Best Stocks for a Starter Portfolio in 2023

Jun 09, 2023 By Triston Martin

It might be daunting for novice investors to figure out where to begin. The biggest stock exchanges in the United States list thousands of stocks. Mutual funds, ETFs, and other investment vehicles number in the thousands. The question then becomes, what is the best way to begin a stock portfolio? Although there is no assurance of future profits, investors may feel confident putting their money into firms that have consistently performed over a long period.

Consistent profits over many years should be expected from a company with significant competitive advantages, a market-leading brand name, and a top-tier management team. Finding businesses that have consistently grown their dividends for at least 25 years is a smart place to start when looking for investment opportunities. This is a wonderful spot for novice investors to begin constructing a stock portfolio since it indicates a company's resilience to economic uncertainty.

Apple Inc. (AAPL).

With a current market capitalization of $2.4 trillion, the company behind the iPhone, iPad, Mac, & App Store is the largest publicly listed company in the United States. The revolutionary products and services offered by Apple, created in 1976 by Steve Jobs, Steve Wozniak, & Ron Wayne, have allowed the company to beat sales and profit forecasts consistently. The stock of Apple Inc. (AAPL) is highly recommended.

The company has a free cash flow of $25.7 billion and an operating margin of 31% for the 12 months leading up to March 2022. Apple's stock price has dropped by 17.9 percent this year as of July 12; this decline mirrors that of the broader technology sector. The company's underlying strength indicates that the current price may be valuable despite the market downturn.

Visa Inc.

Visa, the world's most valuable publicly listed credit services firm at about $470 billion, is the second-best investment for beginners. It's easy to understand this multinational firm with a worldwide presence (they do business in over 200 countries and territories and have 3.6 billion cards in circulation). Stocks in Visa, Inc. (V) are highly recommended.

Visa charges a fee for every purchase made using a Visa card, regardless of where the purchase is made. This is a low-risk company with bright long-term growth potential despite the trend toward cashlessness in today's economy. The forward price-earnings ratio for Visa is less than 26, while that for Mastercard Inc. (MA) is 35. Moreover, Visa trades at a discount to its nearest direct competition, Mastercard Inc.

The A. O. Smith Company

Stocks that pay dividends and are good long-term investments, in general, tend to be market leaders in conservative sectors. A. O. Smith is a prime illustration of this. It dominates the market for domestic boilers and water heaters. This is not a field known for its allure. However, A. O. Smith benefits from the rising demand for new homes because hot water is necessary for everyone.

A. O. Smith should benefit from a demographic tailwind as millennial generation members become homebuying adults. The company also has a significant international presence and has thrived as nations like China have rapidly increased their domestic house production in recent years. Short-term worries for A. O. Smith include a cooling property market and rising prices. Long-term demand is strong, and the current price of shares (19 times projected earnings) is appropriate.

Amazon (NASDAQ: AMZN)

We consider Amazon (AMZN) one of the best-performing stocks ever. Not only have I earned a fortune from it, but the firm has excellent potential for expansion in the years ahead. That's partly because Amazon has so many avenues for success, such as e-commerce, cloud computing, and even autonomous vehicles. The latest stock split by Amazon means you are less likely to need to buy fractional shares.

The value of Amazon's stock has quadrupled in the last four years, which is hard to fathom. Their yearly income has increased by almost 100% in the same time frame. It's difficult to predict how far Amazon will go, but I plan to be there every step of the way.

Microsoft (NASDAQ: MSFT)Microsoft logo

Microsoft stock, along with that of Apple and Amazon, is among the most valuable in the United States. The last time I checked, it was down in third place. Microsoft is still going strong, serving millions of customers in every region with its PCs, software, hardware, and cloud services. During CEO Satya Nadella's tenure, the corporation has made significant investments in Azure, its cloud computing platform, and has released new services like Microsoft Teams, among other things.

Microsoft stock, at roughly $342 per share at the time of this writing, is close to its all-time high, despite the global epidemic. Like many innovative digital firms, it has figured out how to increase its value to customers even as the economy has weakened. Microsoft's recent success demonstrates the worth of a patient investment strategy in blue-chip equities. That's why Microsoft is a great company for novice investors to buy.

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