A $5,000 investment can give investors enough skin in the game to make a strong profit, plus earn a decent dividend along the way. Companies that offer both growth opportunities and recurring income can maximize investors' odds for a good return without requiring significant risk along the way.
Two stocks that check off those boxes are Novo Nordisk (NVO -1.20%) and Dell Technologies (DELL -1.92%). Not only do they pay investors more than the 1.3% yield you would collect with the average S&P 500 stock, but they also possess some promising long-term growth opportunities and are safe investments to hang on to for the foreseeable future.
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1. Novo Nordisk
Danish healthcare company Novo Nordisk pays investors a dividend yield of around 1.6%. The stock's total return (which include dividend payments) over the past five years are 238% -- well above the S&P 500's return of 94%.
The company's focus on diabetes and obesity makes Novo Nordisk a relatively safe investment. According to a recent study, half of all adults in the U.S. by 2030 could be categorized as obese based on body mass index. One-quarter could fall under the criteria for severe obesity.
Novo Nordisk's obesity care and diabetes segment accounts for around 88% of its revenue and is the big driving force behind its results. This year, the business expects to grow between 6% and 10% at constant exchange rates (CER), mainly due to that segment of its business. In 2021, the company's net sales totaled 140.8 million Danish kroner, up 14% at CER. On that revenue, Novo generated an impressive profit margin of 34%.
The company's financials look solid, and with an important place in the healthcare industry, this looks like a safe investment to hold for years. Novo's payout ratio sits at just 45% right now. Although it may look a tad expensive, trading at a forward price-to-earnings ratio of more than 30, the stock could be a bargain given the long-term opportunities it possesses. According to analysts at Fortune Business Insights, the global diabetes drug market will be worth more than $78 billion by 2026, growing at a compound annual rate (CAGR) of 6.1% until then. Over time, Novo's earnings multiple will come down, and the stock could look a lot cheaper as it capitalizes on all that growth.
Between the dividend and long-term potential it possesses, Novo Nordisk can be an optimal place to invest $5,000 into today.
2. Dell
Another business with plenty of potential is Dell. The company is known for its computers and the ease of ordering them online. Since the pandemic, more companies have been doing business online, and that trend is growing at a rapid rate. Grand View Research projects that the global digital workplace market (including more people working remotely) will be worth more than $54 billion by 2027 -- double its value of $25.6 billion in 2020, rising at a CAGR of 11.3%.
All that growth will undoubtedly drive demand for Dell's laptops, workstations, electronics, and other devices. For fiscal 2022, which ended on Jan. 28, Dell reported revenue of $101.2 billion, which rose 17% year over year as the company came off a record number of shipments of its personal computers.
Although its profit margin is relatively modest at less than 6%, that still translates into billions' worth of profits. The company's diluted per-share profit of $6.26 this past year is more than enough to cover its new dividend, which, on an annual basis, totals just $1.32 per share. At 2.5%, it's a promising payout for a top tech stock.
Shares of Dell are trading at less than eight times the company's future earnings, which is cheap compared to other dividend-paying tech stocks, including Cisco and Oracle, where investors are paying forward earnings multiples of 16. Dell's stock is a bargain that can boost your portfolio's value through its growth opportunities and its dividend.
