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5 core stocks for new investors

If you’re a new investor, or perhaps just new to the stock market, it can be a daunting experience because the learning curve appears to be really steep. Never fret, once you’ve got the basics down, you can start investing and try your hand for as little as $10 per trade.

The most important thing is just to get started. Consider building your portfolio starting with these five stocks. These companies are well known, reputable brands that have large market capitalisations, modest growth and pay great dividends while you wait — perfect for the long-term individual investor.

1. Telstra (ASX: TLS)

Telstra is about as ‘core’ as Australian stocks come. It’s likely to average strong single-digit growth in coming years, will pay a dividend of at least 28 cents fully franked and is sure to be around when you decide to cash out. Telstra has a beta rating of 0.5, meaning the stock price isn’t as volatile as the wider market, allowing investors to sleep easy at night.

2. Washington H Soul Pattinson (ASX: SOL)

This is one of the oldest companies listed on the ASX and perhaps one of the most consistent. Over the past 10 years, the stock price has delivered an average annual return of 11.9% plus dividends. The company achieves stable returns by dipping its fingers into many different pies. For example, it has holdings in TPG Telecom, Brickworks, New Hope Corporation, API, Ruralco and more.

3. Westfield Retail Trust (ASX: WRT)

Although modestly priced, trading on earnings around 15 times, Westfield Retail Trust will be a consistent earner for dividend-seeking investors. At current prices, it will pay a 6.3% yield (19.9 cents) but according to Morningstar, the dividend is likely to increase up to 21 cents by 2015.

4. BWP Trust (ASX: BWP)

Australian property group BWP is another consistent stock for new investors entering the market. Its portfolio, which consists largely of properties used by Bunnings Warehouse, is steadily growing and it pays a stable 6.3% dividend, which is likely to increase in coming years. BWP is considerably smaller than the other stocks listed above and, as a result, can be more volatile in its day-to-day share price movements.

5. WAM Capital (ASX: WAM)

WAM Capital is a company that invests in Australian stocks. It aims to: 1) deliver a rising stream of dividends, 2) provide capital growth, and 3) preserve capital – so far so good. In the past five years, the company has averaged a 22.5% annual return in its share price.

Foolish takeaway

Perhaps the most important thing new investors can understand is that stock market investing is a long-term pursuit. Buy good stocks cheap and hold for the long term but don’t be surprised if they drop by 10%, 20% or even 30% in the short term — as long as the core business has not changed, it’s unlikely to stay down forever.

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.  

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