Big Growth Stocks: Grab These Dividends and Relative Stability

One of these big growth stocks yields 4.3%. Interested?

Jan 3, 2014 at 4:33PM

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some big growth stocks to your portfolio but don't have the time or expertise to hand-pick a few, the SPDR S&P 500 Growth ETF (NYSEMKT:SPYG) could save you a lot of trouble. Instead of trying to figure out which big growth stocks will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual-fund cousins. This ETF, focused on big growth stocks, sports a very low expense ratio -- an annual fee -- of 0.2%. It yields about 1.5%.

This big growth stocks ETF has outperformed the S&P 500 over the past three, five, and 10 years, though not always by much. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why big growth stocks?
Big companies can add some ballast to your portfolio. They can't always grow as briskly as their smaller counterparts, but many of them are still posting hefty growth rates. Better still, in order to reach their current size, they likely have some strong assets and features. This ETF focuses on big stocks with growth characteristics.

More than a handful of big growth stocks had strong performances over the past year. Biotech powerhouse Gilead Sciences (NASDAQ:GILD), for example, doubled in value. Gilead's all-oral hepatitis-C treatment, Sovaldi (sofosbuvir), has just received FDA approval and investors are looking for it to outsell some competing formulas despite its hefty price tag of $1,000 per day, or about $84,000 for a full 12-week treatment. Gilead Sciences is well known for its success with HIV drugs and has also recently reported promising clinical trial results for drugs treating lymphomas and blood disorders. Piper Jaffray named Gilead Sciences one of its top stocks  for 2014 and Bank of America Merrill Lynch recently reiterated its buy rating for Gilead.

Visa (NYSE:V) surged 43% and is poised to profit as more and more people and businesses shift from cash transactions to electronic ones. Its presence in emerging markets is also a plus, as such economies are growing rapidly -- and for Visa, that means more people beginning to use plastic for purchases. Visa was added to the Dow Jones Industrial Index this year, which is significant, as there are only 30 companies in it. Some would like to see Visa tap the enormous market of underbanked young people, while doubters worry that its stock is a bit overpriced right now.

Other big growth stocks didn't do quite as well over the last year, but could see their fortunes change in the coming years. Qualcomm (NASDAQ:QCOM) gained 16%, but that still lagged the S&P 500 considerably. Qualcomm supplies iDevices and Android devices with chips and makes a lot of money licensing its technology. The company's fourth-quarter report was mixed, with revenue up 33% but management tempering expectations. Qualcomm has been hiking its dividend aggressively for a decade now, and its yield is at 1.9%. Qualcomm's growth in China may be hampered by a Chinese probe into possible antimonopoly practices, but the company's expansion into health care and networking is quite promising. It has a new Gimbal beacon technology that rival's Apple's iBeacon, though the future of either of them is uncertain, and it has introduced a low-end 64-bit chip for smartphones, too.

Philip Morris International (NYSE:PM) advanced 4%, challenged by shrinking volume recently, even for its vaunted Marlboro brand. It yields 4.3% and its dividend looks rather secure. With domestic tobacco companies challenged by tightening regulations, rising taxes and a shrinking smoking base, many have assumed that Philip Morris is the best bet in tobacco. The company also raised the specter of lower volume and likely lower returns for investors. Philip Morris does have its fans, though, who like its innovation, its share buybacks, and its embrace of electronic cigarettes (though even e-cigs are threatened by regulations).

The big picture
If you're interested in adding some big growth stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Apple, Gilead Sciences, and Qualcomm. The Motley Fool recommends Apple, Gilead Sciences, and Visa. The Motley Fool owns shares of Apple, Philip Morris International, Qualcomm, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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