stocks

Diving into the stock market can be an excellent way to build lasting wealth. One type of stock that you may find appealing is dividend stocks. A study conducted by Hartford Funds found that, over a 50-year period, dividend stocks consistently outperformed non-dividend payers with lower volatility.

Dividend Kings are companies that have consistently increased their dividends for 50 years or longer. These stalwarts have earned the trust of their shareholders and consistently demonstrated a proven ability to grow payouts year after year, regardless of the economic conditions.

If you’re looking to boost your portfolio with a passive income component and seek steady returns, here are three dividend stocks that could make excellent additions today.

Image source: Getty Images.

Federal Realty Investment Trust

Federal Realty Investment Trust (FRT -0.59%) operates as a real estate investment trust (REIT). It specializes in high-quality retail-based properties, which include shopping centers and mixed-use properties. As a REIT, Federal Realty is required to distribute 90% of its taxable income to shareholders, making it a popular choice among dividend investors.

Federal Realty holds the distinction of being the only REIT to earn Dividend King status, having raised its payout for 57 consecutive years. This impressive streak is a testament to its diversified holdings and strong balance sheet in what can be a volatile real estate market.

The REIT primarily invests in real estate regions characterized by high population density and affluent populations. This approach helps insulate it from changing economic conditions, as more affluent households can be resilient in the face of recessions or inflation in the economy. With a strong business and robust development pipeline supported by steady funds from operations growth, Federal Realty is a quality dividend stock to consider buying today.

Cincinnati Financial

Cincinnati Financial (CINF 0.06%) provides property and casualty (P&C) insurance to corporate and individual customers. It’s one of the top 25 largest P&C insurers in the United States.

In the insurance industry, underwriting profitable policies is the name of the game. Insurers like Cincinnati Financial operate in a highly competitive environment, so accurately assessing risk and pricing policies is crucial.

Over the past five years, Cincinnati Financial’s combined ratio has averaged a solid 94.6%. This means that for every $100 in premiums it writes, it has generated roughly $5 in profit. In the highly competitive insurance industry, the combined ratio tends to average around 100%, so consistently generating an underwriting profit is key to sustainable, long-term growth.

Cincinnati Financial boasts an impressive history of raising its annual cash dividend over the past 65 years. Only seven companies can boast a longer streak. Its long track record is a testament to its sound underwriting and stellar capital management. With a conservative dividend payout ratio of 29%, Cincinnati Financial is well-positioned to keep rewarding investors with a growing dividend.

S&P Global

S&P Global (SPGI -0.03%) provides credit ratings to entities that issue debt worldwide and serves an important role in financial markets. As a credit rating agency, it provides opinions about credit risk and the ability and willingness of entities to meet their financial obligations. Investors rely on these opinions on credit quality to help manage risk.

The company also owns the S&P 500 index (in a joint venture with CME Group), along with a variety of other index benchmarks used by professional investors. Finally, it provides data and analytics, such as through its Capital IQ Pro platform, which offers another stream of cash flow that’s uncorrelated with credit ratings.

S&P Global enjoys a robust 50% share of the credit ratings market, giving it a strong competitive advantage, especially considering the importance of credit ratings for the global economy. With its stable and diverse business model and strong balance sheet, S&P Global has grown its dividend payout for 52 consecutive years and has a solid platform to keep this streak going.

According to some research, healthcare stocks are about as cheap as they have been in three decades. Many have experienced significant headwinds recently, but for opportunistic investors, now may be a great time to explore the industry for potential deals. Plenty of promising, yet beaten-down, healthcare stocks can be had at reasonable valuations relative to their growth potential.

Two that are worth serious consideration are Pfizer (PFE -0.50%) and Vertex Pharmaceuticals (VRTX -1.00%). Here’s more on these drugmakers.

Image source: Getty Images.

