How should I invest a lump sum of £5,000 in today’s market? That’s a question many investors might be asking right now. The outlook for the global economy is highly uncertain, and investing in this environment is not straightforward.
However, I’m confident that by following the tried and tested investment strategy of buying high-quality, blue-chip stocks at attractive valuations, I can build a large financial nest egg over time. As such, today I’m going to highlight the five shares I would buy right now with a lump sum investment.
How should I invest today?
One company I would buy straight away is consumer goods giant Unilever. I would buy the stock to form the foundations of my portfolio due to its defensive nature, strong balance sheet, large profit margins and history of returning cash to investors. The group has seen an increase in the demand for its cleaning products this year, offsetting a decline in other areas. This has helped it weather the pandemic with relative ease.
Another company I would consider buying is health and safety business Halma. This organisation has gone from strength to strength over the past decade. Using a combination of organic growth and acquisitions, the firm’s profits have grown steadily, and investors have seen large returns. I think this trend will continue. As Halma continues to grow, it can roll more profit back into deals to boost its bottom line. Further, the market for health and safety equipment is only likely to continue to expand in the long run.
On the same theme, I would add distribution group Bunzl to my portfolio. This is another business that has a strong track record of growth through acquisitions and organic expansion. As distribution is a relatively low-margin business, the most prominent companies tend to achieve the best returns. As one of the largest distribution businesses in the country, this suggests Bunzl is well placed to continue its growth march in the decades ahead.
Income investments
If I were to ask the internet ‘how should I invest,’ I would see some articles about buying dividend stocks. That’s how I’d manage my portfolio. I’d own growth stocks alongside some dividend champions. In this case, I’d pick mining group BHP and Phoenix.
I’m excited about the near-term prospects for BHP. As the world tries to rebuild after Covid-19, demand for raw materials will likely rise, which should push up prices. As the world’s largest mining group, BHP should see more enormous profits as a result.
Meanwhile, Phoenix Group is seeing rising demand for its services from companies. Businesses pay the organisation to take on their pension funds. Phoenix can use its size and scale to push down costs and increase profit margins. It then returns extra cash to investors. The stock supports a dividend yield of around 6.5%, which, in my opinion, makes it a top income stock.
