Lucrative investment deals call for much deliberation, making it imperative to keep a look out for opportunities that will help enrich your portfolio apart from taking economic fundamentals into consideration.

This year started on a distressful note, with recession fears looming large due to declining oil prices remaining and no turnaround in China’s economic scenario. However, the upward trend in oil prices has triggered a recovery in market conditions worldwide. Notably, the Nasdaq Composite Index and S&P 500 have scaled nearly 9% and 7%, respectively, over the past month.

Further, increased employment opportunities along with strong positive readings on manufacturing, consumer and housing fronts have lifted spirits. The recent job data has painted a rosy picture of the labor market, dispelling qualms over the health of the U.S. economy.

Meanwhile, China’s adoption of certain stimulus measures to counter volatility has reinstated hope of a steadier global economy.

Based on such bullish macro trends, we can hope for a marked improvement in broader market conditions in the near term, making it ideal for investors looking to put in their money into growth stocks for handsome returns.

Should You Bank on Only Growth?

However, in markets as capricious as these with investment outlooks changing every minute, investing in stocks based on only the growth factor might not be a very wise strategy.

Thus, to rule out risks pertaining to this, we advice investors to balance their portfolios by investing in high-yielding stocks with bright prospects. Notably, dividend stocks provide much downside protection through sizable yields and also act as a hedge against equity market risks, thereby shielding the portfolio from economic upheavals.

However, the trade-off between growth and dividends makes it a little tricky to zero-in on stocks with a high payout ratio and solid prospects. This is because the higher a company’s dividend payout is, the lesser is it likely to invest in growth.

Nonetheless, though rare, there are companies with efficient capital allocation policies in place that allow them to make high dividend payments and also invest in growth projects. Although it is like trying to find a needle in a haystack for the average investors, we have eased the process.