Growth and value are joined at the hip — that’s what Warren Buffett and his business partner Charlie Munger agree on.

And it makes sense to me. I want to buy the shares of businesses at a reasonable valuation, yes. But I also want those enterprises to work hard to increase their inherent value while I’m holding. And one of the best ways for them to do that is by growing their earnings annually.

Growth at a reasonable price

But I’m not the only one who wants that. One investment strategy is dedicated to finding growth at a reasonable price, or GARP for short.

And with that strategy in mind, Somero Enterprises (LSE: SOM) attracts me. The company provides concrete-levelling equipment, training, education and support to customers in over 90 countries. And with the share price near 590p, Somero’s market capitalisation is around £328m.

Since 2015, earnings have been generally rising. But they were weaker in 2020 when the pandemic hit. And I think that demonstrates there is a cyclical element to the company’s business. Although the enterprise appears to be expanding, macro-economic events can cause a setback for shareholders.

And I’m not expecting an easy ride with this stock. Over the past five years, the share price has risen by around 130%. But along the way, it declined by about 60% between September 2018 and March 2020. Such volatility reveals some of the risks involved with holding this stock.

A bullish outlook

In December 2021, the company released a bullish outlook statement on the heels of trading that had exceeded the directors’ expectations. Strong trading in North America drove operational momentum in the second half of 2021. Previously, in 2020, the business generated around 80% of its revenue from the region.

The directors said market conditions in North America are “healthy and positive”. And demand for new warehousing is driving part of the demand, “with customer workloads at high levels and reported project backlogs extending well into 2022“.

So it looks like Somero has high visibility for its earnings through 2022. And City analysts have pencilled in an uplift in excess of 70% for 2021 and expect a further high-single-digit gain this year.

Meanwhile, measured against those expected earnings, the valuation looks undemanding. With the share price at 590p, the forward-looking earnings multiple for 2022 is running around 13. And the anticipated dividend yield is a healthy 5.7%.

There’s some volatility in the multi-year record of earnings and dividend payments. And the share price has been a bit wild over the past few years. But there’s a steady record of annual growth in revenues. And the firm’s strong balance sheet showing a net cash position encourages me.

In fact, I became sufficiently enthused by the opportunity to add a few of the shares to my diversified portfolio recently. And I’m aiming to hold them for the long haul as the underlying growth story continues to unfold.

Kevin Godbold owns shares in Somero Enterprises, Inc. The Motley Fool UK has recommended Somero Enterprises, Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’m always looking for passive income ideas. And the best ones are when my income streams are truly passive. Side hustles are great, but they mean I’d have to do extra work on evenings and weekends to earn my so-called passive income. Here’s where the FTSE 100 comes in. It’s a large-cap stock index in the UK with many dividend-paying companies to choose from. Dividends are my preferred way of generating real passive income because they keep rolling in without my input.

So, here are two dividend stocks in the FTSE 100 I’d buy today.

A top dividend stock

The first company I’d buy is Vodafone (LSE: VOD). It operates telecommunications infrastructure primarily in Europe. I consider this a defensive sector as communication networks are vital today, even during recessions.

The dividend yield is what first attracted me to Vodafone though. In fact, the current forward dividend yield is almost 6.5% as I write today.

Generally, when I look for dividend stocks, the higher the yield on offer, the better. But I also have to keep in mind that dividends aren’t guaranteed. So, I also check to see if the company has been a regular dividend payer over the years. Vodafone looks good here too. Indeed, it’s paid a dividend for at least the past 10 years. The average dividend yield over this time has been 6.5%, which gives me confidence in the current forecast yield. It also means Vodafone was able to keep paying a dividend during the pandemic, again highlighting the defensive sector the company operates in.

I still have to keep in mind that Vodafone is carrying a lot of debt on its balance sheet. Net debt was €44.3bn at the end of the half-year period to 30 September. This may reduce the potential for dividend growth in the years ahead.

However, with its growing 5G capabilities and critical networking infrastructure, I’d buy Vodafone shares for their dividend yield today.

A FTSE 100 stock that’s fallen out of favour

The next stock I’d buy is British American Tobacco (LSE: BATS). I do view the sector as controversial given the health issues linked to its products. And the rise in environmental, social and governance (ESG) investing means many stock-pickers wouldn’t be interested. But I like its move into new-gen products. However, the company has also been the subject of a number of regulatory clampdowns in recent years. Therefore, it’s not been an easy stock to hold.

Having said that, I think the risks are priced into the shares today due to the forward price-to-earnings ratio being only 9. The dividend yield is also excellent, and will go a long way to help me generate a passive income. As I write this article, the current forecast is for a dividend yield of 7.2%.

British American Tobacco has also been able to pay a dividend for at least the last 10 years too. Again, this shows me that the company is a dependable dividend payer. The average yield over this time has been 4.8%, so still a highly respectable income stream for my portfolio.

Taking everything into account, I’d buy British American Tobacco shares today. It’s one of the biggest dividend payers in the FTSE 100. It’s not without risk though. But I view the shares as reasonably priced for the risks ahead.