1. Pfizer

Pfizer is staring down the barrel of several patent cliffs that should happen by the end of the decade. For example, the company’s anticoagulant, Eliquis, will lose patent exclusivity by 2029 at the latest. The market is factoring that in, and in addition to the poor financial results Pfizer has produced lately, it explains its terrible performance on the market over the past few years.

However, Pfizer is rebounding. In the second quarter, Pfizer’s revenue increased by 10% year over year to $14.7 billion. The company’s adjusted earnings per share grew 30% year over year to $0.78. These are strong results for a pharmaceutical giant.

Furthermore, Pfizer’s pipeline should enable it to overcome the upcoming loss of patent exclusivity. The company has earned approval for several new products in recent years that are still in their early growth stages, especially considering that some of them are expected to receive label expansions. Abrysvo, a vaccine for the respiratory syncytial virus, is one such newer product whose second-quarter revenue increased by 155% year over year to $143 million.

Elsewhere, Pfizer has significantly improved its pipeline in recent years through licensing deals in acquisitions. The company’s oncology pipeline appears particularly promising, boasting dozens of programs, at least some of which should yield excellent clinical results in the coming years.

Lastly, Pfizer has been engaged in cost-cutting efforts. The company is on track to deliver net cost savings of $4.5 billion by the end of the year and $7.2 billion by the end of 2027. These initiatives should help boost Pfizer’s bottom line, and they are even more important considering President Trump’s aggressive tariffs.

Pfizer’s overall business still looks robust enough to recover, despite upcoming headwinds. The stock’s forward price-to-earnings (P/E) ratio of 7.7 appears dirt cheap when compared to the industry average of 16.5 for the healthcare sector. The stock is a great choice for value investors right now.

2. Vertex Pharmaceuticals

Vertex Pharmaceuticals’ forward P/E tops 20, which makes the stock look fairly expensive compared to its healthcare peers. And when we consider that the company has encountered setbacks this year, including clinical trial failures and the distribution of some illegal knockoffs of its medicines in Russia, which has impacted its sales, the picture looks even bleaker.

But at current levels, Vertex Pharmaceuticals looks attractive considering its potential. For one, the company still holds a monopoly in cystic fibrosis (CF), a rare lung disease. And in that niche, Vertex Pharmaceuticals has a reasonable amount of whitespace. Although its first CF medicine has been on the market for over a decade, Vertex has developed newer and better products.

Trikafta and Alyftrek, Vertex’s newest launches in CF, won’t lose patent exclusivity until the late 2030s. In the meantime, thousands of patients eligible for these medicines remain untreated. Translation: Expect reasonable revenue growth from this franchise for the foreseeable future.

Now add to that the company’s newer launches: Journavx in acute pain and Casgevy in beta-thalassemia and sickle cell disease. The former fills a need: It became the first approved oral, non-opioid pain inhibitor. Opioid-based therapies come with the risk of addiction and other potentially severe adverse reactions. Journavx was only approved in January. It should make a meaningful impact on Vertex’s results sooner rather than later.

Casgevy’s case is a bit different. It first earned regulatory approval in late 2023, but it has not yet contributed significantly to Vertex’s sales. That’s because it is an expensive gene editing therapy that is complex to administer. However, Vertex Pharmaceuticals is making progress in securing deals with third-party payers. Casgevy has little competition and should also, eventually, see its sales ramp up.

Beyond that, Vertex Pharmaceuticals could earn approval for zimislecel, a therapy for type 1 diabetes, within two years. The company also has late-stage candidates that could make significant progress in the meantime. Vertex still has significant upside from its current levels. The stock has faced headwinds this year, but a turnaround is, indeed, on the horizon for the biotech stock.

It is tempting for a dividend investor to simply select the highest yielding stocks. The problem with that approach is that it exposes you to the risk of dividend cuts if the yield is too high for the company to support.

Which is why dividend lovers also need to consider dividend history as they look at a company. And, when you do that, you’ll find that companies like Pfizer (PFE -0.50%), which has a huge 7.2% yield, don’t match up to companies like Johnson & Johnson (JNJ 1.03%), Omega Healthcare (OHI -0.50%), and Merck (MRK -0.03%).

