Black Friday marks the beginning of the holiday shopping season. Just as consumers begin targeting items they'd like for their holiday wish lists, investors can take this time to pinpoint the great stocks they've been hoping for all year long. With the S&P 500 index up more than 20% this year, investors' attention now turns to whether 2014 can be just as strong.
Here are three highly profitable businesses that have something to offer for both growth and income investors. These three companies are dedicated to providing shareholders with great returns, and should definitely be on your holiday shopping list.
Find growth under the tree
Consumers are still holding their purse strings tight. And as we head into the holiday shopping season, consumer confidence appears to be waning. The monthly consumer confidence index has declined for two months in a row due to the continued sluggish labor-market recovery.
As a result, consumers are feeling less confident in their financial outlook, which means dollar stores such as Dollar Tree (DLTR -0.57%) stand to benefit. This is evident in Dollar Tree's results this year, which are quite strong. Year to date, sales are up 9.5%, and same-store sales, which measures sales at locations open at least one year, are up 3.1% in the same period. Going forward, Dollar Tree expects momentum to continue. Full-year 2013 sales are expected to clock in around $7.9 billion, which would represent a 7% growth rate over 2012.
Dividends are a great stocking-stuffer
For the investor who prefers the volatility-reducing quality of steady dividend payments, health care giant Johnson & Johnson (JNJ -1.15%) can be a core holding. Johnson & Johnson is organized into three main operating segments: medical devices and diagnostics, pharmaceuticals, and consumer health care. And as you probably already know, each segment is hugely profitable.
With $27.4 billion in revenue last year, J&J's medical-devices and diagnostics segment is the largest medical-technology business in the world. Meanwhile, the consumer segment contains several world-class brands that will be found in nearly every household, including Band-Aids, Listerine, and Tylenol. In all, J&J maintains the world's sixth-largest consumer health care business. Finally, J&J's pharmaceutical segment performed strongly last year as well, increasing revenue by 4%.
Consider that J&J generates approximately 70% of its revenue from products that hold the No. 1 or No. 2 global market positions. J&J has delivered 29 consecutive years of adjusted earnings increases and uses its profits to fund its 2.8% dividend. Even better, J&J has increased its dividend for 50 years in a row.
In the pursuit of strong dividends, consider consumer products giant Procter & Gamble (PG -0.03%), which is also a dividend-paying colossus that holds a slew of strong brands. Just a few of P&G's world-class brands include Pampers, Tide, Gillette, and Crest. Half of these 50 "Leadership Brands" generate more than $1 billion in annual sales each, which means P&G has a well-diversified portfolio.
P&G's underlying results speak for themselves. The company generated $84 billion in fiscal 2013 net sales, and grew diluted earnings per share by 5%. P&G had a solid first quarter as well, growing EPS by 8%. Not surprisingly, P&G uses its profits to reward shareholders with rising dividends. This year marks the 123rd quarter in a row of consecutive dividend payments from P&G. Furthermore, P&G has increased its dividend for 57 years in a row and yields 2.8%.
These three stocks are great gifts for any investor
As we enter the holiday shopping season, it's a good time for investors to think about which stocks are on their wish lists. No matter if you're a growth investor, an income investor, or somewhere in between, there are great stocks out there. Dollar Tree, Johnson & Johnson, and Procter & Gamble are strong businesses that reward their shareholders with solid growth and capital appreciation.
