How much growth and returns are you looking for in 2015? We'd all like to have stocks that rise 100% or more in a short time, but it's hard to base an investing strategy on that kind of wish.
Even Warren Buffett sets realistic goals for returns. The billionaire investor likes picking stocks that could return at least 15% annually. If they can do more, all the better, but first they have to clear the 15% hurdle.
If you had a stock that grew earnings 15% consistently every year, it should double earnings about every five years. Having a whole portfolio generate that kind of return isn't impossible. Still, if you thought you weren't as good as Buffett, then set your goal for a consistent 10% return for now.
That would still double your portfolio value every seven years, according to the "rule of 72". All you need are stocks that have a combination of earnings growth and dividend yield adding up to 10%. Some blue-chips are paying over 6% yields now, so you don't need much more in share price gains to hit your target.
Here are two stocks that can help you meet this goal and build your growth portfolio now.
1) Suncorp Group Ltd (ASX: SUN)
The general insurer has rewarded shareholders very well over recent years with special dividends and annual dividend increases. Over the past five years, dividends are up an average 21% annually. The stock yields 6.1% fully franked, so all you need is another 4%+ to reach the 10% return target. Its current business simplification program could generate substantial cost savings over the next several years, part of which could fall to the bottom line. Suncorp definitely makes our stock list.
2) Carsales.Com Ltd (ASX: CRZ)
Many readers may know of or even have bought a car through the number one car sales website in Australia. They may not know the company is expanding rapidly into Asia, but it is definitely going to drive future growth and returns. In FY 2014, its earnings were up 13.6%. That makes our return target even without the stock's healthy 3.4% yield fully franked! Being the market leader in car sales gives the company strong competitive advantages to safeguard growth. Your portfolio could benefit well by having this growth stock driving returns.