Here’s what you need to know about these three healthcare dividend stocks.

Image source: Getty Images.

1. If you need the money to live, dividend reliability is key

Pfizer is actually a well-run company. Sure, it is facing hard times right now, but it has dealt with difficult periods before and survived. It is highly likely that it will do so again, noting that some of the issues it is dealing with are a natural part of the pharmaceutical industry. For example, patent expirations are on the horizon, and it needs to find new drugs to replace older ones. Investors rightly worry about such patent cliffs, but they aren’t the least bit unusual for drug makers.

That said, Pfizer’s huge 7.2% dividend yield is also a reflection of the downbeat view among regulators and consumers around vaccines. So there’s more to watch here than the normal industry swings. But the same things could, largely, be said of Merck, one of Pfizer’s competitors. The drugs and vaccines in question are different, but the worries are basically the same. You could easily buy either one if you wanted exposure to the pharma sector. Why pick Merck and its less impressive, though still high, 4% yield?

The answer is simple. Merck has a long history of supporting its dividend even through difficult periods. Pfizer cut its dividend in 2009 when it bought Wyeth. The acquisition was good for Pfizer, but the dividend cut was terrible for income investors. If dividend consistency matters to you, Merck wins here.

Data by YCharts.

2. Omega Healthcare has survived the hardest of times

If Merck’s dividend resilience over time impresses you, you’ll probably find Omega Healthcare even more exciting. The company owns senior housing facilities, which were hard hit during the COVID-19 pandemic. To put it simply, older people in group settings were at severe risk of dying from the pandemic. That had the exact negative impact you would expect on nursing homes and similar properties. And yet Omega Healthcare, a senior housing-focused real estate investment trust (REIT), didn’t cut its dividend like many of its competitors.

It didn’t raise the dividend, either, but it did stand behind the payment, realizing that investors were relying on that quarterly check. That should make Omega’s nearly 6.4% yield look a lot more attractive, even for more conservative dividend investors.

Data by YCharts.

And don’t forget that the pandemic is now mostly in the rearview mirror. The second quarter of 2025 saw Omega invest in new assets, which should help spur growth and post an 8% year-over-year increase in adjusted funds from operations (FFO). With the business looking like it is on the mend, the dividend is likely more secure now than it has been in years.

3. The Dividend King approach

If you are looking to stick to only the most reliable of dividend companies, however, then you’ll want to buy a Dividend King. These are stocks that have raised their dividends for over 50 years. Johnson & Johnson’s string of over 60 annual dividend increases makes it the healthcare stock to beat when it comes to dividend reliability. Of course, investors know how reliable this drug and medical device maker is, so the stock is usually afforded a premium valuation. Right now, the yield is around 3% or so, the lowest on this list. However, it is still higher than the 1.7% yield of the average healthcare stock, making J&J a good pick for investors who place a high value on dividend consistency.

Clearly, Johnson & Johnson has its own warts to consider. For example, it faces all of the same issues in the pharma space as Merck and Pfizer. It is also dealing with a lingering class action lawsuit around talcum powder that it once sold. So even this Dividend King isn’t risk-free. But if history is any guide, you can count on the dividend continuing to be paid through thick and thin.

Don’t just jump at the highest yield

Although there’s nothing particularly wrong with Pfizer, a comparison to Merck, Omega, and J&J shows that a high yield isn’t the only factor you should consider if you are looking for a good dividend stock. If reliable dividend stocks are what you want populating your dividend portfolio, you will clearly want to look past Pfizer’s yield. And when you do that, you’ll likely find that Merck, Omega, and Johnson & Johnson all offer a more compelling combination of income reliability and yield.

For every winning stock or sector in 2025, you can also find some disappointments. The major indexes are doing well so far, with the Nasdaq Composite up 26%, the S&P 500 rising 11% and the Dow Jones Industrial Average moving 11% higher.

