Value, income, and growth aren't mutually exclusive. Even growth investors are looking for bargains, and all investors are ultimately trying to score some income. No investor is going to pass up a true bargain.
The sweet spot of stock investing occurs when you find a company exhibiting characteristics of all three approaches: a hot stock at a cheap price.
When shopping for stocks, use all three criteria to narrow the field. You can start by looking for dividend stocks with a minimum acceptable yield (for example, 1 or 2 percent higher than the current inflation rate) and then screen for growth and value. Or start by searching for undervalued stocks and then screening your list for candidates that meet or exceed your minimum acceptable yield. When you find a stock that meets all of your criteria, you have a true gem that embodies all the positive characteristics of a dividend stock:
Steady income stream
Good management
Fiscal discipline
Earnings transparency
Dividends increases
Plus the benefits of growth:
Strong earnings growth
Strong revenue growth
With a steady income stream from dividends and good potential for capital appreciation from growth, you've found a real bargain that promises to limit your exposure to risk while maximizing your profit potential.
Don't automatically eliminate small-yield stocks. If a company is managed well and demonstrates consistent growth, chances are pretty good it will eventually start increasing its dividend payments. Once it makes that commitment, it's very likely to increase dividend payments on a regular basis.
