Starting out in the stock market can feel confusing, with so many choices and no surefire way to win. But if you don’t get too caught up in the day-to-day ups and downs, you can find chances to grow your money over time. All investing comes with some risk, but choosing the right stocks can help lower the chances of losing money and give you a good starting point in learning about the stock market.
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10 Best Stocks for Beginners
When it comes to selecting the best stocks for beginners, it’s important to look for companies with stable performance and potential for steady growth. Ideal candidates are typically those that offer dividends, belong to well-established industries and possess a strong market presence. Here are 10 of the best stocks for beginners with little money.
1. Apple Inc. (AAPL)
- Share price as of April 8: $168.87
- Market cap: $2.60 trillion
- Dividend yield: 0.56%
Apple is a consumer products darling, producing everything from iMac computers and iPhones to the Apple Watch. Its loyal fan base and continuous innovation have made Apple one of the largest companies in the world in terms of market cap.
2. The Coca-Cola Co. (KO)
- Share price as of April 8: $59.28
- Market cap: $259.81 billion
- Dividend yield: 3.20%
Famously one of Berkshire Hathaway CEO Warren Buffett’s favorite investments, Coca-Cola is a good example of a consumer staple that performs well even during economic downturns.
3. Comcast (CMCSA)
- Share price as of April 8: $40.66
- Market cap: $165.68 billion
- Dividend yield: 2.93%
Comcast is a major player in media and technology, offering services in broadcasting, cable television and internet. Its diverse portfolio and steady presence in millions of households across America provide a stable investment opportunity, especially for those looking for lower-risk entries into the stock market.
4. McDonald’s Corp. (MCD)
- Share price as of April 8: $267.13
- Market cap: $200.52 billion
- Dividend yield: 2.38%
McDonald’s is one of a handful of stocks known as “Dividend Aristocrats,” as are some others on this list. To be a Dividend Aristocrat, a company must raise its dividend every year for at least 20 consecutive years. McDonald’s has actually raised its dividend 48 years in a row, every single year since it became a public company.
5. Bristol-Myers Squibb (BMY)
- Share price as of April 8: $51.13
- Market cap: $106.68 billion
- Dividend yield: 4.53%
Bristol-Myers Squibb, a leading biopharmaceutical company, is involved in the discovery, development and delivery of medicines. The healthcare sector often provides stable investment opportunities, and BMY’s strong pipeline of medications and treatments in various therapeutic areas offers potential for growth and resilience in the market.
6. Sysco Corp. (SYY)
- Share price as of April 8: $76.92
- Market cap: $40.29 billion
- Dividend yield: 2.48%
Sysco Corp., headquartered in Houston, is a key player in the distribution of food products to restaurants, healthcare and educational facilities, among others. The company’s extensive network and consistent demand from the food service sector make it an attractive choice for beginner investors.
7. PepsiCo Inc. (PEP)
- Share price as of April 8: $169.42
- Market cap: $235.97 billion
- Dividend yield: 2.93%
PepsiCo, the primary competitor of Coca-Cola, is another consumer staple that pays a strong dividend and has a very stable balance sheet.
8. Texas Instruments (TXN)
- Share price as of April 8: $169.65
- Market cap: $154.78 billion
- Dividend yield: 3.00%
Texas Instruments is a major player in the semiconductor industry, known for its broad product portfolio and consistent performance in the technology sector. The company’s focus on analog chips and embedded processors, essential components in various electronic devices, combined with a history of stable dividends, makes it a compelling choice for new investors.
9. Johnson & Johnson (JNJ)
- Share price as of April 8: $152.19
- Market cap: $377.42 billion
- Dividend yield: 3.02%
Johnson & Johnson, a household name in the healthcare industry, offers a diversified portfolio that includes pharmaceuticals, medical devices and consumer health products. Known for its stability and resilience, especially during economic downturns, JNJ is often considered a safe stock for beginners, bolstered by its long history of paying dividends.
10. Ford Motor Co. (F)
- Share price as of April 8: $13.42
- Market cap: $52.96 billion
- Dividend yield: 4.51%
Ford, a well-known name in the automotive industry, has been focusing on innovation, particularly in electric vehicles and autonomous driving technology. This focus on future technologies, coupled with its established brand and global presence, offers an interesting mix of stability and growth potential for investors.
How To Get Started
Beginning your investment journey in the stock market involves a few key steps. Understanding these will help you navigate the world of investing with more confidence and clarity. Here’s what you need to know to get started on the right foot.