Dan Appleby owns shares of British American Tobacco. The Motley Fool UK has recommended British American Tobacco and Vodafone. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Key points

• Renewable energy stocks could rally as global economies transition to cleaner energy sources
• There are a number of exciting companies in the UK to gain exposure to this trend
• Other sectors and industries will play crucial roles, opening up more opportunities for investors

We’re about to see a big uplift in renewable energy capacity, at least according to the International Energy Agency (IEA). It’s forecasting an additional 305 GW of renewable electricity capacity per year between 2021 and 2026. If the forecast is correct, then it would be a huge 60% above the increase in capacity over the previous five years. With such explosive growth forecast, I’ve been looking for renewable energy stocks to buy for my portfolio.

The London Stock Exchange is home to a number of potential stocks in this sector. I started looking at investment trusts to begin with as they can offer me a greater level of diversification compared to buying a single company. I still have to be aware of the potential for share price volatility though as investment trusts do trade on a stock exchange. 

The first renewable energy stock I’d buy is The Renewables Infrastructure Group, or TRIG. It’s an investment trust that’s dedicated to investing in assets that generate renewable electricity. I view this as a great way to gain exposure to the growing renewable energy sector. For example, TRIG is able to generate over 1,900 MW of power across its portfolio of wind and solar farms today.

I’d also buy Greencoat UK Wind and Foresight Solar, two UK-focused renewable energy stocks that specialise in wind and solar assets, respectively. Together with TRIG, these two companies will bring greater diversification to my portfolio.

Mining companies

I’m also considering other ways to bolster my portfolio by increasing my exposure to the renewable energy sector. One way I’d do this is by looking at mining companies. The minerals that these businesses dig up are essential for renewable energy technologies, such as batteries, solar panels and wind turbines.

The first company I’d buy is Rio Tinto which mines products such as copper, lithium and iron ore. According to its website, a 1 MW wind turbine uses a huge three tonnes of copper alone. Rio Tinto has been able to pay a double-digit dividend yield this past year as it benefited from a rise in commodity prices. However, I have to note that these prices can be volatile, so the dividend is being cut this year (to a still impressive 8.5% yield). It does highlight that dividends can be unreliable at times. Nevertheless, I’d still buy Rio Tinto for my portfolio as a long-term investment that should benefit from the growing renewable energy sector.

As well as buying a single mining company (which can be risky), I’d also consider the BlackRock World Mining Trust. This is an investment company focusing on global mining and metals assets. The Trust can buy mining stocks, and also physical metals. It would bring a greater level of diversification to this sector within my portfolio.

Dan Appleby owns shares of London Stock Exchange and Rio Tinto. The Motley Fool UK has recommended Foresight Solar Fund Limited and Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’m searching for the best FTSE 100 shares to buy for my portfolio today. Here are three brilliant blue-chips I think could be too good to miss.

Copper king

I reckon Antofagasta (LSE: ANTO) could end up being a top renewable energy stock for me to own. This is because the copper it produces is used in massive amounts to create wind and solar farms and in battery storage technology. The red metal is also used in vast quantities in electric vehicles and related infrastructure such as charging points.

The likes of Antofagasta could experience some profits weakness if China’s commodities-hungry economy sinks. But, over the long term, I think demand for copper and other energy-transition metals will be robust.

As analysts at ING Bank commented: “Copper and aluminium, among other materials, should continue to benefit from China’s government-led investment in renewable power projects”. The bank even suggested demand here could surprise to the upside.

One final thing. Commodities are often viewed as popular safe-haven assets when inflation is rocketing as it is currently. This could provide the prices of copper et al and, by extension, profits at Antofagasta, with an extra little kick.

Value hero

Speaking of which, I think rising pressure on shoppers’ wallets will likely benefit low-cost retailers like B&M European Value Retail (LSE: BME). Workers’ pay in Britain actually dropped in real terms in November because of soaring inflation. This was the first decline since summer 2020 and is a trend that could well continue in 2022.

I think B&M’s more than just a decent short-term pick though. The importance of value has been growing sharply over many years and is tipped to continue doing so regardless of broader economic conditions. This explains how the FTSE 100 business has grown the number of its branded stores to around 700, from 425 back in 2015.

I’d buy B&M even though it faces intense competition from other value retailers, from Poundland and The Works to Aldi and Lidl. I think a forward P/E ratio of 14 times looks pretty low, given the company’s ambitious expansion plan and the bright outlook for the low-cost retail industry.

A FTSE 100 stock in my portfolio

I also think buying stocks with immense brand power is a good idea as inflation rises. This is where Coca-Cola HBC (LSE: CCH) comes in, a FTSE 100 share that bottles and sells the world’s most popular soft drink. Shoppers will (at least broadly speaking) always find a way to stretch their grocery budgets to buy Coke over cheaper own-brand alternatives.

Coca-Cola HBC does face some near-term danger. Worsening Covid-19 cases and a return to lockdowns could hammer near-term sales to the hospitality industry once more. But all things considered, I think this is a top stock to buy.

