Everyone remembers their first time, right? I know I remember buying my first FTSE stock like it was yesterday!
My arms were sweaty, knees weak, arms were heavy. Luckily, I didn’t get any vomit on my sweater, probably because I’m not a fan of spaghetti.
Jokes aside, let’s face it, it’s much easier to buy stocks these days. Technology in the world has moved on. It’s easy enough to set up a trading account, deposit money, and buy stocks at the touch of my fingertips using a smart device.
Let’s say I was investing for the first time today, and had £1K to spend. I would buy National Grid (LSE: NG.) and Unilever (LSE: ULVR) shares to start with.
Here’s why!
What they do
National Grid is the sole owner and operator of the gas and electricity transmission system in the UK. In simpler terms, it makes sure everyone gets energy to their homes and businesses.
Unilever is one of the largest consumer brands businesses in the world spanning personal care, hygiene, food products, and more. It possesses a huge presence worldwide and has a wealth of experience behind it.
The bear case
It’s worth remembering that all stocks come with risks.
Looking at National Grid, maintaining such a large, extensive, and pivotal piece of infrastructure isn’t easy or cheap. Problems with this type of endeavour could hurt performance levels, which underpin shareholder returns.
Furthermore, the government could intervene and curb the level of dividends and returns the business distributes to its shareholders. This is because it is a regulated business.
For Unilever, the current inflationary pressures that the global economy is battling with is an ongoing risk. This could hurt the business on two fronts. Firstly, rising costs could take a bite out of profit margins. The other issue is that consumers may look for non-branded items from supermarket disruptors or discount retailers, rather than the premium branded items that the giant produces.
The bull case
To the good stuff then — National Grid’s monopoly and defensive traits mean revenues are quite stable. The defensive element comes from the fact that everybody requires energy, no matter the economic outlook.
Looking at some fundamentals, a dividend yield of 5.3% is attractive. Plus, the shares trade on a price-to-earnings (P/E) ratio of just five, making them look good value for money at present.
Moving over to Unilever, it’s hard to ignore the sheer brand power and market dominance the business possesses.
This has helped it become one of the largest businesses of its kind, backed up by a healthy balance sheet and great future prospects. In fact, one of these future prospects includes a change in its modus operandi. The firm is disposing of lesser performing brands. It is also planning to invest more money into better performing ones in its portfolio.
Unilever shares offer a dividend yield of 3.7%. The shares trade on a P/E ratio of 16, which isn’t as low as National Grid. However, the shares traditionally trade much higher than this. It could be a shrewd time to snap up some shares.
