How I'd Invest $10,000 Right Now

Investing in the stock market right now can be a bit tricky, with interest rates back on the rise, valuations being high, and loads of political uncertainty that could weigh on stocks in the near future.

Tracking the S&P 500, which is a collection of the leading stocks on U.S. markets, has normally been a good move for long-term investors, but the index has a lot of exposure to highly valued tech stocks these days. That may not be a tenable option for risk-averse investors.

Investors may want to seek a better mix of risk and reward. If I were investing $10,000 today, I would focus on three types of investments: the Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD), a strong exchange-traded fund (ETF) that pays dividends; Verizon Communications (NYSE:VZ), which is a top dividend stock that can provide a high but safe payout; and Viking Therapeutics (NASDAQ:VKTX), a long-term growth play that has some risk but also plenty of upside.

Here's how I'd allocate $10,000 to each one of those holdings, and why they can provide a good mix of stability, dividends, and growth.

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I'd put $5,000 into the Schwab U.S. Dividend Equity ETF

The Schwab U.S. Dividend ETF is a great long-term option that provides diversification and plenty of dividend income. At 3.2%, it's a far higher yield than what investors can get with the S&P 500, which averages a little under 1.1% right now.

The ETF has about 100 holdings, vetting them for quality to ensure that the dividend payments are safe and don't leave investors exposed to too much risk. This year, as many investors have pivoted to safe-haven investments, the ETF has climbed close to 30% in value. That isn't typical, but it's indicative of just how much value investors see in the fund amid uncertainty these days.

Putting $5,000 into the fund makes sense because it can generate a lot of dividend income and put half of the portfolio into a well-diversified fund right out of the gate. Effectively, it acts as an excellent pillar to build around.

I'd put $3,000 into Verizon's stock

The next $3,000, I'd invest in Verizon, simply because I believe it offers investors the best bang for their buck right now. It hasn’t gotten much love lately, as the market is essentially assuming the business is going to be in deep trouble, with Space Exploration Technologies Corp planning to make Starlink a major mobile carrier in the future. It's a risk that the market appears overly concerned about at this stage.

Verizon's been generating strong results this year, and it's up only 11%; it should be doing even better given its low valuation and high yield. Its price-to-earnings multiple is just 11, and its yield is a whopping 6.3%. It's a terrific payout that looks incredibly safe, as Verizon's payout ratio is around 72%.

That means $8,000 of my portfolio would be locked up in fairly safe, income-producing assets. Now, it's acceptable to take on a bit more risk with the remaining funds.

I'd invest $2,000 in Viking Therapeutics

Viking Therapeutics is a small healthcare company with a market cap of just $3.3 billion. But it has a promising GLP-1 treatment in VK2735 that, if it obtains approval, could send the stock skyrocketing. It's been demonstrating positive results in clinical trials. In September, the stock did surge after a trial showed that it can be highly effective as a maintenance dose, helping people keep weight they've lost, even after switching to monthly doses after taking the drug weekly.

The market seems to have a love-hate relationship with the healthcare stock, as it initially surged and then tanked afterward. Eli Lilly is the big player in GLP-1, but it's not likely to be the only one. VK2735 is incredibly promising, and I believe it will obtain approval, at which point a larger healthcare company may simply buy out Viking for the drug. I see a lot of upside for Viking's stock, but there's also risk here, which is why I would only want to allocate a modest amount of my entire portfolio toward it.

By setting up the portfolio this way, I think it strikes a good balance, and I believe it’s the appropriate strategy in the current market conditions.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly and Viking Therapeutics. The Motley Fool recommends Space Exploration Technologies and Verizon Communications. The Motley Fool has a disclosure policy.