If you’re getting started with investing or want ideas on which stocks could be good buys in today’s market, let me walk you through how I’d invest $10,000 today.
What I think is important is to create some strong pillars in your portfolio, around blue chip stocks that you don’t have to worry about. This gives you a good base and foundation where you put the bulk of your money into. This is likely where you’ll also want to have some dividend income, just to pad your returns or generate valuable cash flow (should you decide not to reinvest the dividends). And after doing this, you can then take on some risk and potentially capitalize on lucrative opportunities in the long run.
Here’s how I’d allocate $10,000 using this approach.
Image source: Getty Images.
I’d put $6,000 into a top dividend stock
For a rock-solid base to build around, I’d pick Enbridge (ENB 1.42%) stock. The company has been growing its dividend for decades, has a stable, consistent pipeline business, and already offers a fairly high yield of 5%. It’s an absolute gem in the oil and gas sector, yet it doesn’t come with the risk that often accompanies these types of stocks. Since it’s involved in infrastructure and transporting oil and gas, it’s a much safer all-around investment to consider.
Today’s Change
(-1.42%) $-0.79
Current Price
$54.89
Key Data Points
Market Cap
$122B
Day’s Range
$54.78 – $55.77
52wk Range
$43.59 – $58.45
Volume
109K
Avg Vol
4.5M
Gross Margin
30.95%
Dividend Yield
4.97%
This year, the stock has performed particularly well, up 16%, as investors have been loading up on oil and gas stocks amid rising commodity prices. But Enbridge is a solid stock to own, regardless of the price of oil. It has averaged a beta of 0.81 over the past five years, indicating that it’s less volatile than the overall stock market. With a safe dividend and a robust business, I’d feel comfortable investing $6,000 in the stock, which, based on the current yield, would produce about $300 in dividends per year.
I’d invest $3,000 into an excellent growth stock
As part of a long-term growth strategy, I’d also want to put a fair bit of money into a promising growth stock. But I don’t want to put my money at risk and throw it at just any growth stock. Instead, I’d put it in a leading company such as Alphabet (GOOG 2.13%)(GOOGL 2.09%).
Alphabet stands out for its diversification and financial strength. Between YouTube, Google Search, Gemini, and Waymo, the company has promising assets that can drive growth for years to come. It offers the type of diversification you might crave in an exchange-traded fund, yet you get it through a single stock.
Today’s Change
(-2.13%) $-7.90
Current Price
$363.20
Key Data Points
Market Cap
$4.5T
Day’s Range
$360.79 – $370.06
52wk Range
$163.33 – $404.47
Volume
259.7K
Avg Vol
20.5M
Gross Margin
60.43%
Dividend Yield
0.23%
The company has a wealth of resources to tap into that can enable it to pursue more acquisitions in the future or simply reinvest in its current operations. Alphabet has generated a staggering $160 billion in profit over the past four quarters. Its business is growing, and its margins are impressive. This is the type of low-risk growth stock that can also make for an excellent long-term investment.
The last $1,000 I’d reserve for a stock with a bit more risk but a ton of upside
Now, with a couple of solid blue chip stocks in Alphabet and Enbridge, I can feel comfortable in taking on a bit more risk with the remaining $1,000. While I still don’t want to gamble on highly speculative investments, I do want to focus on a much smaller business that may have significant growth potential.
For this stock, I’d choose CRISPR Therapeutics (CRSP +5.17%). CRISPR has a market cap of $5 billion and could be much more valuable in the future. It and its development partner, Vertex Pharmaceuticals, have an approved gene-editing therapy, Casgevy, which is in its early stages of commercialization. Thus, CRISPR isn’t as risky as smaller biotech stocks without any approved products. It also has over $2 billion in cash and short-term investments to help fund its day-to-day operations, and also enable it to invest in other gene-editing therapies.
Today’s Change
(5.17%) $2.69
Current Price
$54.71
Key Data Points
Market Cap
$5.0B
Day’s Range
$51.75 – $55.10
52wk Range
$42.17 – $78.48
Volume
39.2K
Avg Vol
1.7M
Gross Margin
-528340.24%
CRISPR remains unprofitable, but it has some enticing growth opportunities. And I’d feel confident that even under a worst-case scenario where I lose most or all of my money in CRISPR, I could make it back through my other investments on this list. By having strong pillars in place, you can take on some risk while knowing you won’t put your overall portfolio in serious danger.
