Investing in stocks right now isn't easy, given market volatility, but I am going to lay out a strategy that will balance growth, dividends, and stability. It's a plan that can appeal to long-term investors and keep you invested in the stock market while trying to keep your overall risk low.
By focusing on safety and dividends, while still leaving some room for risk, you can create a well-balanced and diversified portfolio. Here's how I'd set up my portfolio today if I had $10,000 to invest right now.
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Put $5,000 in a top dividend stock
Dividend stocks can be valuable investments to hang on to, regardless of what's happening in the market. The recurring income they pay can not only pad your overall returns, but you can also use that cash for your day-to-day needs to avoid cashing out of your other investments, should you need money.
You could invest in an exchange-traded fund for this purpose, but you can collect a higher yield by picking a single stock. And the one I'd pick for this purpose is Enbridge (ENB -0.20%). The pipeline company plays an important role in the oil and gas industry, and its financial performance is incredibly steady. Management is confident that the company will hit its financial guidance in 2025 for a 20th consecutive year.
And that consistency and reliability is crucial when you're counting on dividend income. At 6%, Enbridge's yield is far higher than the S&P 500 average of 1.3%. On a $5,000 investment, you'd be collecting $300 per year in dividends.
But that's not all, as Enbridge has increased its dividend for 30 consecutive years and has been known for routinely increasing its payout over the years. With strong financials and the company still expecting more profit growth in the years ahead, it's highly likely that dividend income will continue to rise in the future.
Allocate $4,000 into a top growth stock
I'd also put a significant chunk of cash into a stock that has promising growth potential, but that isn't too risky. Alphabet (GOOG 3.42%) (GOOGL 3.45%) makes for a suitable option here, as it's a big name in tech, has some fantastic assets in YouTube and Google Search, and it has also been investing heavily in artificial intelligence (AI).
Due to antitrust issues, there are concerns of a possible breakup of the business in the future, which is why the tech stock has been struggling this year and is trading down around 12% in 2025. But it shouldn't be a reason to avoid the stock because investors would still get compensated for any spun-off businesses. However, there's no certainty as to how everything will play out just yet.
But buying the stock when others are fearful of it, just as the good old Warren Buffett quote says to do, can allow you to scoop it up for a good discount -- Alphabet stock trades at just 19 times its trailing earnings. For a company that generated $75 billion in free cash flow over the trailing 12 months, that's just too good of a deal to pass up.
Swing for the fences with the remaining $1,000
This strategy is primarily for long-term investors, and with a long-term view, I also think allocating $1,000 to a bit of a riskier stock with a ton of upside can be a great move. A good stock for this purpose is Green Thumb Industries (GTBIF -3.16%). It's a cannabis company with a lot of potential to become more valuable in the future.
Nationwide marijuana legalization in the U.S. likely won't happen for several years (if ever). But if it does, one stock that stands to benefit significantly is Green Thumb, which has a presence in 14 states and has over 100 retail stores. Legalization would remove inefficiencies, make it easier to obtain access to funding from banks, and allow businesses to transport cannabis across state lines.
Green Thumb could also trade on a major U.S. exchange, which could draw in more investors in the process. There are a lot of potential benefits that would come from legalization for the cannabis company. But with investors skeptical about the prospects for legalization, pot stocks have been nosediving. And even though Green Thumb is one of the safer cannabis companies to invest in (it is profitable despite full-scale legalization), it has lost more than half of its value in the past three years.
The company's fundamentals aren't bad, but unfortunately, the industry's growth prospects and a lack of federal legalization are hurting it right now. That's why this is a stock I'd put $1,000 into and forget about. You could end up incurring significant losses if things don't pan out, but the upside could be tremendous if the prospects for legalization improve. This is why you wouldn't want to put too much of your portfolio into a stock like this, but it may make sense to at least have a modest position in it.
