The Best Stocks to Invest $1,000 in Right Now

Key Points

• Chevron is an integrated energy giant with an attractive yield and incredible dividend history.

• NextEra Energy combines a boring utility mixed with an exciting growth story, offering an attractive yield and strong dividend growth potential.

• Coca-Cola is a Dividend King that looks fairly priced, if not cheap, though that may not last long.

• 10 stocks we like better than Chevron ›

The S&P 500 (SNPINDEX: ^GSPC) index is hovering around its all-time highs, and stretched valuations are making buying stocks a bit more worrisome right now. Don't fret: Whether you have $1,000 or $100,000 that you're ready to invest, you have options. Three strong possibilities to buy right now are integrated energy giant Chevron (NYSE: CVX), utility giant NextEra Energy (NYSE: NEE), and beverage giant Coca-Cola (NYSE: KO). Here's a look at each of these reliable dividend stocks.

1. Chevron is built to survive hard times

Chevron's business is diversified across the energy landscape, with assets in the energy production, energy transportation, and chemicals and refining segments. Each of these parts of the energy sector performs a bit differently through the phases of the energy cycle, so having exposure to all of them helps cushion Chevron against the impacts of soaring or slumping commodity prices.

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On top of that, Chevron happens to have one of the strongest balance sheets among its close peers, with a debt-to-equity ratio of 0.2. During energy sector downturns, when its earnings slide, Chevron has the flexibility to take on debt to support its business and dividend. When energy prices recover, as they always have historically, it can (and does) pay those debt levels down again.

Its combination of a diversified business model and a strong financial foundation has allowed Chevron to increase its dividend annually for 38 consecutive years. That's an incredible streak given the inherent volatility of the energy sector. At the current share price, its dividend yield is about 4% -- well above average for the broader market and the energy industry specifically. So if you're in search of a reliable high-yield stock, you might want to put Chevron on your short list. A $1,000 investment would buy you about six shares of the stock.

Image source: Getty Images.

2. NextEra Energy is a dividend growth machine

NextEra Energy is really two businesses in one. First, the company operates regulated utilities, largely in Florida. The Sunshine State has long benefited from in-migration, and a growing base of customers means more revenues for NextEra and an easier time getting rate hikes and capital investment approved by government regulators. On top of that, NextEra has built one of the world's largest solar and wind power businesses. This is its major growth driver -- the company expects to roughly double its clean energy capacity over the next few years.

The key factor that attracts investors to NextEra stock, however, is its dividend. At the current share price, its dividend yield is around 3.1%, which is above the 2.7% average for a utility. And, on top of that, NextEra has grown its payouts at an annualized clip of 10% a year over the last decade. That would be a really good clip for just about any company, but for a utility, it's even more impressive. And based on management's forecasts, it will keep that pace up through at least 2026.

If you like dividend growth stocks, this relatively boring utility could be right up your alley. An investment of $1,000 would buy you roughly 13 shares.

3. Coca-Cola is fairly priced

Coca-Cola is the least attractive of this trio from a dividend yield perspective, given that it "only" pays 3% or so at its current share price. That yield, however, is well above the 1.2% average of the S&P 500 index and tops the consumer staples sector's average of about 2.5%. The big draw here is that Coca-Cola is a Dividend King -- one of the rare companies with dividend-hiking streaks of 50 straight years or more. Coca-Cola's streak, in fact, has run for 64 years.

It's also one of the best-known companies on the planet, selling an array of beverages from its namesake cola and other soft drinks to juices, energy drinks, coffee, and tea. Right now, consumers generally seem to be growing more interested in eating healthy, which has Wall Street a bit worried about the soda maker's future. That helps explain why a stock sell-off has pushed its price-to-sales and price-to-earnings ratios below their five-year averages.

Coca-Cola, though, has navigated through hard times before and will likely be able to do so again. So with the stock trading at a reasonable valuation, there's an opportunity here for new investors.

If you like to own the most reliable dividend stocks, Coca-Cola should be on your watch list, if not your buy list, right now. A $1,000 investment will buy you around 15 shares.

Plenty of options even in an expensive market

It would be understandable for investors to think that with the S&P 500 at such a lofty level, there are no good deals on stocks to be found right now. Yet Chevron, NextEra Energy, and Coca-Cola show that's not the case.

They are three of the best dividend choices out there today, but there are other similarly appealing options available if you look for them. Just make sure you take both the risks and the potential rewards into consideration whenever you examine a business. Each member of this trio has proven it has what it takes to survive the economy's rough patches and keep paying shareholders well all along the way.

Should you invest $1,000 in Chevron right now?

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and NextEra Energy. The Motley Fool has a disclosure policy.