If you're a new investor, this could be a particularly stressful time. Not only are you dealing with the usual first-timer anxieties, you're doing so against a backdrop of geopolitical turmoil and economic uncertainty. These are the sorts of issues that can make even the most seasoned of investing veterans second-guess themselves.
Before talking yourself out of taking on new trades while the broad market is still below recent highs though, embrace this idea: A year from now, most of what concerns you today won't matter nearly as much. Five years from now, today's worries may not even be a memory. In other words, don't sweat it. The biggest risk most investors face most of the time isn't picking the wrong stocks at the wrong time; it's missing out on gains by remaining on the sidelines for too long.
With this in mind, here's a rundown of three solid stocks that'll serve as a healthy foundation for nearly any portfolio.
Microsoft
You know the company. In fact, if you're reading this on a personal computer, there's better than a three-out-of-four chance you're using one of its products. Microsoft (MSFT 0.37%) is of course the name behind the popular Windows operating system, though it also makes the Xbox gaming console, owns the search engine known as Bing, and offers corporate clients solutions like cloud computing services and internal collaboration and communication platforms. It's even the name behind professional networking website LinkedIn.
Image source: Getty Images.
This diverse collection of revenue-bearing products is a big part of the reason the company's been able to grow revenue in every single quarter (on a year-over-year basis) since 2016. Although not quite as consistently, operating profits have grown almost as reliably and have grown faster than the top line has during this timeframe. As recurring, subscription-based revenue becomes a bigger and bigger part of Microsoft's revenue mix, look for more of this same progress.
Be warned that Microsoft shares won't come cheap. The stock's valued at a little less than 31 times its trailing per-share earnings and a little over 31 times its projected twelve-month profits. That's probably a bit higher than the suggested valuations you've heard or read about as you prepared for your foray into the investing arena. As you'll soon learn from experience though, the premium you typically have to pay for quality is worth every penny.
Walmart
Walmart (WMT 1.32%) may lack charm, growth potential, and an online presence that can completely compete with the e-commerce platform being managed by Amazon. What it does have to offer consumers as well as shareholders, however, more than offsets its weaknesses. That's its size and reach. Walmart is still the world's biggest brick-and-mortar retailer, and it's by far the biggest in its most important market. That's the United States, where it operates more than 5,300 locales. According to the company, 90% of Americans live within 10 miles of a Walmart store, which is an incredible opportunity to connect with them and turn them into customers.
It's an opportunity the retailer neglected for too long, allowing Amazon to grow even faster than it might otherwise have. Walmart's making up for lost time though, evolving into what it should have been becoming for years now. That's a lifestyle-oriented destination. More than merely a place to buy life's necessities, the company is now offering sticky perks like primary healthcare, subscription-based delivery service for purchases made at a nearby store, and even private-label premium wines, just to name a few. These developments go well above and beyond Walmart's old norms.
These are all efforts worth watching, but they're not the only reason a novice investor might want to own a piece of this retailer. Walmart is largely worth owning simply because it's an easy name to keep tabs on. There are no cutting-edge developments underway, nor any breakthrough-technology patents to protect or worry about expiring. Everything the company is doing is crystal clear, for better or worse.
Verizon
Finally, add Verizon Communications (VZ -0.53%) to your list of solid investments for new investors.
Verizon stock has admittedly been a sub-par performer since late 2019. But not necessarily due to the pandemic. While it's true that the COVID-19 contagion did somewhat wreck its 5G rollout schedule, the complicated interest rate picture and overwhelming investor interest in the pandemic's beneficiaries kept Verizon shares in check. That will change eventually, allowing the stock to start advancing again. It would be amiss, however, to believe Verizon won't hit a similar wall again at some point in the future.
That frame of mind, however, obscures the much-bigger upside of owning a stake in Verizon. That's its dividend. The telecom giant has never had a problem paying it, and for that matter, has been willing and able to increase it every year for the past 15 years. The stock's multi-month lull means newcomers will be stopping in while the dividend yield is an incredible 4.9%.
But you're not looking for income right now? Here's the thing: While the investment industry seemingly encourages shareholders to reinvest dividend payments in more of the same dividend-paying name, that's not a requirement. It's just as sound of a strategy to use dividend income to build a sizable cash position, which can then be used to purchase any stock when a window of opportunity is opened.
Like Walmart, Verizon is also an easy-to-watch transparent name -- the phone business isn't exactly a complicated one.