It actually sits in my own investment portfolio because of the brand strength of its drinks and its long track record of successful product innovation to embrace lucrative consumer trends. These include rolling out its plant-based AdeZ drink and launching its Coca-Cola Energy beverage.

Royston Wild owns Coca-Cola HBC. The Motley Fool UK has recommended B&M European Value and Coca-Cola HBC. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As I noted in a recent article, I believe the Lloyds (LSE: LLOY) share price currently has more potential than at any point in the past decade. However, I think the company’s peers also have a lot of potential. And with that being the case, I have also been taking a closer look at the Barclays (LSE: BARC) share price. 

If I had to choose, I believe one has the potential to produce significantly higher returns than the other. 

Barclays share price potential

I think two words describe the main difference between Lloyds and Barclays… international diversification. Barclays has it. Lloyds does not. After the financial crisis, the latter quickly reduced its global footprint to streamline the business and improve the operating performance. 

Conversely, Barclays was busy expanding. This growth has catapulted the business into the list of the top 10 largest banks in Europe. It also helped the company navigate the coronavirus pandemic. While its international investment bank provided a steady stream of income, the rest of the business was trying to analyse how rising loan losses would hit profits. 

I think this diversification gives the company an edge over Lloyds. While Barclays can capitalise on the global economic recovery via its international business, its peer is far more reliant on the domestic UK market. 

Lloyds’ domestic focus is the most considerable risk to the bank’s growth. It means the success of the group is tied to that of the UK economy. If the economy starts to struggle, the lender could as well.

That is not to say the Barclays share price is risk-free. Its international investment arm can be an unpredictable beast. If the market environment is unfavourable, losses can quickly become unwieldy. This makes it harder for me to analyse the business’s long-term outlook. 

Lloyds shares appear attractive 

While I think Barclays’ international exposure gives the group the edge over Lloyds, due to the risks outlined above, I am not entirely convinced this is the better buy. 

Instead, I think I would rather own Lloyds for my portfolio. The UK economy is currently firing on all cylinders, and the lender should be able to capitalise on this growth over the next few years.

The business is also well capitalised, which suggests management has plenty of headroom to increase shareholder returns. There is already speculation the group will unleash a substantial share repurchase allocation alongside its fourth-quarter results. A dividend increase is also a possibility. 

Barclays also has the scope to increase investor payouts, but its large investment bank is capital intensive. This could have an impact on its balance sheet and capital ratios, suggesting the group may not be able to return as much as Lloyds with its simplified business model. 

Therefore, if I had to pick between Barclays and Lloyds, I would buy the latter for my portfolio. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Key points

• Covid-19 restrictions have battered the travel industry
• The IAG share price is down 61% from the beginning of the pandemic
• Early signs of a recovery have appeared in the industry 

The Covid-19 pandemic has had a catastrophic impact on the travel industry. With the milder Omicron variant, however, it is possible that travel is on a one-way ticket back to normality. International Consolidated Airlines Group (LSE: IAG) owns a number of airlines, including British Airways, that operate across the globe. I already hold IAG stock, but should I be buying more in anticipation of a return to pre-Covid conditions this summer?

A pandemic battering

In the company report for the year to 31 December 2020, revenue stood at just 30% compared with the same period in 2019. IAG recorded a €7.8bn loss during this time. This is hardly surprising, however, given that most countries around the world shut down for many months. Some popular destinations like Hong Kong still have strict measures on any inbound aircraft. Furthermore, from February 2020, when news of the pandemic was starting to filter through, until now, the IAG share price is down 61%.  

Just when we thought international travel was regaining some degree of normality, the Omicron variant emerged late in 2021. Investors took this development seriously and the IAG share price fell 30% from mid-November to mid-December. This led to Bank of America downgrading IAG in January 2022, because airline capacity had still not returned to pre-Covid levels.

Reasons I’m optimistic

Although recent financial information and share price movement are gloomy, I have many reasons to be optimistic about the direction of travel for IAG. Firstly, Omicron is much milder than previous variants. Only today, the UK withdrew most domestic restrictions. On the international front, testing for travel has essentially been outlawed in the UK. I think it is only a matter of time until other countries follow suit.

In November 2021, the transatlantic route to the US reopened. This is encouraging, because it is IAG’s most lucrative business. This encouraged Citi to downgrade short-haul carriers like Wizz Air, in favour of longer-haul airlines. While IAG does operate shorter flights, the widespread restrictions still in place throughout Europe has made a recovery in this area more difficult.

Recent consolidated results for the nine months up to 30 September 2021 are also reassuring. In the third quarter, capacity stood at 43.4% of the same period in 2019. This marked an increase from 21.9% in the second quarter of 2021. While we still have some way to go, it is heartening to see these figures going in the right direction.

The pandemic hit airlines extremely hard. This is evident from 2020 financial results, and IAG was no exception. With more governments lifting restrictions following the milder Omicron variant, however, it is only a matter of time until international travel opens up even further. For me, I will be adding to my existing IAG stock because the share price is still at relatively low levels.            

Andrew Woods owns shares in IAG. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.