The Motley Fool

GlaxoSmithKline plc, Banco Santander SA & Unilever plc Make Up My Perfect Starter Portfolio

Trying to build your own investment portfolio from scratch can be a daunting prospect, but in reality it’s quite easy.

A key way to start search for opportunities is to search out stocks that fit into one of two groups: growth and income. Of course, shares that offer the perfect blend of growth and income are the best picks.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

And on that basis, GlaxoSmithKline (LSE: GSK)Santander (LSE: BNC) and Unilever (LSE: ULVR) look to be three perfect starter portfolio picks. 

Income play

When it comes to income, Glaxo ticks all the boxes. At present levels the company offers a dividend yield of 5.1% and the payout is covered one and a half times by earnings per share. The long-term, defensive nature of Glaxo’s business means that it is perfect for any beginner’s portfolio, too.

Along with a range of pharmaceutical products, the company also produces a leading range of consumer healthcare products, such as toothpaste, mouthwash, Panadol, skincare products and even Horlicks. The essential nature of these products means that customers will continue to buy from Glaxo day after day, giving the company a predictable income stream and base to grow from.  

Unfortunately, due to Glaxo’s defensive nature and lofty dividend yield, the market has put a premium valuation on Glaxo’s shares. The company currently trades at a forward P/E of 17.3 but as an income play this premium is worth paying for Glaxo’s market-leading dividend yield.

European growth 

As a growth play, Santander is a great pick. Now, usually I’m not a fan of banks, but Santander has shown over the past year that it is not a normal bank. After Emilio Botín — who ran the bank for 28 years — died in September, the bank has made some drastic changes. 

In particular, after raising $9bn in new capital and cutting its dividend payout, Santander is set to become one of Europe’s most liquid banks. By 2016 the group’s tier one ratio, under Basel three standards, is expected to be in the region of 10% to 11% compared to expectations of 8% to 9% for peers.

A stronger balance sheet gives Santander more room to grow and benefit from economic growth within Latin America, and a return to growth within Europe. Management expect the capital raising to start contributing to growth by 2016.

There’s also the improving European economy to consider. Standard should benefit from increased business activity as well as a lower level of loan impairments throughout the rest of the decade. 

City analysts expect Santander’s earnings per share to expand at a mid-teens rate every year until 2017 — that’s growth worth paying for. At present Santander trades at a forward P/E of around 12, and based on the group’s projected growth rate this indicates a PEG ratio of 0.9. 

Long-term play

Unilever offers the rare combination of both growth and income. Further, just like Glaxo, Unilever produces and sells a range of every day consumer products and food, which makes the group a defensive pick that’s well placed to generate long-term growth. 

But just like Glaxo, Unilever is also expensive at present levels. The company currently trades at a forward P/E of 21.3 and supports a dividend yield of 3.2%.

Still, sometimes you have to pay a premium for quality and it’s worth paying extra for Unilever’s defensive nature and long-term growth outlook. For investors who are just starting out in the stock market, you can’t go wrong with Unilever. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Rupert Hargreaves owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. The Motley Fool UK owns shares of Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.