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3 Stocks That Investing Beginners Can Trust in 2020

By Dan Caplinger - Jan 25, 2020 at 11:36AM

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Working up the courage to invest in the stock market for the first time can be tough. Even after the long bull market has demonstrated just how rewarding stocks can be, many people feel like they'll just be putting their money into the market at exactly the wrong time.

Novice investors should look for companies that can stand the test of time, and that have qualities that will enable them to bounce back from any short-term hits to produce strong returns over the long run. Another solid strategy for beginners is to pick stocks that pay dividends, as those can provide extra income and offset declines or weak growth in the share price. And finally, beginning investors often feel most comfortable when they have previous connections with the companies they are buying, typically because they've used its products or services.

Below, we'll look at three stocks that generally meet all three of those criteria. They won't by themselves give anyone a diversified portfolio, but they're a good starting point for beginners trying to get comfortable with stock investing.

Binder labeled Invest, with glasses, pen, and charts.

Image source: Getty Images.

PepsiCo

Beverage and snack giant PepsiCo (PEP 0.13%) has a history that harks back well over a century, and its unique combination of soda and beverage offerings with its Frito-Lay snack foods division makes it a diversified behemoth. Even if you don't drink Pepsi-Cola or eat Lay's potato chips, you might put products like Quaker Oats, Tropicana juices, or Gatorade sports drinks in your shopping cart -- PepsiCo serves a wide audience.

The stock pays a dividend that yields 2.7% right now, and for 47 straight years, it has increased the size of its payout. Even though consumer products stocks have been popular with investors, PepsiCo still sports a reasonable valuation with a price-to-earnings ratio that's lower than the market average. The company also did well by identifying early on the consumer trend toward seeking healthier snack and drink options, which allowed it to cushion itself from the declining sales of some of its less-healthy core products. Beginning investors can buy PepsiCo shares knowing that they'll continue to see its products everywhere -- and profit from them.

Disney

Media and entertainment company Walt Disney (DIS -1.20%) has been around since the dawn of the motion picture age, and it has grown from its modest beginnings as an animation studio to a powerhouse with a hand in nearly every aspect of the entertainment industry. With movie studios, television networks, retail stores, video games, and its iconic theme parks, the Disney empire is known the world over.

The company is busily forging new pathways to growth, leveraging its vast array of content production assets and creating the Disney+ streaming platform as a new way to reach viewers. Its 1.2% dividend yield does fall short of the market average, but the payout has risen tenfold in the past decade, demonstrating management's commitment to dividend growth. No matter where you are in your investing journey, Disney should have appeal as a familiar name with strong business prospects for the long term.

JPMorgan Chase

Big banks aren't necessarily consumer favorites, but they play a vital role in the U.S. economy, and JPMorgan Chase (JPM -0.80%) is one of the biggest. Between its JPMorgan investment arm and its Chase consumer banking division, the financial institution does everything from providing mortgages and issuing credit cards to providing high-end investment advice to investors and big corporations. With a worldwide presence, JPMorgan Chase weathered the financial crisis a decade ago quite well, and emerged stronger than ever.

From an investment perspective, JPMorgan Chase boasts a valuation that's considerably cheaper than the market average, along with a dividend yield of 2.6%. Both earnings growth and dividend growth have been ample in recent years. JPMorgan Chase might not generate quite the same level of name recognition for beginning investors that Disney or PepsiCo do, but the bank will be able to profit from a strong U.S. economy in much the same way as those consumer giants.

Get started with your investing in 2020!

Investing in stocks is a pathway to wealth that's open to anyone. If you're nervous about getting started, these three stocks should give you the comfort you need to stop procrastinating and move forward today.

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Stocks Mentioned

JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$116.38 (-0.80%) $0.94
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$96.61 (-1.20%) $-1.17
Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$166.35 (0.13%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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