If I won the lottery, chances are the excitement would carry me straight down to the luxury car dealership, and home in one of these mean machines:
Source: Lotus Australia website
After registration, insurance, maintaining a second car for my daily driver, and buying a garage to store the Lotus in because I'm too scared to leave it in the street, I could use the remaining dollars to pay off my uni debts and be back precisely where I started.
Not living in a big city has its advantages though, and a 20-hour drive to the Lotus dealership in Brisbane means plenty of time to cool off and realise that, invested correctly, $1 million in lotto winnings could leave me set for life.
Since $1 million bucks is substantially greater than my existing portfolio, I'm going to need a whole new one.
Here's how I'd spend it:
Sonic Healthcare Limited (ASX: SHL) – last traded at $19.64, yields 3.6% fully-franked
Sonic runs a whole pile of diagnostic and pathology services in Australia – think Queensland X-Ray, Sullivan Nicolaides Pathology, Douglass Hanly Moir pathology, and many more.
The company has a long-term history of growing by acquisition and uses new purchases to increase its scale, while also entering into foreign markets successfully.
Although half year 2015 net profit declined slightly, revenue continues to grow and Sonic has powerful tailwinds in the form of an ageing population. A fantastic 'buy and hold forever' kind of company.
I would invest a hypothetical $150,000 into Sonic.
Woolworths Limited (ASX: WOW) – last traded at $29.45, yields 4.7% fully-franked
Woolworths shares have suffered recently as losses mount at Masters Hardware and concerns grow over its sales lagging behind competitor Wesfarmers Ltd (ASX: WES), which operates Coles supermarkets.
Fellow contributor Owen Raskiewicz has been buying into Woolies in a big way and I agree that the company's advantages mean it's still a solid long-term prospect.
(You can read Owen's take on the myriad advantages of owning Woolworths shares here).
I would invest a hypothetical $100,000 into Woolies.
In my mind, no portfolio can be complete without a reasonable exposure to the resources sector. Since we're talking long-term here, investors will want to look only at the very best companies – in this case BHP Billiton Limited (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL).
Both companies pay reasonable dividends and have great commercial advantages derived from their scale. However with conditions in the oil and iron ore sectors looking less than ideal, I would wait for things to improve before buying.
I would put a hypothetical $50,000 each into BHP and Woodside, once the future of their markets becomes more clear.
FlexiGroup Limited (ASX: FXL) – last traded at $3.54, yields 4.9% fully-franked
FlexiGroup is a great way to gain exposure to the retail sector, as this company offers a variety of interest-free consumer financing arrangements on all kinds of office equipment.
A recent expansion in New Zealand also puts FlexiGroup in the driver's seat in that market, with potential benefits in the form of government contracts and better deals with suppliers.
I would invest a hypothetical $100,000 in FlexiGroup.
Last but far from least, Collection House Limited (ASX: CLH) changes hands for $2.16 a share and offers a 3.8% fully-franked dividend.
Despite a long history of profitability, earnings growth is slowing somewhat as competition in the debt collection space grows (partly thanks to low interest rates reducing bad debts).
The company continues to grow profits and dividends however, and over the medium term a return to interest rate normalcy should see powerful tailwinds in the form of increasing bad debts at the big banks.
Collection House is an interesting way to own a capable company with financial exposure without owning one of the 'Big Four' banks.
I would invest a hypothetical $100,000 in this stock.
Readers who have been counting the dollars with me will realise that I've only allocated $550,000 so far.
Where's the other $450,000?
Well, it's important to keep a strong cash balance to pick up some more great stocks when the opportunity arises – you didn't think your portfolio would be complete after 6 stocks, did you?
Definitely not.
In fact while this portfolio is pretty well balanced – Sonic for defensive healthcare and an ageing population, Woolies for defensive grocery exposure, BHP Billiton and Woodside Petroleum for the major resources, FlexiGroup for retail exposure and growth, and Collection House for financial and rising interest rate exposure – we're far from finished.
Further complementary stocks should be purchased in increments over time – but there's one stock missing that should be added right away.
It's The Motley Fool's Top Stock for 2015, and it's a dominant online company that neatly fills the tech stock gap in this portfolio.
With a 3.3% fully-franked yield and comprehensive dominance in the Australian market – not to mention exciting plans to replicate domestic success overseas – it is well deserving of a spot in your portfolio alongside these market leaders.
Best of all, you can get TMF's full coverage FOR FREE, simply by clicking on the link below and entering your email address!
