Build a portfolio of the best stocks worth investing in by taking a diversified approach that includes spotting hidden assets, sustainable dividends, and strong growth prospects

Long-term growth in your stock portfolio is a key investment goal of TSI Network. Long-term stock growth is the gradual accumulation of stock market profits over decades. And because you’re investing for a long period of time, short market fluctuations will ultimately have very little impact on long-term gains.

Meantime, you need to pay attention to the best ways to find stocks worth investing in and watch for steady drains on your capital—like fees on structured products sold by brokers, say, or an MER on a mutual fund. Losing (or missing out on a profit of) even 1% a year can have an enormous draining effect on your total return in a decade or two.

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You can find undervalued stocks worth investing in by following these tips

Undervalued stocks are companies that have strong fundamentals and are trading, for one reason or another, at low share prices. When you’re looking for undervalued stock picks, focus on shares of quality companies that have a consistent history of sales and earnings, as well as a strong hold on a growing clientele. Undervalued stocks like these are hard to find, even when the markets are down. But when you know what to look for, you can discover them.

One big factor to look for is hidden value or assets. This hidden value could take the form of real estate, research spending or loyal customers. Companies often do spinoffs or create new companies from internal divisions or departments when they feel it isn’t a good time to sell them outright. Instead, they choose to hand out shares of the new firm to their shareholders. That often results in undervalued stocks—and buying opportunities.

Meanwhile, when they look for undervalued stocks to buy, investors usually start by looking at a few basic ratios. For example:

• Low price-to-earnings ratio—a sign of a cheap or undervalued investment.
• Low price-to-book-value ratio—another sign that stock is cheap in relation to other stocks on the market.
• High dividend yield—the stock’s annual dividend divided by the share price.

Top growth stocks are worth investing in to boost your portfolio returns

Successful Investors know the value of high-performing growth stocks and the potential boost they give to long-term returns. These are the firms whose earnings have increased at a faster rate than the market average. Their growth is likely to remain above average for years or decades. It is often the case that they pay small dividends or none at all. Instead, they re-invest their cash flow in the business, to promote their growth.

Although these stocks can be highly volatile, they often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they have grown at higher-than-average rates within their industries, or within the market as a whole, for years or decades.

Successful growth investing focuses on trying to identify and buy rising stocks when they have further growth ahead.

These stocks may trade at higher-than-average multiples of earnings, cash flow, book value and so on. Ideally, though, they also have above-average growth prospects, compared to other investments.

Find top blue-chip firms and you’ll find stocks worth investing in

Blue-chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Investing in blue-chip stocks can give you an additional measure of safety in today’s turbulent markets. We believe investors will profit most, and with the least amount of risk, by putting the bulk of your stock portfolio in shares of blue chip companies—those that are well-established, with strong balance sheets and steady earnings and cash flow. These are companies that have bright prospects in healthy and growing industries. All in all, the best blue chips offer both capital gains growth potential and regular dividend income.

Look for investments that pay steady dividends to find stocks worth investing in

If you stick with top-quality stocks paying the highest, yet sustainable dividends, the income you earn can supply a significant percentage of your total return—as much as a third of your gains. And at the same time, dividends are more dependable than capital gains as a source of investment income.

Good dividend stocks are a valuable component of any sound investment portfolio. But note, though, that when it comes to investment safety, a long history of steady dividends is more important than a current high dividend yield.

Use our three-part Successful Investor approach to find stocks worth investing in for your portfolio

1. Hold mostly high-quality, dividend-paying stocks.
2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
3. Downplay or stay out of stocks in the broker/media limelight.

How do you avoid controversial stock buys while building your portfolio?

What is the most important factor for you in choosing stocks to invest in?