How I'd Invest $10,000 Right Now
Tracking the S&P 500 may not be optimal anymore, and there can be better ways for investors to gain a mix of dividends, stability, and growth.
Investing $10,000 wisely in today's stock market can be a challenge due to rising interest rates, high valuations, and political uncertainty affecting stocks. While the S&P 500 has traditionally been a solid move for long-term investors, it now has significant exposure to overvalued tech stocks, which may not suit risk-averse investors.
To achieve a better balance of risk and reward, I would consider investing in three types of assets: the Schwab U.S. Dividend Equity ETF (SCHD -0.97%), Verizon Communications (VZ +0.42%), and Viking Therapeutics (VKTX -2.76%).
First, I would allocate $5,000 to the Schwab U.S. Dividend ETF, which offers diversification and substantial dividend income. The ETF's yield of 3.2% is much higher than the S&P 500's average yield of 1.1%. It holds about 100 quality stocks, ensuring safe dividend payments and minimizing risk exposure. Over the past year, the ETF has gained 30%, proving its value amid market uncertainty. By investing $5,000 in this ETF, half of the portfolio is secured with a well-diversified fund.
Next, I would invest $3,000 in Verizon Communications, a stock that has been undervalued due to speculation about its future in the mobile carrier market. With a price-to-earnings ratio of 11 and a yield of 6.3%, Verizon offers an attractive combination of affordability and income. Its payout ratio of 72% indicates a safe dividend payout. Allocating $3,000 to this stock would lock up $8,000 of the portfolio into income-generating assets.
Finally, I would direct the remaining $2,000 to Viking Therapeutics, a small healthcare company with a promising GLP-1 treatment called VK2735. If approved, this treatment could significantly boost Viking's stock value. Although the company has faced mixed reactions in the market, I believe its promising clinical trial results and potential acquisition by a larger healthcare firm make it a worthwhile investment.
However, due to the higher risk associated with this investment, allocating only $2,000 to Viking Therapeutics is a more appropriate strategy.
By balancing these three investments, I believe this portfolio offers a good mix of stability, dividends, and growth potential, making it a suitable choice for the current market conditions.
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