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There is no right or wrong answer to the question of what is the best stock to buy at any given time. It depends on what is happening in the market, but, above all, it also depends on the investor.
For example, I think October would be a good time to buy FTSE 100 insurer Avivabut one thing stops me. I already have a lot of interest in the rival. Legal and General Group so you would run the risk of being overexposed to the fate of a single sector.
Many other factors come into play, including my experience and how much money I have to invest.
My first stock pick
For example, if I were buying my first individual stock, I wouldn't start with a luxury automaker. Aston Martin Holdings. Its shares are volatile and I only bought them myself after creating a balanced portfolio of 24 more sensible stocks.
If I was starting from scratch and only had £500, I'd want something whose actions weren't likely to spiral out of control and deter me from investing forever.
With that in mind, I'd go for a solid blue chip from the FTSE 100 and one called caught my eye – the consumer goods giant. Unilever (LSE: ULVR). This is not a “here today, gone tomorrow” company. It was founded in 1929. While there is no guarantee that it will survive another century, its history gives me a degree of comfort.
Unilever is a huge global company that has the best brands. Axe, Ben & Jerry's, bovril, Pigeon· Domestos, Magnum, sun silk, Vaselineand many more. An estimated 2.5 billion consumers use them every day.
Unilever is where I would start
It does not sell expensive and luxurious items, but rather basic everyday items with high brand recognition and loyalty. This helps protect sales in a recession, when people cut back, while generating a lot of additional income in good times.
However, Unilever got into a bit of a pickle in recent years. It became too big and sprawling. Activist investors began snooping around and pushed to dissolve the company. Sales fell as customers felt the pressure. Fortunes come and go even in the biggest and best companies.
Unilever is steadily recovering. In 12 months, its shares have risen 19.76%. If we add to that a dividend yield of 3.03%, the total return is 22.79%. It's always worth noting that returns are not guaranteed. I have no idea where it will go next year, but in the long term, I'm optimistic that it can outperform the FTSE 100, and with less volatility along the way.
Unilever shares are trading at 22.46 times earnings today. That's comfortably above the FTSE 100 average of 15.7 times. It's a premium price for a premium company. But it's a great way to get started with £500.
There is a downside to investing a small sum in this stock. Today, each share costs 48.93 pence. That means my reinvested dividends wouldn't be large enough to automatically buy more shares. So I would look to increase my involvement over time. That 500 pounds is just the beginning.
