Over the past decade, investing in growth stocks has been the thing to do. These companies outperformed dividend-paying companies, or those with attractive valuations, by a rather wide margin.
However, as we continue on a year of consolidation, the broad view of investors appears to be shifting. Many are now focusing on high-quality companies providing total returns, over those simply searching for scorching growth.
This means that companies that provide value, growth, and dividend yields may be preferable. For those looking to create a portfolio that’s truly balanced, there are several great options to choose from.
Let’s dive into the three I think are among the best to buy right now.
Restaurant Brands (QSR)
Restaurant Brands (NYSE:QSR) is a company best known as a fast-food giant. Its banners include Burger King, Tim Horton’s, Popeye’s Lousiana Kitchen, and the recently acquired Firehouse Subs. Thus, this is a well-diversified name in the space, with a range of options suitable for a diverse clientele.
That’s one reason to like this stock. Its defensive nature, and relatively attractive valuation multiple of 21-times earnings (at least relative to its historical levels) means this stock is worth considering on its own.
However, this is more than just a defensive play. Restaurant Brands showed some impressive performance in its recent quarterly results. Comparable same-store sales were 8.5% higher year-over-year.
The company’s Popeye’s and Burger King banners saw respective growth rates of 180 bps and 40 bps in their comparable sales year-over-year.
Future growth will probably come from the company’s continued expansion into new markets, particularly in Asia. Thus, I think this is a company that’s poised to become a cash flow machine.
What will it do with all that cash flow? Well, the company currently distributes a significant portion of its earnings to shareholders.
Currently, QSR stock yields 3.2%, and I think its distribution will continue to rise for years to come. So, for those seeking value, growth, and yield, this stock has it all.
Devon Energy (DVN)
Devon Energy (NYSE:DVN) has had a relatively attractive valuation multiple for a very long time. In fact, I’d put the company’s 5.7-times earnings multiple in the deep value bucket, something that the other stocks on this list are nowhere near.
This extremely low multiple bleeds into the company’s very high dividend yield of nearly 10%. Typically, yields of this size are unsustainable. Investors steer clear of companies like Devon over dividend cut worries.
The thing is, Devon is one of the few companies that offers a fixed and variable dividend. That is, a portion of its dividend is fixed, and gets raised from time to time.
However, the company also pays out 50% of its cash flow to shareholders. That means in boom times (like now), the profits flow directly to shareholders.
A rising commodity price environment has led to this boom, which appears to have legs. Given the ongoing geopolitical climate, I expect oil prices to remain elevated for some time.
For Devon, this means higher profitability and a great chance of growth.
Again, this stock has it all. And while oil prices could drop, and this stock could falter, at these levels, investors are still getting a bargain. I think there’s an effective floor under this name, and it’s one of my top picks right now.
A leader in the food and beverage sector, PepsiCo (NASDAQ:PEP) is renowned for its consistency as a stock. Pepsi has a tightly knit company strategy, which is robust and varied.
In addition, having control over its product line allows PepsiCo to maintain low costs. This has been demonstrated by its consistently gross solid and EBITDA margins, even during market weakness, in the past year.
In addition, PepsiCo has recently joined the group of Dividend Kings, having continuously paid dividends for 50 years, highlighting its strong standing in the industry.
Last year, the company performed well in the stock market with a 7% return. Over the last decade, the stock has seen a remarkable 129% growth, establishing its reputation as a top wealth generator.
PepsiCo’s recent financial report indicates that the company is not facing growth-related issues. The company’s organic sales showed strong growth at the end of the year, with a 15% increase in the fourth quarter and a 14% increase throughout the entire year of 2022.
However, the stock strikes a good balance between growth and income without placing investors at significant risk. This blend of features is helpful in any market, particularly in the uncertain economic landscape.
On the date of publication, Chris MacDonald has a position in QSR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.