- Pay off high-interest debt: Before investing, it’s crucial to clear any high-interest debt, such as credit card balances, as the interest on these debts can often surpass potential stock market returns.
- Build an emergency fund: Save around six months’ worth of income in an emergency fund to avoid the need to sell stocks in case of unexpected financial hardships, like job loss or major repairs.
- Choose a stock brokerage account: Select a brokerage for buying stocks, considering factors like fees, commissions and available trading tools. Keep in mind that some platforms offer commission-free trading.
- Determine your risk tolerance: Understand your comfort with investment risks — choose stocks that align with your ability to handle market fluctuations and your investment goals.
Investing In Stocks for Beginners: What To Avoid
For those new to investing, certain pitfalls can hinder your progress and success in the stock market. Being aware of what to avoid is as crucial as knowing what to invest in. Here are some common traps that beginners should steer clear of:
- Avoid small companies: Beginners should steer clear of “small-cap” or “micro-cap” stocks, typically companies with a market value of less than $2 billion. These are often in early growth stages and can be quite volatile, with a higher risk of failure.
- Be cautious with high-risk sectors: While some sectors like technology or biotech offer high growth potential, they can also be unpredictable and risky. Beginners should approach these sectors with caution, balancing their portfolios with more stable and less volatile investments.
- Stay away from highly shorted stocks: Companies with a high percentage of their shares shorted can be risky. These stocks are often targeted by traders who expect the company’s stock to decline. For those new to investing, it’s advisable to choose stocks with low short interest to minimize risk.
Can You Make Money in Stocks as a Beginner?
Yes, beginners can make money in stocks, but it’s important to have realistic expectations. Investing in the stock market involves risks, and it often requires patience and a long-term perspective.
Educating yourself about the stock market, starting with a small, manageable investment and choosing less volatile stocks, can increase your chances of seeing a return on your investments.
What To Consider Before Investing In Stocks
Starting your investment journey in stocks, especially when working with little money, requires a careful balance of risk and reward. For beginners with limited funds, it’s advisable to begin with a cautious approach. Initially, focus on selecting the best stocks for beginners with little money — these are usually conservative, stable stocks that provide a solid foundation and can withstand market fluctuations. This approach not only helps in building a resilient portfolio but also aids in gaining familiarity and confidence in navigating the stock market.
As you become more comfortable and knowledgeable, gradually diversify your portfolio with a mix of higher-risk and potentially higher-reward stocks. Having a strong, diverse foundation allows for safer exploration and the ability to manage more risk as you progress in your investment journey.
FAQ
Here are the answers to some of the most frequently asked questions regarding investing.- How much should beginners invest in stocks?
- Try to make sure that you never have more money invested in stocks than you can afford to lose. You should only start investing in stocks after you've paid off your high-interest debt and built up an emergency fund with about six months' income. Even then, move slowly so you don't overcommit.
- Do I need a financial advisor to start investing?
- Definitely not. While a financial advisor can play a crucial role in building the sort of investment portfolio you'll need to retire comfortably or send your kid to college, much of the information they provide can be found on your own. If you're investing limited sums of money, the downside of doing your own research and starting without an advisor is pretty small.
- Which is the best app for a beginning stock investor?
- Robinhood allows you to buy specific stocks without charging a per-trade commission, making it a great option for beginning investors. That said, there are many different investing apps, each of which offers its own unique set of features and costs. You should take the time to explore your options before settling on one.
- What are the best stocks to invest in with little money?
- Investing in stocks with little money is easy these days, especially with options like fractional shares. Look for well-established companies with a history of stable growth. Stocks in sectors like consumer goods, utilities and healthcare are often recommended for their stability and resilience. Additionally, companies with a lower share price but strong fundamentals can be a good starting point.
- What are good stocks to buy as a beginner?
- Good stocks for beginners typically include those from stable, established companies with a history of consistent performance. Blue-chip stocks, which represent well-known, financially sound companies, and Dividend Aristocrats, known for their long history of paying out dividends, are often suitable choices.
- Can I invest as little as $100?
- Yes, you can start investing with as little as $100. Many online brokerage platforms offer fractional shares, allowing you to buy a portion of a stock that might otherwise be too expensive. This makes it possible to diversify your portfolio even with a small amount of capital.
Daria Uhlig, Joel Anderson and John Csiszar contributed to the reporting for this article.
Data is accurate as of April 8, 2024, unless otherwise noted, and is subject to change.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
This article originally appeared on GOBankingRates.com: 10 Best Stocks for Beginners for April 2024
