Investors relatively new to the markets are often in search of industry giants with a long history of growth, as well as future growth opportunities that will keep the solid results coming for years to come. The following stocks, which include Alphabet (GOOG +1.35%) (GOOGL +1.71%), Disney (DIS 1.01%), and longtime energy titan and income-producing giant Enbridge Energy (EEP +0.00%) fit aspiring investors' criteria to a "T."
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Still performing like a tech industry upstart
Tim Brugger (Alphabet): It's been nearly 13 years since Alphabet, Google's parent company, went public. Why that's important to aspiring investors is that even though Alphabet is a longtime publicly traded tech stalwart, it continues to perform as if it were in a hypergrowth stage. Last quarter was the latest example of why Alphabet is a large-cap stock worth consideration.
Alphabet reported first-quarter revenue of $24.75 billion, an impressive 22% year-over-year jump. The first quarter was even more impressive, in that Alphabet's $20.26 billion in sales last year was a 17% improvement. In other words, not only is Alphabet continuing to boost its top line, but it's also picking up steam.
Operating income soared 23% to $6.57 billion, margin improved to 27%, and earnings per share rose over 28% to $7.73 compared with last year's $6.02 a share. The majority of Alphabet's revenue is search-related advertising, which generated $21.4 billion last quarter.
Naysayers may suggest that Alphabet has saturated the market, limiting long-term growth. But aspiring investors needn't worry. Just half of the world's 7.5 billion population has internet access, meaning there are about 3.75 billion potential Alphabet search and online site users remaining. And as low-cost smartphones in emerging markets continue rising, the number of internet users will increase, as will Alphabet's revenue.
Nearly two-thirds of the world's smartphone and mobile-device owners use Alphabet's Android operating system. As the globe becomes even more connected, Android will drive yet more users to Alphabet's sites, which will keep it humming along like a hot tech upstart.
A magical profile
Keith Noonan (Disney): Whether you're new to investing or simply have aspirations of adding new winners to your existing portfolio, Disney is a large-cap company that deserves strong consideration. While the House of Mouse is feeling pressure from declining viewership for ESPN and the cord-cutting trend's impact on its media-networks segment, there's still plenty of magic left in the company's kingdom -- and its non-prohibitive valuation suggests substantial upside for the long-term investor.
The strength of Disney's film franchises and incredible cast of characters creates fantastic synergies across its segments, and the company has made smart moves to improve the media-networks situation. In 2016, Disney spent $1 billion to acquire a majority stake in Bamtech -- a move that will result in the launch of an ESPN-branded streaming package later this year. Instead of serving as an ESPN replacement, the upcoming over-the-top offering will allow the company to make use of licensed sports content that's not being broadcast through its core cable networks. That's a welcome development amid rising content costs.
Disney also deserves some attention for its returned-income component. The stock's 1.5% yield is below the S&P 500's 1.9%, but it's still nothing to sneeze at, and the cost of distributing its dividend is just 26.3% of trailing earnings, indicating that the company has plenty of room to increase its payout if it decides that would be the best way to use its cash.
Trading at less than 18 times forward earnings estimates, Disney stock looks to present a rare combination of value, growth potential, and income, and that's the kind of profile that should help you realize your aspirations.
Visible growth and income with less risk
Matt DiLallo (Enbridge): Energy infrastructure behemoth Enbridge has been an excellent investment to own for the long term. It has paid dividends in each of the past 64 years, including boosting the payout for the past 22 by a remarkable 11.2% compound annual rate, making it a dream stock for income investors. That growing income stream has fueled market-smashing returns for investors, with the stock delivering an 18% compound annual return over the past decade, which has trounced the broader market.
Yet Enbridge still has plenty of growth left in the tank, because it has the largest slate of expansion projects in the energy infrastructure sector. These projects run the gamut from oil and gas pipelines that will improve market access for growing North American supplies to offshore wind farms that will increase global renewable generating capacity.
Further, because long-term fee-based contracts underpin these projects, Enbridge expects them to fuel 12% to 14% annual cash flow growth through 2019, with double-digit annual cash flow growth expected for several years after that. This visible growth has Enbridge forecasting that it can grow its dividend by 10% to 12% annually all the way through 2024 while maintaining a strong balance sheet and a conservative payout ratio of between 50% and 60% of annual cash flow.
With several years of growth already locked up, Enbridge should deliver a steadily growing income stream and healthy capital appreciation to investors. That makes it a great low-risk option for those just getting started.
