As all Fools know, the best time to buy shares in a company is when they offer great long-term potential. Indeed, throw in a decent yield to keep your return ticking over in the meantime and you could be onto a winner. With that in mind, here are three shares that offer a top-notch yield as well as the potential for long-term growth.
With a yield of 5.6%, Vodafone (LSE: VOD) (NASDAQ: VOD.US) certainly ticks the yield box. However, there’s much more to the company than a yield that is 60% higher than that of the wider index. Indeed, while Vodafone’s short-term growth prospects may appear to be rather limited as a result of its increasingly large exposure to the stagnant Eurozone, its long-term potential is anything but.
That’s because Vodafone is buying up undervalued, quality assets in Europe (such as Spain’s Ono and Germany’s Kabel Deutschland) that could increase profitability in the long run. Certainly, the next couple of years could be rather anaemic in terms of bottom-line growth, but a great yield should help to keep investors interested before the Eurozone recovery really takes hold.
After a tumultuous few years that kicked off with the tragic Deepwater Horizon oil spill, BP (LSE: BP) (NYSE: BP.US) is getting back on track. Certainly, profitability is volatile and is not being aided by a wildly fluctuating oil price. However, the company continues to offer investors a high-quality asset base that has the potential to deliver strong growth in the long run. Couple this with a yield of 4.7% that has the potential to increase at a brisk pace due to a relatively low dividend payout ratio of 49%, and BP could prove to be a super long-term play.
While peers such as Tesco and Wm. Morrison have been squeezed in recent years by discount retailers and higher-quality operators, J Sainsbury (LSE: SBRY) has been able to deliver relatively strong sales growth. Indeed, the company could have a great future as it uplifts its J Sainsbury offering to allow a joint venture with Danish retailer, Netto, to combat the discount retailers such as Aldi and Lidl. While this strategy may take a while to come to fruition, J Sainsbury’s yield of 5.1% should keep investors (and the market) happy during the interim.
Peter Stephens owns shares of BP and Sainsbury (J). The Motley Fool owns shares in Tesco.