There’s a vast choice for anyone looking to start investing in UK stocks. Personally, I’d want to have a solid base from which to build out my portfolio. With this in mind, here are the five stocks I’d buy to start investing in August.
Brand powerhouses
Consumer goods giant Unilever is a stalwart of many a portfolio. It owns trusted household brands, including Persil, Vaseline and Hellmann’s. Repeat buys of such products across the world give the company resilient cash flows, whatever the economic conditions. Shareholders receive quarterly dividends and the annual yield is running at 3.5%.
In the face of competition, Unilever has to work hard to keep its brands relevant to the tastes and preferences of new generations of shoppers. The value of my shares and dividend could suffer if it fails to do so, but it has a long experience of handling this risk.
Another brand powerhouse is also on my list of stocks to start investing. Whitbread owns the UK’s biggest and most popular hotel chain, Premier Inn. It’s also recently entered the German market and has a multi-decade opportunity to replicate the brand’s UK success. Understandably, the company has had to conserve cash through the pandemic and isn’t currently paying a dividend.
Virus variants and entering a new market are risks for Whitbread. However, its long growth runway excites me and I think the risk/reward balance is good.
Necessary supplies and medical devices
You may have seen Bunzl‘s vehicles on the road, with their distinctive blue-and-green livery, but may not know what the company does. It owns an international sourcing and distribution network, providing other companies with necessary supplies. This includes everything from workwear to cleaning and hygiene products. Its dividend yield of 2.1% isn’t the highest, but it has a 28-year track record of consecutive increases.
Part of Bunzl’s growth has come from its acquisition strategy. This is riskier than organic growth, but the company has a long history of successfully buying and integrating complementary businesses.
I also think Smith & Nephew is another good stock for me to start investing. The company designs and manufactures medical devices. It specialises in orthopaedic reconstruction, endoscopy, and advanced wound management. Like Bunzl, it has a relatively modest dividend yield (1.8%). But it’s paid a dividend every year since 1937.
The company’s suffered during the pandemic from much-reduced levels of elective surgeries. As such, renewed pressure on healthcare systems from a surge in virus variants is a near-term risk to Smith & Nephew’s recovery. Focusing on the long term helps me accept this risk.
Start investing with gold?
Investors have mixed views on gold. Some steer clear of it altogether. I’m in the camp that favours having some exposure to this traditional ‘safe-haven’ asset. With London-listed gold miners, I’d want to own a few to mitigate geopolitical risk. This is because their assets are generally in potentially less stable areas of the world.
Instead, I’d start investing by buying iShares Physical Gold ETC. This simply owns gold bullion but its shares trade on the London Stock Exchange. There’s less risk — solely the volatility of the price of gold — than with owning miners. And I think it’s a good choice for my starter portfolio.
