Newbie investors shouldn’t shy away from individual stock ownership. There are a variety of advantages to holding individual stocks in your portfolio. These include the ability to tailor your portfolio to your values and beliefs — and avoid so-called “sin stocks.” Other advantages include more control over costs, tax and estate planning.
Finally, an individual investor can be nimble, quick and decisive in their buys and sells, versus a mutual fund manager who often needs committee approval on portfolio shifts. Here are eight stocks to buy for a starter portfolio.
[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]
General Electric Co. (ticker: GE). Smart investment choices are those with strong businesses — like GE — that attract the best talent and possess sustainable long-term earnings power. After GE’s financial arm nearly brought down the company in the 2008-2009 crisis, the company faced reality and ultimately decided to return to its industrial roots. In 2015, it announced its decision to sell most of its GE Capital assets, and the sales since then have raised roughly $200 billion. If all goes to plan, at least $90 billion will be returned to shareholders through dividends and buybacks through 2018.
Walt Disney Co. (DIS). Disney is a media conglomerate that monetizes its characters and franchises across multiple platforms including movies, home video, merchandising, parks and resorts and musicals. While investors should keep an eye on the pace of ESPN subscriber losses going forward, several of its inimitable assets — namely Disneyland Shanghai and the Star Wars franchise — should help fuel growth going forward.
Facebook (FB). Mark Zuckerberg’s company is the leading social network in the world. While that superlative in and of itself doesn’t mean much to investors, its trove of user data allows it to offer hyper-targeted advertising to marketers, and today Facebook and Google ( GOOG, GOOGL) essentially dominate the world of digital advertising. With other assets like WhatsApp, Instagram, Facebook Messenger and Oculus, the company is very well positioned to defend itself from competitors and continue growing.
American Express Co. (AXP). American Express is a global charge and credit card payment company, and is famously one of legendary investor Warren Buffett’s largest investments at Berkshire Hathaway. With a modest 1.6 percent dividend and a steady stream of share buybacks, the company is devoted to returning capital to shareholders, and still trades at a very reasonable valuation.
[See: The 10 Best REIT ETFs on the Market.]
Wal-Mart Stores (WMT). Wal-Mart operates retail and wholesale discount stores under the names Wal-Mart and Sam’s Club. While it may not be the most exciting pick on the planet, it’s a steady performer with a global presence that isn’t going anywhere anytime soon, despite Amazon.com’s ( AMZN) best efforts. In fact, Wal-Mart has been investing in e-commerce itself, and has seen those efforts rewarded: In the fourth quarter of 2016, total e-commerce sales rose at a blistering 36 percent year-over-year clip.
Berkshire Hathaway (BRK.A, BRK.B). If investing like the best investor of all time sounds like a decent idea, buying Berkshire Hathaway stock is an easy way to do just that. The struggling textile mill that Warren Buffett bought and converted into a high-powered, cash-flowing holding company is built to stand the test of time, and highly insulated from any disastrous market crash via its diversified and thoughtfully complementary portfolio of strong businesses. In fact, when market crashes do happen, Berkshire is often able to take advantage by using its cash hordes to pick up companies on the cheap.
Johnson & Johnson (JNJ). This classic blue-chip stock has been a go-to portfolio cornerstone for decades, and continues to be a great option for conservative investors looking for stability and strength. Diversified among consumer goods, pharmaceuticals, and medical devices, JNJ is home to a litany of billion-dollar brands. Not only can investors sleep easy knowing many of JNJ’s products are necessary and ubiquitous, but its solid 2.6 percent dividend yield gives shareholders a decent income stream just for sitting on the stock.
[See: 7 of the Best Stocks to Buy for 2017.]
Cisco Systems (CSCO). Networking technology giant Cisco is another solid stock to buy for beginning investors. As the go-to provider of the communications technology that helps power the internet, Cisco’s no longer a growth business, but it is a verifiable cash cow. Already trading at a modest forward P/E ratio below 15, that multiple is nearly cut in half when Cisco’s price is adjusted for its cash, which accounts for more than 40 percent of its entire market cap.
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8 Stocks to Buy for a Starter Portfolio originally appeared on usnews.com
