Guide To A Solid and Profitable Portfolio

Mitchell Clark: When it comes specifically to dealing with stocks, creating a portfolio does not need to be complicated.

Depending on your goals, any equity market portfolio is well served by a handful of anchor positions. These are stocks representing underlying businesses with long track records of wealth creation. Preferably, they pay dividends, and those dividends can be reinvested into new shares if the income is not required.

All stocks are volatile and inherently risky securities (The Procter & Gamble Company (NYSE:PG) had an earnings miss in 2000 and took six full years to recover).

While buying and selling stocks are business decisions, the stock market is an emotionally driven secondary market of corporate ownership. Within it, however, investment risk can be managed through diversification and the quality of the underlying businesses themselves.

Choosing five core anchor positions is a good way to start. I’m a huge believer in dividend income; and if that income isn’t required, dividend reinvestment compounds your returns and is a solid path to genuine wealth creation from the equity market.

The following are five examples of stocks that may be considered as core positions.

1. Johnson & Johnson (NYSE:JNJ): With more than 50 years of consecutive dividend increases, Johnson & Johnson is a dividend-paying blue chip with three main business lines, including consumer products, pharmaceuticals, and medical devices. The company typically announces a quarterly dividend increase in the second quarter of the year.

2. Colgate-Palmolive Company (NYSE:CL): A well-known producer of toothpaste, soap, deodorant, and dog food, Colgate-Palmolive is a consistent grower of diluted earnings per share and dividends, and a consumer products favorite.

(...)Click here to continue reading the original article: Guide To A Solid and Profitable Portfolio [Johnson & Johnson, Nike Inc, The Procter & Gamble Company, 3M Co]

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