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New Investor in 2021? Here Are 3 Stocks to Build Your Portfolio Around

By David Jagielski - Feb 2, 2021 at 7:20AM

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They can provide recurring income and diversify your holdings from the get-go.

If you're new to investing, it can be a bit overwhelming to determine where to invest your money. Should you buy growth stocks, dividend stocks, or just jump on the bandwagon and invest in a stock that's been performing well lately? There's nothing more discouraging than losing money when you start buying stocks, and that's why safety should be a top priority for investors who are just starting out.

Here are three terrific investments that can be pillars for your portfolio and you can build around for many years: Johnson & Johnson (JNJ 1.75%)Apple (AAPL 0.17%), and Comcast (CMCSA -0.02%). Not only do they pay dividends, but these businesses also have ample opportunities for future growth. Here's a closer look at why they're great buys today.

Businessman with a stock chart in the background.

Image source: Getty Images.

1. Johnson & Johnson

Healthcare giant Johnson & Johnson may not be the most exciting investment, but it's one you won't need to worry too much about. A top brand in the industry, the business is known for its pharmaceutical products, but it also makes medical devices, and its consumer health segment accounts for a little less than one-fifth of its sales.

With a diverse business, the company is able to post strong numbers even amid broader economic challenges and market swings. In 2020, revenue of $82.6 billion was nearly identical to the $82.1 billion the company reported in the previous year. Despite the difficulties the pandemic brought last year and the disruptions it's made to the healthcare industry, Johnson and Johnson still reported a solid profit of $14.7 billion, which was down 2.7% from a year ago.

Another great reason to invest in the stock is for its dividend. Dividend payments are never a guarantee, but with Johnson and Johnson, it's almost a sure thing. For 58 years in a row, the company has not just been making dividend payments -- it has been increasing them. Its impressive track record makes the stock a Dividend King. Today, its yield of 2.5% sits well above the 1.6% that you would earn from the average stock on the S&P 500

There's also growth potential for the company in the near future. The biggest cause for excitement is its COVID-19 vaccine. Last week, Johnson and Johnson announced just how effective its vaccine candidate is. In the U.S., it shows a 72% effectiveness in preventing moderate to severe COVID-19. The overall percentage drops to 66% when including other parts of the world and accounting for other variations of the disease. However, it is 85% effective in preventing the most severe cases of COVID-19.

Those percentages are well above the 50% efficacy the Food and Drug Administration is looking for from a COVID-19 vaccine. And Johnson and Johnson's single-dose vaccine would be a more convenient option than the two-dose vaccines from Pfizer and Moderna that the FDA has already issued Emergency Use Authorizations (EUAs) for. If the FDA gives Johnson & Johnson's vaccine the green light, it could give its sales a big boost in what could be a $100 billion COVID-19 vaccine market. 

With great stability, a top-notch dividend, and even some hype around its COVID-19 vaccine, Johnson & Johnson gives investors a mix of everything -- and it can be the perfect stock to start your portfolio with. 

2. Apple

Another great option for new investors is Apple. Last week, the company released its first-quarter earnings of fiscal 2021, and it was another solid showing for the business. Apple reported a record $111.4 billion in revenue for the period ended Dec. 26, 2020. Analysts were only expecting $103.3 billion in sales. The company's iPhone, wearables, and services segments all reached record sales numbers in Q1. Apple also posted diluted earnings per share (EPS) of $1.68, which smashed Wall Street's estimate of $1.41. And yet, these recent results were still muted due to COVID-19, as CEO Tim Cook noted that store closures negatively impacted the company's sales.

The company does distribute some of that profit back to shareholders: Its quarterly dividend payment of $0.205 yields around 0.6% annually. It's not a terribly high or regular payout, but the dividend isn't the reason why investors stick with Apple for the long run. The stock's gains are why you'll love the business. Over the past five years, its shares have skyrocketed more than 440%, well above the S&P 500's gains of 91% during that time. It is one of the safer tech stocks to put in your portfolio. An incredibly loyal customer base along with a diverse mix of products and services ensures that its top and bottom lines will remain strong for years to come.

3. Comcast

A telecom business can make for a great investment because it offers essential products and services for millions of people. A top phone from Apple would be of little use if there's no high-speed internet to go along with it! And that's one of Comcast's top business segments, which in fiscal 2020 made up one-third of its total cable communication revenue.

The company released its fourth-quarter results on Jan. 28 for the period ending Dec. 31, 2020, and sales of $27.7 billion were down 2.4% year over year. For the full year, revenue of $103.6 billion marked a 4.9% decline. But those are relatively modest numbers, given that COVID-19 is still weighing down its theme park business. Revenue of $1.8 billion for that segment in fiscal 2020 was down 68.9% from a year ago. Theater closures are also negatively impacting its filmed entertainment segment, which declined by 18.7% last year.

But it wasn't all bad news in Q4 as the company's new streaming service, Peacock, which launched in July 2020, is showing strong growth. Its 33 million subscribers is a 50% increase from the 22 million it reported in the previous period. By comparison, Netflix surpassed 200 million paid subscribers in its most recent quarter.

Overall, Comcast reported a strong bottom line with an adjusted EPS of $0.56 that beat analyst expectations of $0.48. The company also said it would be increasing its dividend payments by 8.7% to $0.25. With the higher payout, the stock now yields just over 2%.

Comcast is a great investment for both new and old investors as it offers a dividend, stability, and some exposure to the growing streaming industry.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
$176.98 (1.75%) $3.04
Apple Inc. Stock Quote
Apple Inc.
$137.59 (0.17%) $0.24
Netflix, Inc. Stock Quote
Netflix, Inc.
$186.35 (1.56%) $2.87
Comcast Corporation Stock Quote
Comcast Corporation
$42.01 (-0.02%) $0.01
Pfizer Inc. Stock Quote
Pfizer Inc.
$52.47 (3.59%) $1.82
Moderna, Inc. Stock Quote
Moderna, Inc.
$136.25 (-4.97%) $-7.13

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

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