But there are plenty of big names that are struggling, and some are currently sitting near their 52-week lows. These could be tempting contrarian buys for investors looking to profit from what they believe will turn out to be temporary weaknesses for the companies in question. 

When contrarian investors pick well, it can be a winning strategy. Choose poorly, and you’ll be stuck with a value trap, or even worse, a situation where you’ve tried to “catch a falling knife.”

Here are two well-known companies that are in weakened positions right now that could be ripe for small investments.

Image source: Getty Images.

Chipotle Mexican Grill: Down 31% in the last year

Chipotle Mexican Grill (CMG -0.73%) stock seems to ride the highest highs and suffer the lowest lows. The company experienced a series of foodborne illness outbreaks in its restaurants from 2015 to 2018 that led to a $25 million fine from the Justice Department — the largest-ever regulatory fine in a food safety case. Those outbreaks drove away customers, sapped its profits, and clobbered the stock. But Chipotle addressed its issues, sales recovered, and the stock soared so high that in 2024, the company executed a 50-for-1 stock split to make the stock more accessible to employees and retail investors.

This year, however, that roller coaster has been heading down again. Chipotle currently trades just 4% above its 52-week low — and about 42% off its peak.

However, what makes Chipotle promising is its loyal customer base. Chipotle revolutionized the fast-food niche by offering something different than burgers, chicken, or sandwiches. Its ingredients use no preservatives, and its kitchens don’t have freezers because everything is prepared fresh. That helps make Chipotle appealing to health-conscious customers.

The company’s revenue in the second quarter was $3.1 billion, up 3% from a year before, although comparable restaurant sales fell by 4%. Adjusted earnings came in at $0.33 per share, down by $0.01 per share from the same quarter a year ago.

The company is dealing with higher prices for its ingredients, particularly steak and chicken, as well as modestly higher labor costs, all of which are cutting into the company’s margins. Management believes that full-year sales will be flat, but plans to open between 315 and 345 additional locations this year.

Target: Down 41% in the last year

Not so long ago, Target (TGT -0.82%) was a high-flying retailer viewed as a true challenger to Walmart. However, the last few years have not been kind. Revenue has declined since 2023, and the company’s stock is struggling. Currently, it’s down by about 50% from its peak, and trades less than 3% above its 52-week low.

The company is trying to turn things around by promoting Chief Operating Officer Michael Fiddelke to CEO — he’ll take over in February. Fiddelke has been central to Target’s efforts to be more flexible, use technology, and make the company more agile to position it for growth. He was credited for the success of Target’s omnichannel efforts, and also helped the company develop its private-label brands, which it can sell at lower prices while still earning better margins than it does on national brand products.

Sales in the second quarter were $25.2 billion, down nearly 1% from the prior-year period. The company’s operating income margin of 5.2%, down from 6.4% a year earlier. Gross margin was 29%, down from 30%.

Regardless of who is in the CEO’s office, Target will face a challenging environment, with supply chain issues, tariffs, and labor costs providing headwinds. Those who invest now should only do so if they have a long time horizon in mind. But considering that Target’s price-to-earnings ratios are still far cheaper than Walmart’s right now, it’s an intriguing bet on a retailer that at one point showed some real power on Wall Street.

TGT PE Ratio data by YCharts.

The bottom line

There are compelling cases for bargain-hunting investors to consider Chipotle and Target. Chipotle has a dominant brand, a loyal customer base, and it stands apart from other fast-casual restaurants. It has proven that it can face adversity, recover, and prosper. Target, meanwhile, has omnichannel strength, a growing base of private-label products, and new leadership waiting to take the helm. Both companies are turning profits — they’re just not making the margins that investors had hoped to see.

These are long-term contrarian plays right now that could profit shareholders handsomely as the companies rebound. But if you’re going to invest in either of them now, the position should only be a small piece of a balanced and diversified portfolio, and one that you plan to hold for at least three to five years.

$8,000.

