If you're a beginner investor when it comes to ASX stocks, you may be wondering where to start.
Motley Fool has created some great guides when it comes to beginning with ASX shares.
Deciding what to invest in might be overwhelming because of how many different businesses we can choose to invest in. There are thousands of companies on the ASX, as well as other choices like exchange-traded funds (ETFs).
If I were starting from scratch, I'd want to choose investments that offered me diversification, which is why I like these three investments.
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Wesfarmers Ltd (ASX: WES)
This ASX stock represents a number of different businesses across different sectors.
It owns Bunnings, Australia's biggest hardware retailer. Kmart and Officeworks are arguably the strongest discount retailer and office product retailer. Priceline is one of the biggest pharmacy companies in Australia.
I really like that Wesfarmers is expanding the non-retail side of the business.
It has one division called Wesfarmers chemicals, energy and fertilisers (WesCEF). Inside this segment, it's working on a joint venture lithium project, which could add at least $1 billion of earnings.
As a bonus, Wesfarmers is projected to pay a grossed-up dividend yield of 5.5% in the current financial year of 2024 according to Commsec.
Metcash Ltd (ASX: MTS)
Metcash supplies IGA supermarkets around the country, providing the ASX stock with a defensive base of earnings.
It also supplies a number of independent liquor retailers such as IGA Liquor, Bottle-O, Cellarbrations and Porters Liquor.
Finally, it owns a few different hardware brands including Mitre 10, Home Timber and Hardware, and Total Tools.
This isn't exactly a high growth ASX share, but each segment has been doing work on improving its operations (such as a new distribution centre) and offering customers an even more compelling service.
With the Australian population steadily growing and expected to keep rising thanks to an elevated level of immigration, this should boost Metcash's total potential customer base, which can help earnings over time.
It trades on a relatively low price/earnings (P/E) ratio, so the high dividend payout ratio (of 70% of underlying net profit after tax (NPAT) means the ASX stock's grossed-up dividend yield is 8.25% according to Commsec.
Betashares Nasdaq 100 ETF (ASX: NDQ)
This is actually an ETF, not actually an ASX company, but we can buy it on the Australian Securities Exchange, just like a normal ASX stock.
I think this particular ASX-listed ETF is a great option for beginner investors because of the strength of the businesses that it's invested in.
The biggest positions in the portfolio are the US giants like Amazon.com, Apple, Microsoft, Alphabet, Tesla, Nvidia and Berkshire Hathaway.
There are also a number of businesses that are leaders in their respective areas, but aren't quite as big as the above names, such as Costco, Intuitive Surgical and Qualcomm.
I believe that being invested in some of the world's best businesses gives investors the chance to deliver good returns. Over the last three years, the NDQ ETF has delivered an average return per annum of 15.6%, though past performance is not a reliable indicator of future performance.
