When simply starting, the inventory market can appear extremely complicated. More often than not, it’s troublesome to know the place to start out.

After I first began investing, I didn’t have a lot of an concept about what I used to be doing. I invested in corporations with out doing the right due diligence. Sadly, it has meant that a few of my earlier investments misplaced me cash.

Nevertheless, over time, as I’ve realized extra concerning the inventory market, I’ve discovered a technique that fits me finest. Now, I concentrate on shopping for high-quality companies, predominantly on the FTSE 100 and FTSE 250, that I feel will be capable of present me with wholesome earnings over years and many years. I additionally goal corporations the place I clearly perceive the enterprise mannequin and the way income is generated.

If I have been beginning out once more, right here’s one inventory I’d think about shopping for if I had some money to take a position.

Unilever

The enterprise in query is Unilever (LSE: ULVR). The inventory has had an excellent begin to the 12 months, rising 11.7%. Which means it has outperformed the FTSE 100, which is up 6.7%.

After I take a look at investing in an organization, there are some things I make a beeline for. Firstly, how low-cost are its shares? Unilever trades on 19.6 occasions earnings. In comparison with the Footsie common of 11, which will look costly.

Nevertheless, that’s under Unilever’s historic common of 25. Which means there may very well be worth in its share price in the present day.

Secondly, does it pay a dividend? Dividends are a type of revenue sharing that corporations use to reward shareholders. Unilever has a yield of three.5%.

That’s nowhere close to the very best obtainable on the FTSE 100. Vodafone takes that crown with a ten.2% yield. Nevertheless, there’s a motive I favour Unilever’s dividend over the likes of Vodafone’s.

It’s as a result of the enterprise hasn’t minimize its payout for over 50 years. Dividends are by no means assured. A enterprise can scale back or minimize its payout altogether with out warning. We noticed this throughout the pandemic.

Subsequently, a observe document like that offers me confidence that the enterprise has put an emphasis on rewarding shareholders and can proceed to take action transferring ahead.

The dangers

Investing comes with dangers and with Unilever, I see some challenges.

The biggest is the truth that it faces stiff competitors from funds retailers similar to Aldi. Unilever sells premium merchandise that always come at a premium value.

As such, with many individuals struggling throughout the cost-of-living disaster, it could see them swap to extra reasonably priced options. Aldi has been aggressively gaining a higher share of the market in recent times, which can be a testomony to this.

Pricing energy

That stated, I nonetheless just like the look of Unilever shares in the present day. Whereas it faces competitors, it has confirmed not too long ago that it has robust pricing energy.

Final 12 months, though its costs jumped 6.8%, it nonetheless noticed underlying gross sales develop 7%. That highlights that demand for its merchandise is powerful.

As such, Barclays not too long ago raised its goal price for the inventory to five,200p from 5,000p. That represents a 21.5% premium from its present price.