Choosing your first ASX stock to invest in can be a big deal. Whilst hopefully it will represent the start of a long and prosperous journey of building wealth, we also have to consider that choosing a share that ends up faring poorly can have disastrous consequences for beginner investors' morale.
As such, I think an investor's first stock is an important choice and one with a big impact on how said investor can move forward with the share market.
So here's why I think a perfect candidate for a beginner investor's first $500 investment is Coles Group Ltd (ASX: COL).
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Why I'd choose ASX 200 blue chip Coles for a first ASX stock
There are two reasons why I would go with Coles as a starter ASX stock.
The first is Coles' position in its industry. Here we have a strong, mature and dominant company that is the established duopolistic player in the Australian supermarket and grocery space.
To start with, supermarkets are a consumer staples industry that is highly resistant to recessions, inflation and other economic shocks. We all have to eat, after all.
As such, Coles' position in this industry makes it a very resilient business that will be making profits, regardless of the economic weather. No ASX share is 'safe'. But there's very little chance this company will ever go broke, in my opinion. I think these are important traits for an ASX investor's first share to have.
The second is Coles' dividend chops. Coles shares have only been on the ASX in their own right since 2018:
But in the years since its ASX debut, it has been steadily building up its fully-franked dividends. In 2019, investors received a total of 35.5 cents per share in dividend income.
This rose to 57.5 cents per share in 2020, 61 cents per share in 2021 and 63 cents per share in 2022. Coles' first dividend of 2023 is set to be an increase over 2022's corresponding payment as well. Today, Coels has a dividend yield of around 3.7%, which grosses up to a high-yielding 5.29% with the value of those franking credits.
So all in all, I think these two reasons make Coles an ideal candidate for a first ASX share to buy with $500. It's a strong and stable company with a high dividend yield. What better way to begin an ASX share portfolio?