That’s what the typical American has in the bank, according to the Federal Reserve. Most people need to use the money in their bank accounts to cover everyday expenses. However, some people, particularly those with more than $8,000 in the bank, may be able to invest a portion of their savings as a way to grow their money.

Let’s examine two stocks that investors on a budget may want to consider.

Image source: Getty Images.

AT&T

First, there’s AT&T (T -1.12%).

The telecommunications giant fits the bill as a bargain stock for several reasons. Let’s start with the most obvious: Its stock recently cost less than $30 — meaning most investors can afford to own a decent number of AT&T shares.

However, it’s not just AT&T’s low stock price that makes it appealing for investors looking for a bargain. There’s also the fact that AT&T’s valuation is affordable. AT&T’s price-to-earnings (P/E) ratio, which compares its stock price to its earnings per share, is around 17x.

In comparison, the S&P 500 market index has a P/E ratio of about 30x. Moreover, many high-flying tech stocks sport P/E ratios north of 100x. Media-streaming veteran Spotify, for example, has a P/E ratio of 164x, as of this writing.

Finally, AT&T is a bargain buy for another reason: Its business model is solid, if not all that exciting. The company has refocused its efforts on delivering wireless and fiber service. It divested its media assets, spun off its WarnerMedia holdings, and sold its stake in DirecTV.

As a result, the company is better positioned to pay down debt — it still has more than $141 billion in net debt on its balance sheet — and return value to shareholders through dividend payments. The company pays a quarterly dividend of $0.2775, which works out to an annual dividend amount of $1.11 per share, resulting in a dividend yield of 3.75%.

AT&T offers a solid value, making it a name that investors on a budget should consider.

Alphabet

Next, there’s Alphabet (GOOG 1.04%) (GOOGL 1.06%).

At first blush, Alphabet might seem like a strange stock for bargain-seeking investors to consider. After all, shares of Alphabet recently were trading at around $249 each.

However, bargains aren’t only found in low-priced stocks. Indeed, with the widespread availability of fractional share trading, the market price of a stock no longer matters the way it did in the past.

What makes Alphabet a stock for bargain-seeking investors is its wonderful mix of business segments. Alphabet is no one-trick pony.

Let’s start with its most profitable and best-known operation: Google Search. The company’s search business is its crown jewel. It generates more than $200 billion in annual revenue. What’s more, this online behemoth is still growing like a weed. Search revenue increased 12% year over year in the recent second-quarter report, despite concerns that ChatGPT and other AI-powered chatbots would eat away at Google’s search engine dominance.

In addition to its powerful search segment, Alphabet has other powerful divisions. Its Google Cloud segment, the third-largest player in the red-hot field of cloud services, racked up $13.6 billion in revenue last quarter (the three months ended June 30, 2025). That’s a year-over-year growth rate of 32%. The company also recorded more than $17 billion in quarterly ad revenue from its YouTube division and its Google network (Gmail, etc.).

All in all, Alphabet’s mix of business segments and solid growth make it a stock that investors on a budget should strongly consider.

A flood of wealth is anticipated to sweep from baby boomers to younger generations over the next couple of decades. Cerulli Associates estimates $106 trillion will pass to younger generations. Of that, a large chunk is destined to be passed on to the companies that manage their finances.

Robinhood (HOOD 1.90%) and Lemonade (LMND 2.67%) are two fintechs laser-focused on providing financial services to Great Wealth Transfer winners. Robinhood offers the next generation of investing, banking, and credit products. Lemonade does the same for insurance.

Here’s a look at each.

Image source: Getty Images.

1. Robinhood

Robinhood is widely seen as the face of fintech by young, tech-savvy investors. It pioneered zero-commission stock trading, a win that continues to pay reputational dividends. It continues to attract interest by beefing up its premium Gold subscription. Perks include 3% IRA match, a credit card with 3% rewards, and $1,000 of interest-free margin trading. The subscription is cheap, at $5 a month as of this writing.

