Beginning the adventure of investing in FTSE companies can feel like a maze of endless choices. However, armed with the right knowledge, I think it’s one of the most rewarding things a person can do.
I’ve been investing in the stock market for quite some time, and if I were starting over from zero, I’d look at making these two companies the first in my portfolio.
UK’s largest petcare company
My investment in Pets at Home (LSE:PETS) is one of my favourite purchases of all time. I particularly like how stable its balance sheet is. If a company I have a stake in has more equity than debt, that always helps me sleep well at night.
The firm is the largest petcare business in the UK, and it offers items for dogs, cats, fish, reptiles, birds, and wildlife. It also has veterinary services.
While there are other shares out there that might appreciate in price faster than Pets at Home, being a shareholder in this company feels more reliable to me.
That said, the price is down 44% since 2021. There are two ways I can look at that. In one sense, some volatility has been experienced in the past by shareholders. That’s a risk I need to consider.
On the other hand, a depressed price can give me a good buying opportunity. A lower price can indicate a better valuation, which means the price could rise faster if revenue and profits keep performing as expected.
I’m also pleased to know it pays out a generous 63% of its earnings to shareholders. That could help my monthly bills.
A top British board game business
Games Workshop (LSE:GAW) is another company that I’d buy again if I had to start over. When I first invested in the business, I knew I’d be holding it for life if possible.
With the company set to expand further overseas, I consider there to be a significant growth opportunity here that’s yet to come. It’s also planning on building a new factory to keep up with heightened demand. Sold-out launch products have even crashed its website before!
It pays out 100% of its earnings as dividends at the moment. That’s arguably not sustainable, but it’s great news if I want passive income.
The firm’s biggest risk is arguably its valuation. A price-to-earnings ratio of around 22 means the shares aren’t exactly ‘on sale’.
Nonetheless, its price is still down 20% from all-time highs. Therefore, if I was starting from zero, now would be the time I’d buy.
Reinvesting my passive income
As both of these companies pay healthy dividends, I’d look at reinvesting those, especially if I’m starting from scratch.
It’s wise for me to focus on growing my investment pot early and throughout my life until my elder years. Then I’ll have more security when a steady salary is no longer coming into my bank account each month.
If I’d started with £1,000 and invested in the two companies mentioned, after 30 years, I could be looking at a portfolio worth £1.3m. That’s if I reinvested my yearly dividends and contributed an extra £200 per month.
Of course, that’s not guaranteed and I could lose money too. But I wouldn’t just hold these two shares. I’d diversify for extra security.
The post 2 compelling FTSE ‘starter’ stocks I’d invest in appeared first on The Motley Fool UK.
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Oliver Rodzianko has positions in Games Workshop Group Plc and Pets At Home Group Plc. The Motley Fool UK has recommended Games Workshop Group Plc and Pets At Home Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
