When you start investing, there are certain things to look for as you start to construct a stock portfolio. For one thing, you should focus on businesses that are well-established and have excellent track records of growth (and room to keep growing). It’s also a good idea to look for businesses that are easy to understand, and that aren’t terribly recession prone.
With that in mind, here are five of my favorite stocks that are great buys right now for beginning and experienced investors alike.
It’s difficult to find another business like Amazon (AMZN 3.81%) that is dominant in not one but two massive industries. Amazon is well known as the largest retailer in North America because of its e-commerce marketplace, and its Amazon Web Services (AWS) business has a sizable lead in cloud computing services.
Both sides of the business have more room to grow than you might think. E-commerce makes up just 15% of U.S. retail sales, and the cloud services industry is expected to more than quadruple in size by 2030. Amazon has been beaten down in the recent market decline, mainly over fears of slower consumer spending, so now could be a great opportunity to buy shares.
2. Berkshire Hathaway
I’ve said that if I could only buy one stock, it would be Berkshire Hathaway (BRK.A 1.67%) (BRK.B 1.52%). Berkshire owns a collection of more than 60 subsidiary businesses, including household names like GEICO, Duracell, and Fruit of the Loom, and also has a massive $325 billion stock portfolio managed by Warren Buffett and his team. Over the years, Berkshire should be able to keep beating the market, while remaining a relatively low-volatility business.
3. Realty Income
Realty Income (O 1.64%) is a stock that many beginners haven’t heard of, but it can be a great way for beginners to add real estate and dividend growth exposure to their portfolio (the first two on the list don’t pay any dividends).
Realty Income is a real estate investment trust (REIT) that owns more than 11,000 single-tenant commercial properties, most of which are occupied by “essential” retail businesses, such as drug stores and dollar stores. It has paid over 600 consecutive monthly dividends and has increased the payout for more than 100 quarters in a row. And over time, it has handily beaten the total returns of the S&P 500.
4. Walt Disney
Disney (DIS 4.44%) is a company that doesn’t need much of an introduction, with its theme parks, movie studios, television networks, cruise line, and merchandise. It also owns the Disney+, Hulu, and ESPN+ streaming platforms, which have grown rapidly in recent years. The company is still trying to figure out how to make the streaming side of the business profitable, but even in the meantime this is a fantastic business that should remain an industry leader for years to come.
5. Bank of America
Banking is one of those businesses that will always be needed. It may evolve, but at the end of the day, people need secure places to keep their money and facilitate financial transactions. Bank of America (BAC 1.87%) is an excellent choice for beginners, as it is not only a well-run and massive institution with strong quality, but it is investing heavily in technology to keep up with the evolving banking landscape.
Plenty of options
To be perfectly clear, these are five examples of great stocks for beginning investors, but there are plenty of others that can work well. The key takeaway is to notice what all five have in common. They have plenty of room to grow, long and established track records of success, and relatively low volatility. They are not the most exciting growth companies in the world, but that’s ok – once you’ve established a base that allows you to sleep well at night, you can incrementally add to it over time.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP® has positions in Amazon.com, Bank of America, Berkshire Hathaway, Realty Income, and Walt Disney. The Motley Fool has positions in and recommends Amazon.com, Bank of America, Berkshire Hathaway, and Walt Disney. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, long January 2024 $145 calls on Walt Disney, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.