You can build a fortune over the years by adding steadily to your investment portfolio. If you have $1,000 to spare right now, investing that amount in the right stocks can go a long way in helping you reach your investment goals.
Here are three great stocks to consider buying right now. This combination offers you attractive growth prospects along with a steady dividend income.
Kinder Morgan
The first stock to consider investing a third of that $1,000 in is pipeline operator Kinder Morgan (KMI -0.08%). The company has a huge asset footprint and moves roughly 40% of the total natural gas consumed in or exported from the U.S. Additionally, it transports refined products and CO2.
Kinder Morgan's key strength is its steady cash flows. The company generates relatively stable cash flows backed by take-or-pay and fee-based contracts. Under the take-or-pay contracts, the customer either uses the contracted capacity or pays a penalty if the capacity remains unused. Only 3% of the company's earnings are exposed to commodity prices. It is for this reason that Kinder Morgan managed to generate steady EBITDA in the last five years despite fluctuating commodity prices.
KMI EBITDA (TTM) data by YCharts
Kinder Morgan has also raised its dividend steadily since its 2014 dividend cut. At the same time, the company's debt-to-EBITDA ratio is trending in the right direction. This ratio shows a company's ability to pay back its debt and a lower ratio is better.
Kinder Morgan reported strong performance in the first quarter with a 52% year-over-year increase in its adjusted EBITDA. What's more, it has also raised its guidance for 2021 and expects to generate $7.6 billion to $7.7 billion in adjusted EBITDA for the year. The stock's 5.6% yield can surely give a nice boost to your dividend income.
Brookfield Renewable Partners
Top renewable energy company Brookfield Renewable (BEP 3.61%) (BEPC 2.88%) grew its distributions at a compound annual rate of 6% over the last 20 years. Not many renewable companies can boast of such a stellar track record. Brookfield Renewable owns and operates a diversified portfolio of renewable energy assets.
A key element of Brookfield Renewable's growth strategy is to acquire value-based assets that it then develops using its experience and expertise. At the same time, the company routinely sells mature assets in a way that creates value for its shareholders. It buys attractive assets using the funds generated from selling the mature assets. This is an ongoing cycle that the company has successfully executed over the years.
Image source: Getty Images.
In the latest quarter, Brookfield Renewable grew its normalized funds from operations by 33%. Particularly noteworthy was the growth in the company's solar business where funds from operations grew to $30 million from $8 million in the year-ago quarter.
Brookfield Renewable targets annual distribution increases averaging 5% to 9%. With its solid pipeline of growth projects, the company looks well placed to meet this target. In addition to attractive growth prospects, Brookfield Renewable stock offers a healthy dividend yield of 3.3%.
SolarEdge Technologies
Finally, consider investing a third of the $1,000 in SolarEdge Technologies (SEDG 4.19%). The company provides optimizers for solar panels which enhance the power generated from a photovoltaic system. With the high expected growth in the use of solar power, SolarEdge's products should see rising demand.
The company's revenue has steadily grown over the years. Moreover, it has managed to generate consistently high gross margin on its sales, despite stiff competition.
SEDG Revenue (Quarterly) data by YCharts
SolarEdge's lead, especially in the European markets, supports the company's high revenue growth. Though the company's first-quarter revenue fell year over year compared to its pre-pandemic Q1 sales last year, it expects a healthy growth in its Q2 revenue.
After surging 230% last year, SolarEdge stock is nearly 40% off its 2021 highs. The recent fall in the stock, along with several other renewable energy stocks, has made it attractive. SolarEdge stock's forward PEG, or price/earnings-to-growth, ratio is well below one, which indicates that it may not be overvalued despite its high forward price-to-earnings ratio of 46. A higher expected earnings growth for SolarEdge justifies the stock's premium valuation compared to the broader market.
