If you're considering getting into the stock market, now may be an opportune time. Although a bear market may be concerning, it won't last forever. The markets have recovered from crashes, inflation, and even world wars. Legendary investor Warren Buffett, for example, first invested in the stock market in 1942, in the early stages of World War II.
While this recent bear market may have you worried, it shouldn't discourage you from investing in it. If I had $10,000 to start investing with right now, the three stocks I'd put in my portfolio are Camping World Holdings (CWH 0.22%), ExxonMobil (XOM 0.39%), and Curaleaf Holdings (CURLF 2.70%). Here's how I'd allocate those funds to ensure a good mix of dividends and growth potential without taking on too much risk.
Camping World Holdings: $6,000
The bulk of my investment would go toward Camping World Holdings, a retailer of recreational vehicles that also sells camping equipment. It offers financing, which can make it affordable for consumers to buy an RV without breaking the bank. In the long haul, using an RV can make for a cost-efficient vacation option, which is why I'm bullish on its growth prospects.
The company's business is solid as Camping World is also coming off the best second-quarter results in its history. At $2.2 billion, sales for the period ending June 30 were up 5.2% year over year. Rising costs chipped away at net income (it fell 20% from the prior-year period), but diluted earnings per share of $2.01 are still more than enough to cover its quarterly dividend payment of $0.625.
At close to 10%, Camping World offers a mouth-watering yield that can generate tons of dividend income for you. On a $6,000 investment, that's $600 you could be collecting each year just in dividends. Not only is the current dividend safe (the payout ratio is just 42%), there's room for Camping World to increase its payouts. And this year, it hiked its dividend by 25%.
Camping World is down 37% this year as investors may be overly bearish on the yield, assuming that at such a high percentage, it could be due for a cut, which doesn't look to be the case. At a discounted price, trading at less than five times its earnings, Camping World's stock could be a steal of a deal right now.
ExxonMobil: $3,000
Another top dividend stock I'd put money into is ExxonMobil. The top oil and gas producer pays a yield of 4%, and with earnings coming up, the company may soon announce an increase to the dividend. Exxon is a Dividend Aristocrat, and it has increased its payouts for nearly 40 consecutive years, averaging a 6% increase during that time.
In addition to the dividend, the reason I'd put nearly one-third of an investment into Exxon's stock is because it can be a hedge against inflation. Rising oil prices this year have boosted the oil producer's profits. Through the first two quarters of 2022, Exxon has generated $23.3 billion in profit versus $7.4 billion over the same stretch last year.
The company's shares have also soared close to 50% since the start of the year, with investors betting that oil prices remain elevated. The only reason I wouldn't put an equal amount of money into Exxon as I would into Camping World is that oil prices can be incredibly volatile; last year, they even went negative for a brief period. As a result, Exxon's stock can be riskier when holding for the long term and thus justifies a smaller investment. Although that may seem like a bad strategy this year, with Exxon outperforming Camping World by a huge margin, that's not a trend I would expect to last over several years.
Curaleaf Holdings: $1,000
The previous two stocks were about dividends, safety, and offsetting inflation. With Curaleaf, this investment is all about sheer growth potential. And the $1,000 investment represents the risk that comes with investing in a pot stock. Although Curaleaf is one of the largest cannabis companies in the world, reporting just under $1.3 billion in revenue over the trailing 12 months, it's also the only company on this list that remains unprofitable.
Curaleaf is a large multistate marijuana operator with a presence in 21 states. Its revenue has been growing but at a declining rate in recent quarters due to an excess of supply in the cannabis industry.
Data by YCharts.
However, the industry will have more growth opportunities as more states and countries globally legalize marijuana for medicinal or recreational use. Analysts from Fortune Business Insights see the global cannabis market reaching a value of nearly $200 billion by 2028, growing at a compounded annual growth rate (CAGR) of more than 32% until then.
Given the industry's potential, I think it would be a mistake for growth-oriented investors to overlook it despite its risks. And with a top company like Curaleaf, you're decreasing some of that risk by going with a big name here that could generate significant long-run returns for your portfolio. Although the stock has tanked 60% this year, so has the Horizons Marijuana Life Sciences ETF. Investors have been bearish about the industry as a whole, but that trend is likely to change in the long term.
