With as little as $50 you can start successfully investing in the stock market today. However, with everything from small cap stocks and bell weather blue chips to mutual funds and high growth stocks, knowing where to put your money can become confusing in a hurry. To help you get started, three Motley Fool contributors explain why a few of the best places to invest your money are in disruptive innovators, tier one enterprises, and dividend aristocrats are three of the best ways to invest in stocks today.
Anders Bylund: There's nothing quite like identifying a disruptive winner several years before the broad stock market catches on. Innovation is the lifeblood of any healthy business culture, and a fantastic driver of strong investment returns as well.
A prime example of this type of business is Netflix (NFLX -0.08%) . First the company upended the video rental market a decade ago, and it was quickly obvious to a careful observer that there was a new sheriff in town. As the DVD era peaked and started to fall, Netflix took the next step into digital streaming -- and once again crushed established video rental models, including its own DVD mailer service.
Meanwhile, in the healthcare industry, Intuitive Surgical (ISRG 0.71%) saw an opportunity to dominate the brand new robot-assisted surgery market. The company seized the day via aggressive buyouts and an ironclad patenting strategy. The da Vinci system matured and landed FDA approvals for several important procedures, just as the Greatest Generation started reaching retirement.
The S&P 500 market barometer has gained 74% over the last 10 years. Meanwhile, Intuitive Surgical investors enjoyed a gain of 1,300% or 14 times their original 2004 investment. Netflix rode its own innovation to a heart-pounding 3,000% gain. The best part? As mere mid-caps today, both of these disruptors still have plenty of room for growth. And I'm always looking for the next disruptive winner in the Netflix or Intuitive Surgical mold. Maybe you should, too.
Tamara Walsh: One of the best ways to make money in the stock market is by investing in reliable dividend stocks. In fact, over time dividend-paying stocks have historically outperformed all other investments. That's where dividend aristocrats come into play. To qualify as a dividend aristocrat a company must consistently raise its dividend for at least 25 consecutive years. Dividend aristocrats are therefore a smart place to invest because they promise investors a steady stream of reoccurring income.
Target Corporation (TGT -0.71%) and Procter & Gamble (PG 1.52%) are two of my favorite dividend aristocrat stocks to own today. That's because both of these companies offer low risk and high dividend growth. Target, for example, has paid a dividend every year since 1967, and has increased its dividends annually for the past 42-years straight. The discount retailer raised its quarterly dividend 21% in June to $0.52 per share, or $2.08 per share annually.
Procter & Gamble also knows how to reward shareholders for years on end. The consumer products maker has paid a dividend every year for the past 124 years without fail. Perhaps more impressive is the fact that it has increased its payout for the last 58 consecutive years at a compounded rate of more than 9% a year. As you can see, dividend aristocrat stocks like Target and Procter & Gamble are not only a reliable source of cash for investors, but also quality companies that should reward shareholders for many years to come.
Joe Tenebruso: Fool co-founder and brilliant investor David Gardner once told me that our personal investment capital represents the sum of our life's efforts – all those hours we spent waking up early, working late, and coming in on the weekends. As such, we should honor those efforts by investing wisely.
The best way I know to protect our capital while still earning extremely attractive rates of return is to seek out and invest in the world's elite businesses. For me, this means companies with the most valuable brands, best business models, strongest competitive advantages, superior products and services, and excellent management. Here I'm talking about businesses such as Disney (DIS -0.55%), with its valuable collection of timeless brands and irreplaceable assets; Apple (AAPL 0.51%), with its superior products (iPhone, iPad, Macs) and incredible ecosystem; and Amazon (AMZN 1.49%), with its tremendous scale advantages, vast distribution network, and visionary leader, Jeff Bezos.
These businesses are dominant and best of breed. I call them Tier 1 enterprises, and together with my other holdings, they have helped the real-money portfolio I manage for The Fool earn a time-weighted return of 99.54% since inception on Sept. 1, 2011, compared to the S&P 500's 84.59% return during that time. I expect my focus on outstanding businesses to continue to widen that outperformance in the years ahead. But more importantly, I believe that Tier 1 enterprises are a great place to consider investing your hard-earned money, and can help you improve your investment results.
