When putting together a portfolio for steady returns over years and decades, we have to factor in many costs to arrive at our real rate of return. Things like trading commissions, transaction fees and capital gains tax all take a little bite out of any profit you make.
There's one more cost, but it's not recorded anywhere on a monthly statement or tax return. It may not be the biggest cost, however it can relentlessly eat away at your money – wherever it is.
You may have guessed its name by now- inflation. The cost of things rise and the dollars you have buy a little bit less each year. Right now, the rate of inflation isn't high, but throughout your lifetime it may rise and fall widely. If you make a 7% stock gain over one year and the inflation rate is 3%, let's say, then really you're making around 4%. 7% sounds okay, but 4% sounds dull.
That's why you need to maximise your returns by both dividend income and share price growth to fight this inflation beast. If you already have some good, sturdy dividend stocks in your portfolio, then you need some growers.
Here are three that could help maintain high growth rates over the long term.
1) Macquarie Group Ltd (ASX: MQG) is an investment bank that was known as the "Millionaires Factory". Rising up strongly over the past two years, it is getting back to pre-GFC earnings levels. It is growing internationally more as overseas financial markets are hitting new highs.
2) Domino's Pizza Enterprises Ltd (ASX: DMP) is a leading restaurant franchise network in Australia and now has leapt into Asia to take a 75% stake in Domino's Pizza Japan. It estimates it can possibly make another 340 stores on top of the 260 existing ones over the next five years. Lots of pizza may make lots of dough for shareholders.
3) SEEK Limited (ASX: SEK) operates Seek, the number one job search website, but it also is growing its education business. Asian expansion is a top priority, with subsidiaries in a number of countries in the region, especially China. The scope for more business there is fantastic and should supply many years of growth to shareholders.
