How does the old saying go? If I had known then what I know now, I'd have done a lot of things differently? The cliche has survived because it cuts to the heart of a perpetual problem with people -- we tend to gain most of our wisdom by making costly mistakes. Investors are hardly immune.

If I had a chance to go back in time and start over again with $5,000 worth of capital, here are the five stock picks I'd make the long-term pillars of my portfolio, allocating $1,000 apiece to each.


Alphabet (GOOGL -1.21%) (GOOG -1.30%) of course is the parent to search engine Google, YouTube, a commercial cloud computing platform, and a handful of other less impactful businesses. It faces competition in all of those key markets, but at least as to the first two, it still dominates. That's not likely to change. GlobalStats' statcounter indicates that Google handles 92% of the world's web -- a commanding lead the company has enjoyed for over a decade. YouTube, in the meantime, has quietly caught up with Netflix in terms of revenue even though it produces that revenue quite differently. Alphabet is also the dominant name of the mobile operating system arena; its Android OS is found on nearly 73% of the world's mobile devices, according to GlobalStats.

Alphabet's going to be tough to dethrone as the effective king of these markets. The much bigger threat, however, is a decision from consumers to start using the internet less than they currently do. But, somehow that seems incredibly unlikely as well. This company remains a growth machine as well as a cash cow as long as that's the case.


Just for the record, while I expect to always respect drugmaker Merck (MRK 0.38%), my interest in actually owning it is heightened in light of the current circumstances. In contrast with most of the rest of the market, Merck shares are down 5% for the past 12 months, and down 16% since the end of 2019. The end result is a dividend yield of 3.5% and a forward-looking price-to-earnings ratio of less than 11.

I suspect this weakness reflects the fact that Merck was never a key participant in the race for COVID-19 vaccines and treatments, which have captured the attention -- and money -- of investors. Largely forgotten thanks to the sheer noise of the pandemic, however, as that all the world's other ailments and diseases didn't go away, and Merck's still addressing them with its impressive drug portfolio. Take cancer-fighting Keytruda as an example. Merck sold $14.4 billion worth of Keytruda last year, up 30% from 2019's sales, yet still miles away from the drug's projected peak sales on the order of $23 million. And that's just one of the company's many franchises.

JPMorgan Chase

Just for the sake of diversity I'd add a financial name to the mix. I think JPMorgan Chase (JPM 1.04%) is the best of breed right now.

Not everyone else is so gung-ho about banking names right now, and understandably so. Interest rates are seemingly stuck at rock-bottom levels, and although the Federal Reserve's governors now see one rate hike coming next year and at least another one for 2023, they're probably going to be unusually low for years. It's a problem for banks since profit margin on lending is lower when interest rates are suppressed than they are when rates are high.

A person looks at their phone next to a laptop that shows various charts.

Image source: Getty Images.

The thing is, interest-based income only makes up about half of this company's bottom line. Most of the other half is linked in one way or another to capital markets, which is the fancy term for investing-related income. As long as people want to grow their money faster than inflation devalues it, the world's going to support a name like JPMorgan Chase.

The kicker: Dividend growth here is impressive. The current annualized payout of $3.70 per share is more than twice what the company was dishing out 29 years ago, and that's with a dividend cut stemming from 2008's subprime mortgage meltdown.


You won't get any meaningful dividend income from Microsoft (MSFT -0.45%), but that's not the goal here. Rather, owning Microsoft is a means of plugging into a bunch of different businesses the iconic software company operates. Video gaming, personal productivity, cloud computing, web advertising solutions, operating systems, and even LinkedIn are all part of the company's revenue-bearing repertoire. Like Alphabet, Microsoft's leadership within its chosen industries is secure as long as the world continues to use internet-connected devices.

What really makes Microsoft such a must-have here, however, isn't its breadth of business. It's that by selling so many of its software platforms on a subscription basis, the company has turned into an incredible recurring revenue machine. Microsoft doesn't divulge all the key details on this aspect of its business, but it did say during its most recent earnings call that there's $141 billion worth of "remaining performance obligations" on the books, up more than 30% year over year. That's in reference to subscription-based access to software to be provided in the future.


Finally, I'm adding Verizon Communications (VZ 1.57%) to my personal list of long-term picks if I had an opportunity to do it all over again.

This pick isn't nearly as much about diversifying into the telecom sector as it is stepping into a name currently yielding 4.7%. I'm not interested in reinvesting those dividend payments in more shares of Verizon, however. Rather, my end goal is injecting regular, reliable cash that I can use to make new purchases without putting more outside cash into my portfolio. That way I've got flexibility, including the option of not being forced to sell another holding at a low point just to free up money for a new pick.

And there's little doubt that Verizon will be able to serve in this capacity for a long, long time. Consumers may postpone a vacation or skip a trip to the mall. But they're going to keep their mobile connection to the rest of the world turned on no matter what it takes. Paying those bills in turn means Verizon has plenty of recurring cash flow that can be used to fund dividend payments. The trade-off is relatively low growth, but it's a fair trade-off when you also own higher-growth holdings like Alphabet and Microsoft.