks like this do exist. Most of the ones
above are well-known names, but others that meet the test more closely
resemble Google-like growth stocks that you're less familiar with.

Yet out of all the methods you can use to invest, choosing dividend
stocks whose businesses are still growing gives you the most tangible
evidence that your shares' value should rise over time. If past
dividend increases continue into the future, you'll get an ever-rising
stream of income, which other investors will value highly. Rapid growth
will support higher dividends. It'll also leave the company with the
flexibility to pursue other strategies, such as reinvesting money to
grow its internal business, or making offers to buy out competitors.

© 2009 UCLICK, L.L.C.