For someone starting out investing, it seems like a hard task to choose which stocks will give you a good return. Actually, not losing money at the early stages may be more important than making big gains.
Building a new portfolio from scratch may be challenging and even $5,000 could be a major sum for investors. However, it doesn’t have to be scary as long as you do it in a business-like way.
No punts or lottery-style hopes are allowed. Your money is too important to just gamble. Only select good companies that grow their earnings and can operate the business for many, many years to come.
For example, Ramsay Health Care Limited (ASX: RHC) is the leading private hospital operator in Australia and is growing quickly in France, the UK and Asia. Earnings per share are up every year in the past five years, but as a healthcare stock it can hold up well in a weaker economy because of the sheer demand for medical services. It offers a 1.7% dividend yield.
For a good growth story, Domino’s Pizza Enterprises Ltd. (ASX: DMP) is one stock that investors can understand well. Apart from its continued expansion in Australia, it is growing in Japan where it has more than 260 stores, yet plans to raise that to about 600 in five years. The stock has risen impressively in recent years. Both earnings and dividends are forecast by analyst consensus to increase over 15% annually for the next two years. It also has a 1.7% yield fully franked.
Amcor Limited (ASX: AMC), the global packaging producer, is a great example of a good stock for both earnings growth and dividend income. It offers a 4.0% yield unfranked, which could give your portfolio a good source of income as the stock rises over the years. It has spun off Orora Ltd (ASX: ORA) recently and is concentrating more on core businesses. Packaging will always be necessary, so market-leading Amcor has good growth prospects.