Best Stock Picks For New Investors

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Feb 09, 2015

When you try your hand in investing for the first time, it is obvious that you might have your own apprehensions. You will have a sea of choices before you and it is easy to get lost in this. As a beginner, your first choice would be stocks that are giving out returns on a consistent basis. Dividend stocks are the best bet for you, if you are entering the stock market for the first time. You must ensure that you choose dividend stocks that have been delivering a stable performance over the years and those that have withstood the volatility of the stock market. The top 3 dividend stocks that favor novice investors are listed below:

Awesome blend of growth and returns

If there is one company that has been registering phenomenal growth and at the same time paying out its investors reasonably well on a consistent basis, it is the healthcare giant, Johnson & Johnson (JNJ, Financial). It has a diverse range of products and is the undisputed leader in the baby care products section. It has been manufacturing some breakthrough drugs in the recent past like Remicade (to cure arthritis), Xarelto (blood-thinning drug), Stelara (to cure psoriasis), Invokana (to cure diabetes type B) and the most important of all, Zytiga (to cure prostate cancer). Johnson & Johnson has benefitted incredibly from the last two drugs as these have been appreciated as game-changing drugs. Currently, the stock yields a 2.7% dividend yield. With a history of increasing its dividends for 52 years in a row, Johnson & Johnson is a stock that you can blindly place your bet on, if you are a beginner. The stock movement of the company for the last few months is shown below:

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Diverse product portfolio

The other dividend stock that suits first-time investors the most is Coca Cola (KO, Financial). There are quite a few reasons for this. The most important three reasons are – simplicity in operations, dividend increases for 52 years in a row, and diverse product portfolio. Being the leader in carbonated beverage segment, Coca Cola has been pretty simple in its nature of operations so far. It has faced limited competition from its counterparts and has been adding value to its investors through consistent dividend increases. Just when Coca Cola was looking slightly scared owing to the fall in demand for its carbonated beverages, news popped up in the market about its supposed smart partnerships with the energy drink major, Monster Beverage (MNST, Financial) and the coffee brewing machine making giant, Keurig Green Mountain (GMCR, Financial). Going by the street news if Coca Cola launches its Keurig Cold later this year, Coca Cola will benefit a lot from this deal. Through these transactions, Coca Cola has strategically diversified its product portfolios as well; giving lots of reasons for its investors to be happy about. It is one of the most-effectively managed companies in the market today and has been providing consistent returns to shareholders; hence it’s a highly recommended option for a beginner.

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Bright road ahead

When it comes to three of the must-buy stocks for first time investors, VF Corporation (VFC, Financial) Â figures in this list. This is because the company owns a whopping 17 brands of clothing and apparel that include names like Wrangler, Timberland, 7 for all Mankind etc. These are big names in the apparel segment and VFC has been generating a large amount of cash flow from them. For the last 40 consecutive years, the company has been increasing its dividends, which should explain the consistency of VFC’s performance. The other interesting aspect of its dividends is that VFC has paid out only 40% of its earnings, giving strong clues about increased pay-outs in the future. VFC also has its plans clearly laid out for the future. The company is expecting to reach a sales figure of $17 billion by 2017, which will be a 40% increase from the values of 2013. As the apparel segment is all poised for stupendous growth over the years, VFC will continue pleasing its investors, as it usually does. Stock price and dividend histories are explained in the chart below:

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Conclusion

First time investors can place their bets on these stocks because they can be assured about great returns and remarkable growth potential from these. These are best choices for safeguarding your investments against the two main characters of the stock market- risks and volatility.