Robinhood has promising user base demographics. In a May 2025 Investor Day presentation, the company discloses the median age for Robinhood customers is 35. Robinhood is popular with millennials and Gen X, the two generations primed to inherit the most over the next 10 years. But what really sets it apart from competitors is how it’s sprinting to meet these users where they’ll be not next year, but a decade from now.

The company has diversified from trading into wealth management and banking, a huge profit driver. The recent unveiling of Banking and Strategies products is evidence of a company executing on an ambitious long-term vision. Both product lines are key to convincing young and maturing customers that Robinhood is a “serious” wealth manager.

The stock is far from undervalued. As of this writing, it trades at a forward price-to-earnings (P/E) ratio of over 50x, a valuation typically attributed to tech stocks — much higher than the 29x S&P 500 (^GSPC 0.48%) average. There might be better-valued opportunities among competitors like Block.

Strong fundamentals justify its high multiples. The company is profitable and has been so for over a year. It’s grown total platform assets at a staggering 99% in a single year, and it has over $4 billion on the balance sheet — plenty to invest in growth, or lean upon during tough times.

Robinhood’s young user base, ambitious vision, and strong fundamentals position it perfectly to win the Great Wealth Transfer. Its quickly growing suite of products is proof the company is moving to meet the next generation where it’s at: online, via an award-winning interface that does investing, banking, and wealth management.

2. Lemonade

Lemonade is very well positioned to serve as a major insurer of young and maturing users. It offers insurance via the Lemonade app, an artificial intelligence (AI)-powered interface that can pay out claims in as little as 3 seconds. It typically attracts customers with the promise of cheap rental insurance. As customers mature, they purchase higher-margin insurance from Lemonade, like Car and Pet.

Powerful machine learning models put Lemonade in a league of its own. From Car to Life, these models gobble up data that the company uses to improve predictions. Combined with AI models that manage customers and employees, it can scale premiums from $609 million to $1,083 million while shrinking operating expenses, excluding growth spend.

To scale quickly, Lemonade is leaning into the expansion of its car insurance product. Car insurance is a huge unlock for users who want to stick with a single insurer across all products, snagging discounts. Lemonade knows this. In the Q1 2025 Shareholder letter, the company reveals it sees a 60% boost to conversion rates in states where it offers car insurance.

Lemonade has yet to prove it’s a sustainable business. The company is unprofitable, a red flag in a volatile market that places a premium on stability.

Critics point to the Car product in particular. Car insurance is a loss leader, with an 82% loss ratio, well above the 40% to 60% industry ideal. That needs to improve. An ideal gross loss ratio is typically between 40% to 60%, according to data by Relativity6.

All signs point to Lemonade reaching profitability on a reasonable timeline. Gross loss ratios, a key insurance metric, are trending in the right direction: down. Loss ratios dropped from 79% in Q2 2024 to 69% in Q2 2025. Lemonade expects to reach adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability in 2026, meaning the core business generates more profits than it spends. Investors would love to see it.

Great Wealth Transfer winners to buy and hold

Robinhood and Lemonade may be the real winners of the Great Wealth Transfer. Both are innovative fintech companies with strong and improving fundamentals. I plan on holding both in my portfolio for five years or more.

Today is the day.

At 2 p.m. ET Wednesday, give or take a few minutes, the Federal Open Market Committee should decide on its next round of interest-rate changes. Presumably it will lower its target interest rate from the current range of 4.25% to 4.5%, to one of 4% to 4.25% — a quarter-point cut. Potentially, it could lower the interest rate by twice as much — 0.5%.

Either way, and assuming a cut of any size at all, this will be the first interest-rate cut by the Federal Reserve in the past nine months, the Fed having last cut rates (also by 0.25%) back on Dec. 18, 2024.

Image source: Getty Images.

Why might the Federal Reserve cut interest rates?

