So, you’ve decided to start a share portfolio? If so, congratulations! I hope that you find share investing as interesting and rewarding as I do.
In this article, we’ll go through 4 of my top picks to get you started. Each of these companies operates in different markets, providing for diversification.
Keep in mind, it’s always a good idea to expand your portfolio over time to ensure you have sufficient market diversification and not too much portfolio weighting in any one share.
Carsales.Com Ltd (ASX: CAR)
Carsales is Australia’s leading online car classifieds provider with an overwhelming market share in its local market.
The company has demonstrated it can continue to build on its entrenched and dominant position in Australia. In this way, Carsales has a protective moat against any market competition, while also very aggressively growing its presence overseas.
A big driver in Carsales’ domestic performance has been its premium listing products. This allows sellers to get more favourable listing slots on searches by paying more money.
Carsales is now getting a majority of its growth from overseas markets. I believe it’s this growth that will drive the Carsales share price higher over the next decade.
CSL Limited (ASX: CSL)
CSL has become a global market leader in blood plasma research and disease treatment, reaching more than 60 countries.
The company has gone from strength to strength over the past 2 decades, evolving from a modest federal government department to now sit as the second-largest company on the ASX.
A key factor underpinning CSL’s strong growth has been its high investment in research and development to create new products. Another factor is that the company’s earnings base is essentially shielded from any business cycle downturn. Over the last 3 years, CSL’s earnings growth has averaged 16.5% annually.
I believe that CSL is well-positioned to continue to deliver strong earnings growth over the next 5 to 10 years. This will be driven by a strong new product development pipeline and a steadily increasing global demand for immunoglobulin products.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an Australian investment house that has exposure to a wide range of industries. These industries range from pharmacies to telecommunications, mining and building products. I believe this diversification makes Soul Patts an excellent defensive stock, providing a good layer of protection to any market volatility.
Soul Patts has been listed on the ASX for over a century and has paid a dividend every year in that time. What’s more, the company has increased its annual ordinary dividend every year since 2000 and has a great long-term track record of outperforming the ASX index.
I feel fairly confident that Soul Pattinson’s is very well placed to continue to perform strongly over the medium to long-term.
Telstra Corporation Ltd (ASX: TLS)
As you are probably aware, Telstra is Australia’s largest telecommunications provider. The industry giant has held the top position in Australia’s telco market for several decades.
Telstra has been undergoing some recent short-term pain as it restructures into a leaner company, as Australia’s National Broadband Network (NBN) continues to be rolled out. However, I believe that this strategy will position the company well to retain its number one market position and, in my opinion, translate to good share price growth.
The telco recently revealed that its T22 cost-cutting strategy, which was announced a few years ago, has been making significant progress and is on track for cumulative savings of around $2.5 billion by FY22.
Telstra shares currently trade on a solid trailing dividend yield of 3.4%, fully franked.