The S&P 500 index of US shares provides a world of investment opportunities for individuals. The problem is that identifying the best stocks to buy among its many hundreds of listings can be a tough ask for new investors.
So here I’ll identify three great shares to consider buying today. With exposure to various industries and regions, they allow investors to achieve effective diversification — and with it the benefits of risk management and greater opportunities for wealth creation — that this provides.
With a mix of growth, dividend and value shares, this mini portfolio offers added advantages to stock pickers. Growth shares can rise strongly in price if earnings continue to soar. Meanwhile, value stocks can also deliver robust capital gains as the market becomes aware of their cheapness. And dividend shares provide a steady flow of passive income.
Growth
The S&P 500 is packed with high-growth technology shares. But the elevated valuations of many of these leave them in danger of further share price weakness.
However, the cheapness of Dell Technologies (NYSE:DELL) leaves it (in my opinion) at less risk than other more expensive tech businesses. Its forward price-to-earnings (P/E) ratio sits at just 10.3 times.
By marketing a broad range of computer services and products, Dell shares provide multiple ways for investors to capitalise on the booming digital economy. I’m especially encouraged by its potential in the field of artificial intelligence (AI) — it’s expecting AI server sales of $15bn this financial year alone.
City analysts think total earnings will soar 110% in the 12 months to January 2026.
Value
Adding the iShares S&P 500 Value ETF (LSE:0JFT) to a portfolio has two significant advantages. Firstly, as an exchange-traded fund (ETF) it invests in a basket of assets, providing extra diversification benefits. Today, the fund has holdings in 398 US companies.
Secondly, it provides “exposure to large US companies that are potentially undervalued relative to comparable companies“. This can provide superior capital gains potential than a standard S&P 500-related ETF.
The cheapness of the fund can be seen in the following table:
| Fund | P/E ratio | Price-to-book (P/B) ratio |
|---|---|---|
| iShares S&P 500 Value ETF | 21.8 times | 3.2 |
| iShares Core S&P 500 ETF | 25.9 times | 4.7 |
Be aware however, that this value ETF is denominated in US dollars. This can leave investors more exposed to unfavourable movements on forex markets.
Dividends
Real estate investment trusts (REITs) like Crown Castle International (NYSE:CCI) can be excellent long-term dividend providers. Under REIT rules, annual dividends need to equate to at least 90% of profits from their rental operations.
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This doesn’t theoretically make them reliable dividend payers from one year to another. During tough economic times, earnings can suffer if they have problems collecting rents and/or occupancy issues arise.
However, Crown Castle’s focus on the defensive telecommunications industry substantially reduces this risk. The business provides shared communications infrastructure, including 40,000 cell towers across the country and around 85,000 miles of fibre.
The dividend yield here is a healthy 4.7%. I think it’s a top REIT to consider despite the problem of rising costs.