Economists seem pretty certain a rate cut of some size is in the offing. According to the latest inflation update here at The Motley Fool, inflation is still running hotter (2.9%) than the Fed’s target rate of 2% — which you might think would give the Fed some pause. That said, the jobs market is showing sufficient signs of weakness that the Fed is getting concerned — and inclined to roll the dice and risk a bit of extra inflation in hopes of goosing the jobs numbers higher.

In July, the U.S. Bureau of Labor Statistics (BLS) reported that only 73,000 net new jobs were created, which was below projections. Then came August’s number, which was an objectively horrible 22,000 net new jobs — less than one-third of what economists had predicted. And all of this came after May and June jobs numbers were revised downward by more than a quarter-million.

So the jobs market doesn’t look great, and that means the Fed probably will cut rates today. Now what does this mean for you, the individual investor?

What it means for investors

Believe it or not, bad news for the jobs market and worrisome trends in inflation are both generally interpreted as good news for the stock market — at least when a Fed interest-rate cut is on the table as a possible solution. This is because when the Fed lowers interest rates, it becomes cheaper to borrow, and cheaper to pay interest on debts, which can be a boon for companies not yet earning profits.

Which kinds of companies? Well, maybe I’m biased because I write a lot about nuclear stocks. But if you ask about companies that might benefit from debt getting a bit cheaper, the first to come to my mind are the handful working to develop a new generation of small modular (and micro) nuclear reactors (SMRs). In order from smallest to largest, these include Nano Nuclear Energy (NNE -2.67%), NuScale Power (SMR -4.70%), and Oklo (OKLO -2.77%).

Investors value these three companies very differently. Nano Nuclear is worth only $1.5 billion in market capitalization, versus NuScale with an implied market cap of $11.1 billion, and Oklo tipping the scales at a weighty $14.1 billion.

But in many respects, these three companies look similar. Neither Nano Nuclear nor Oklo has any revenue to speak of. NuScale, which does have some revenue (from technology licenses, not from actual sales of either reactors or nuclear energy), still did only $56 million in business over the last 12 months — enough to value the stock at nearly 200 times sales.

Lacking revenue, it stands to reason that all three of these nuclear energy stocks are also unprofitable. What worries me more than the losses based on generally accepted accounting principles (GAAP), though, is the fact that these companies must continue burning through their cash reserves as they work toward commercializing their technology. Any nuclear stock that runs out of cash before it starts generating positive free cash flow on its own is at risk of needing to sell shares, or take on debt, to raise the cash it needs.

It’s here that lower interest rates from the Fed could lend a helping hand.

Who benefits most from a Fed rate cut?

I expect NuScale Power to benefit more than the others from a rate cut today. With only $420 million in the bank and an annual cash burn rate of $95 million, NuScale’s on course to be the SMR stock that runs out of cash first — potentially before it reaches profitability in 2030 (according to analysts polled by S&P Global Market Intelligence).

In contrast, both Oklo (with $534 million in cash and a burn rate of $53 million per year) and Nano Nuclear (with $210 million and $23 million, respectively) already have enough cash laid up to keep themselves in business for roughly a decade.

Relatively speaking, they’re both in stronger financial positions than NuScale is — but for this very reason, I expect NuScale stock to benefit most from today’s Fed rate decision.

Cathie Wood is in a good groove again. The largest of the exchange-traded funds (ETFs) she manages as CEO of Ark Invest is up by 77% over the past year, crushing the market. The aggressive growth stocks she favors are in style on Wall Street, and investors are paying attention to her moves.

She did a little more buying than usual on Tuesday, adding to her funds’ existing positions in Advanced Micro Devices (AMD -0.92%), Airbnb (ABNB 1.31%), and Figma (FIG 2.27%). Let’s take a closer look at these three dynamic stocks.

1. Advanced Micro Devices

It has been a wild ride lately for AMD investors. The maker of central processing units (CPUs), graphics processing units (GPUs), and other types of microprocessors has seen its shares more than double since bottoming out in early April after the first wave of concerns about President Donald Trump’s tariffs rattled the market. However, despite that surge, the stock is barely trading 5% higher over the past year. Yes, this chipmaker has underperformed the market over the past year. No one said that investing in AMD was going to be boring.

