Best shares to buy now: how I’m investing £10,000 for income and growth

With £10,000 to invest, I’m on the lookout for the best shares to buy now. With these four companies, I could achieve passive income together with consistent growth.

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With £10,000 to invest on the stock market, I’m searching for the best shares to buy now. In so doing, I’m looking both at income and growth opportunities. This means I can potentially benefit from growth stocks over the long term, while creating an income stream simply by holding shares in a company. Where should I invest? Let’s take a closer look.

Best shares to buy now: building an income stream

Investing in stocks to gain a passive income stream can be a great way to grow wealth within my portfolio. I could therefore take half of my £10,000 and use it to buy stocks with strong dividend records.

M&G, a savings and investment firm listed on the FTSE 100, could be a good option for investment. It currently trades at 221p.

It has a dividend yield of around 9.2%, which is competitive. This most recently translated to about 18.3p per share. 

For 2021, pre-tax profits fell from £788m to £721m, but the company is proceeding with a £500m share buyback scheme.

Another strong contender is Howden Joinery, a producer and fitter of kitchens and other products. It currently trades at 729p.

It has a dividend yield of 2.2%, or 19.5p per share. What’s more, for the 16 weeks to 16 April, revenue increased by 21.8%, year on year. 

It is also opening 50 new depots between the UK and France, although rising inflation and energy costs may soon impact profit margins.  

By my calculations, investing £5,000 equally between these two firms could provide me with a passive income stream of around £275 per year, just over 5%, simply from holding shares. I do have to keep in mind that dividends are never guaranteed, of course.

High-flying growth stocks

It could also be beneficial to add growth stocks to my portfolio with the remaining £5,000. Learning Technologies Group, for instance, is a company providing software learning solutions. It currently trades at 139p. 

It had a compounding annual earnings per share (EPS) growth rate of 25.37% between 2016 and 2021. This is highly competitive.

What’s more, it had organic revenue growth of 8% over 2021 and total revenue increased 95% to around £250m, year on year. 

Despite this, it ended 2021 with net debt of £140m, swinging from a net cash position of £70m the previous year.    

Similarly, Alpha FX, a foreign exchange risk management firm, had a compound annual EPS growth rate of 27.2% between 2017 and 2021. It currently trades at 2,130p.

Its revenue grew 68% in 2021 and client numbers rose by 27%. Furthermore, it is a debt-free business. It is possible, however, that inflation may begin eating into profit margins in the future.

While past performance is not necessarily indicative of future performance, both growth stocks have been delivering profits for shareholders year in, year out.

Overall, splitting my £10,000 equally between income and growth stocks could be a good way to diversify my portfolio. A solid income stream from established companies, together with riskier high-growth businesses may help to grow my £10,000 in the future. I will be buying shares in all four companies soon. 

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Alpha FX, HSBC Holdings, Howden Joinery Group, and Learning Technologies. 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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