Got $1,500 to put away so it can grow for the future? Sure, you can put it in a savings account and get a decent interest rate, at least until rates start falling again.
Since we know that stocks beat stashing cash in the credit union or bank or your mattress over the long run, you may want to invest it. You can certainly do worse than choosing one of the uber-popular exchange-traded funds that invest in whole segments of the market rather than choosing your own stocks. But what fun is that?
Instead, you can look for companies that have strong financials, a continuing competitive advantage in an industry with positive long-term prospects, and are reasonably priced. And if your picks pay dividends, all the better since that provides a flow of passive income and usually some stability to the price in unstable times.
Consider Brookfield Infrastructure Partners (BIP 2.82%), Prologis (PLD -1.69%), and Tractor Supply (TSCO -0.02%). This chart shows how each of these three stocks has grown a $500 investment in the past 10 years compared with each other and with the Vanguard 500 Index Fund ETF. After all, why buy any of these if they don't have a long-term record of beating the market?
TSCO Total Return Level data by YCharts.
Here's a look at each of these habitual outperformers.
Tractor Supply
Tractor Supply bills itself as America's largest rural-lifestyle retailer. Based in suburban Nashville, the company has been around for 85 years and has grown into a nationwide operation with 2,164 stores under its own brand as of April 1 and another 189 small-box pet supply stores under the Petsense name.
The company's recession-resistant product mix of agriculture, lawn and garden, home improvement, and pet care goods caters to the needs of both rural communities and suburban customers. Its firm grasp on its niche market and savvy inventory management not only make it a popular destination for customers but a good choice for investors seeking share-price growth with a side of passive income.
Tractor Supply shares are selling for about $225, roughly about where they started the year after dropping about 9% in recent weeks. After 12 straight years of dividend increases, the stock is yielding about 1.8%. The company has bumped up the payout by nearly 40% annually, on average, over the past three years -- maybe paving the way for this iconic brand to grow into a dividend machine.
Prologis
It's likely a Prologis property was in the supply chain that got some of those products onto the Tractor Supply shelves. That's because something like 2.5% of the world's gross domestic product runs through the 5,500 or so distribution centers and warehouses this 40-year-old real estate investment trust (REIT) operates in 19 countries.
https://www.prologis.com/how-we-work/investors
Prologis has about 6,600 tenants using its 1.2 billion square feet of logistics space -- the largest such portfolio in the world -- for both business-to-business and retail-online fulfillment, and its largest three customers are proven household names: Amazon, Home Depot, and FedEx.
As a REIT, San Francisco-based Prologis is required by tax law to pay out most of its taxable income as shareholder dividends, and it's raised that payout for 10 straight years, including by an average of about 14% over the past three years. It currently yields about 2.8% at a share price of about $123 that's up nearly 10% this year.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners generates a giant stream of cash by investing in, owning, and operating ports and pipelines, toll roads and telecommunications lines, and more that keep electricity, oil and gas, water, data, and people moving around the world.
As one of the world's largest infrastructure firms, this 2008 spin-off from the gigantic Canadian asset manager Brookfield has the diversification across sectors and geographies to continue growing its own business along with the global economies that depend on the services and products its customers provide.
The stock currently sells for about $37 a share, and its dividend has risen at an annualized rate of 6.5% for the past three years, good for a decent yield now of just over 4%. The market likes this infrastructure stock, too, boosting its price by nearly 20% so far this year.
Three different businesses with one result
Tractor Supply is a good example of a strong retailer in a recession- and inflation-resistant business, while Prologis continues to benefit from the rising demand for logistics infrastructure driven by the e-commerce boom, and Brookfield's strong global presence and investment in high-demand sectors offer attractive growth prospects for investors.
Each of these firms is equipped to continue to weather the turmoil of choppy markets while generating income and nice capital gains for those who don't focus on the short-term but instead confidently buy in and hang on.
