Top Investment Opportunities with a $1,000 Budget at Present
Dropping a grand into the stock market might not seem like a lot now, but with commission-free and fractional trades, it's a breeze to builds stakes in stocks trading for hundreds or even thousands of dollars a pop.
For risk-averse investors, tossing a thousand bucks into an S&P 500 index fund or ETF is a smart move for keeping pace with the market. But if you're aiming for a bit more growth or income, consider investing that $1,000 in the tech powerhouse Nvidia (NVDA 3.97%) or wireless behemoth Verizon Communications (VZ -0.39%). Let me break it down.
NVDA
The growth stock: Nvidia
VZ
Nvidia's stock has skyrocketed approximately 2,040% over the past five years, taking a modest $1,000 investment and turning it into a hefty $21,300. The majority of that rocket ride was fueled by Nvidia's soaring sales of data center GPUs, used for processing artificial intelligence tasks. While CPUs process data individually, GPUs can simultaneously crunch through a vast array of integers and floating point numbers, making them perfectly suitable for tasks like rendering graphics, mining smaller cryptocurrencies, and processing large data sets for AI applications.
Nvidia currently supplies over 98% of the world's data center GPUs, assuring this market will continue to grow as AI applications expand. Looking at forecasts, professional analysts expect Nvidia's revenue and earnings per share (EPS) to increase at a compound annual growth rate (CAGR) of 57% and 65% respectively, from fiscal 2024 to fiscal 2027. Considering these explosive, yet reasonable valuations, Nvidia's stock is an exceptional bet, even if you've missed the historic rally of the last few years.
artificial intelligence (AI) tasks. Unlike CPUs, which process single pieces of data individually, GPUs can process a wide range of integers and floating point numbers simultaneously through scalar processing.
The dividend stock: Verizon
forward dividend yield of 6.9%. By comparison,
Bear in mind that Verizon was once considered the blue-chip dividend stock of telecoms, but after a significant dip, its stock now trades at just a meager nine times forward earnings, and offers a high forward dividend yield of 6.9%. In comparison, its competitor AT&T trades at a slightly more expensive 12 times forward earnings and offers a lower yield of 4.9%.
FCF) rose 6% to $19.8 billion and easily covered its $11.2 billion in dividend payments. In short, Verizon is a good way to earn some income as interest rates gradually decline. A simple $1,000 investment in Verizon would net an extra $69 in extra dividends every year.
Verizon stumbled a little in expanding its core wireless business, but in 2024, it regained its footing, more than doubling its postpaid phone net additions compared to 2023. Verizon achieved this milestone by simplifying incentives, optimizing marketing campaigns, enhancing customizable "myPlans," and expanding its distribution business with Walmart. It also bolstered its prepaid market by acquiring TracFone, and anticipates its wireless revenue to increase another 2%-2.8% in 2025.
As Verizon added customers and reduced churn rates, its wireless retail churn rate dipped from 1.67% in 2023 to 1.62% in 2024, while the operating margins of its consumer and business segments expanded. Verizon's free cash flow (FCF) similarly expanded, now easily covering its $11.2 billion in dividend payments. In summary, Verizon is the go-to choice for income-seekers as interest rates start to soften, making a $1,000 investment in Verizon reward you with an extra $69 in annual dividends.
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- For those interested in investing $1,000 in a growth stock, Nvidia (NVDA) could be an excellent choice, given its impressive 2,040% increase over the past five years.
- With a forward dividend yield of 6.9%, Verizon Communications (VZ) is a good option for income-seeking investors looking to earn some extra dividends each year.
- Investing $1,000 in Nvidia could potentially turn into a hefty $21,300 if its revenue and earnings per share (EPS) continue to grow at a compound annual growth rate (CAGR) of 57% and 65% respectively, from fiscal 2024 to fiscal 2027.
- In the text, the 'show_benchmark_compare' and 'collapse_on_load' functions are used to visually compare the performance of various stocks and indices, such as NVDA and VZ, with the S&P 500.