It’s a myth that you need to be rich to be able to invest. The ability to buy just one share of any stock means you can easily gain exposure to some of the best companies in the world with minimal capital. The beauty of investing is that you can pace your purchases and invest at regular intervals: If you’re in the market for the long term, there’s no major rush to deploy your money.
If you have $2,000 to spare, you should consider parking it in well-run businesses that suffer from weak near-term sentiment but are still fundamentally strong. The important thing to remember is to focus on how the business is doing and to concentrate your search on stocks with strong franchises, a great track record of growth, and tailwinds that can help to grow their revenue and net income well into the future. When a crash inevitably comes along, you can stand ready to swoop in to buy such stocks.
1. American Tower
If you are an income-seeking investor looking for a stable source of dividend income, American Tower (NYSE: AMT) could be the investment for you. The owner and operator of almost 219,000 communication sites generates consistent leasing income from long-term tenant contracts that have built-in rental escalation clauses. The real estate investment trust (REIT) also enjoys high renewal rates, as its clients, some of whom include reputable telecommunication companies such as AT&T (NYSE: T) and Verizon (NYSE: VZ), cannot find alternative sites.
American Tower’s stock has tumbled around 14% since the start of the year as investors panicked at the prospect of rising interest rates. The fall opens up a golden opportunity to give your portfolio exposure to growth of the digital economy and 5G communications. Plus, its dividend history is impressive: American Tower has grown its payouts at an annual rate of around 22% from 2012 to 2020. Although its year-over-year dividend growth has slowed to 15% in 2021, it still beats inflation, which recently hit a near four-decade high of 7%.
There’s more growth in store for this REIT as it utilizes acquisitions to boost its portfolio of communication sites. American Tower acquired Telxius Tower a year ago for approximately $9.4 billion, adding around 31,000 sites in Europe and Latin America. And just two months ago, the company acquired CoreSite Realty for $10.1 billion in cash in a move that added data centers and cloud on-ramps into its portfolio. American Tower is boosting its mobile edge computing division while continuing to increase its stable of communication sites. Investors can count on the REIT to continue delivering increasing distributions in the years ahead.
Microsoft (NASDAQ: MSFT) is known for its eponymous suite of word processing and spreadsheet software that almost every individual and organization crosses paths with. However, the technology company provides many other products and services, such as cloud computing, professional networking, and server products. The software giant’s 10% year-to-date tumble opens up a great opportunity for investors to buy into a business with a great track record that’s riding on sustainable tailwinds.
Microsoft has reported a stellar set of financials over the last three fiscal years. Total revenue has increased from $125.8 billion to $168.1 billion from fiscal years 2019 to 2021, while net income has jumped from $39.2 billion to $61.3 billion. During this period, free cash flow has surged by nearly 47% from $38.3 billion to $56.1 billion. The growth momentum has continued into its fiscal 2022’s first quarter with revenue climbing by 22% year over year and net income soaring by 47.6% year over year to $20.5 billion.
The technology giant’s growth is not running out of steam anytime soon. It has proven that it can develop and monetize new technology, such as with the roll-out of its cloud product, Microsoft Azure. Microsoft can also tap into the metaverse to increase its revenue sources. Its recently announced acquisition of Activision Blizzard for a whopping $68.7 billion, which will instantly propel it into the league of the top-three gaming companies in the world and give it a leg up in the digital universe. Both the gaming and metaverse sectors show great potential for future growth, and Microsoft is well poised to capture a large slice of each space.
10 stocks we like better than American Tower
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and American Tower wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of January 10, 2022
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Royston Yang owns American Tower. The Motley Fool owns and recommends Activision Blizzard, American Tower, and Microsoft. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.