Wouldn't you love to give your children the keys to their own financial success? One way would be to create a portfolio of established stocks for them that could generate a good return while they're still young now.
Since we might be talking about 10 or 20 years before they're ready to manage the portfolio, we want high-growth stocks that could also become tomorrow's blue-chips, building up recurring dividend income.
If the stocks aren't paying a high dividend yield now, that's fine. You want them to maximise their growth and gains by ploughing more earnings back into the business.
Here are three stocks I think could fit well together and create decent returns over the next decade and longer.
SEEK Limited (ASX: SEK), the seek.com.au website and educational training company is growing at a fast clip right now. It is already expanding overseas to tap into the much larger Asian job markets by investing in job website companies that it can make even better with its experience and know-how. In the past five years it has grown earnings an average 22% annually. In ten years it may slow down, but by then it could be a blue-chip stock.
Another would be Oil Search Limited (ASX: OSH), which has a sizeable stake in the PNG LNG project. The project just started exporting LNG and over the next several years its production output is forecast to increase four times. It can use its large future cash flow to expand into and develop other projects. That could keep the strong growth going for a long time.
Next, a good money manager like Perpetual Limited (ASX: PPT) could be wise to have. The fund manager may not be as big as a big four bank, but in FY 2014 it raised earnings 32% by investing well in the rising financial markets. It now manages $29.8 billion dollars in clients' funds. Over the next 10 – 20 years, it could become an established blue-chip, generating attractive income for your children's future.
These three stocks could be a foundation of financial freedom and wealth from dear old mum and dad. A portfolio built for the future can also have smaller companies with compelling growth opportunities.
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