The case for buying AMD stock these days is clear. Booming demand for generative artificial intelligence (AI) means that tech players will keep building out massive new data centers to crank out resource-intensive results. AMD makes chips that propel data centers onto their AI-rendering journeys. It’s not the top dog in this niche, but there is clearly room for more than one canine here.

Image source: Getty Images.

There are some signs that AMD stock might be taking a breather — the shares have slipped by 15% from the 52-week high they touched last month. After a year of accelerating revenue growth, AMD’s top-line increase slowed to 32% in the second quarter. Management is forecasting revenue growth of just 28% year over year in the current quarter.

One analyst did downgrade the stock late last week. Erste Group’s Hans Engel feels that its valuation is elevated given the lack of improvement in its operating margins and its unimpressive returns on equity. AMD also trades now for about 27 times next year’s expected earnings, which Engel believes is a bit too high. So he replaced his earlier buy rating on the stock with a hold rating.

That valuation may seem high for a company experiencing decelerating growth, but there are external issues contributing to the drag. AMD, like others in this space, has been caught in the crossfire of the trade war, which is restricting sales of its potent Instinct MI308 GPUs into China. It’s still selling plenty of chips elsewhere, though, and its client and gaming segment is in the midst of a resurgence, with sales up 69% in the second quarter.

2. Airbnb

Airbnb shareholders could probably use a vacation. The stock is up just 4% over the past year — and trading 7% lower year to date despite 2025’s generally buoyant market environment. The top app for booking vacation properties has found revenue growth for the fourth consecutive year. However, the 13% year-over-year increase it booked in its latest quarter was its healthiest result in more than a year.

There are certainly plenty of reasons to be concerned about investing in Airbnb. Trade war rhetoric is making international travel less savory. Closer to home, more companies are requiring employees to return to working in offices, which means fewer will be able to travel — often using an Airbnb — while still getting work done remotely. The biggest area of looming concern for the company’s outlook, though, is that the U.S. economy may be softening. Consumer confidence has been dropping for the past year, and when people are worried about their finances, they may not see springing for a getaway as prudent. Meanwhile, hotel chains are hopping into Airbnb’s niche, offering standalone property rentals to loyalty club members who are pining for something different.

The good news is that Airbnb is still a moneymaker. It has generated $4.3 billion in free cash flow over the past year. Management appears to see the stock as a good deal at current prices, given that it announced a $6 billion share buyback authorization this summer. It’s trading at just 25 times forward earnings, a historical low for the travel platform operator.

Though artificial intelligence has been the hottest trend on Wall Street, it’s far from the only catalyst responsible for sending the benchmark S&P 500 (^GSPC -0.13%) to new heights. Investor excitement surrounding stock splits in high-profile businesses has played a close second fiddle.

A stock split allows a publicly traded company to cosmetically adjust its share price and outstanding share count by the same factor. These changes are “cosmetic” in the sense that they don’t impact a company’s market cap or its operating performance.

Image source: Getty Images.

Typically, investors keep their distance from businesses enacting reverse splits and gravitate to those announcing and completing forward splits. The latter is designed to lower a company’s share price to make it more nominally affordable for retail investors who can’t buy fractional shares through their broker. Companies that complete forward splits are usually out-innovating and out-executing their competition.

As of the closing bell on Sept. 12, three magnificent businesses had announced and completed forward splits this year. Whereas the benchmark S&P 500 has risen by roughly 12% on a year-to-date (YTD) basis, Wall Street’s trio of stock-split stocks has crushed it!

O’Reilly Automotive: up 36% YTD

Though it wasn’t the first to complete its split, auto parts supplier O’Reilly Automotive (ORLY -0.85%) kicked off stock-split euphoria in 2025 by announcing its intent to conduct a 15-for-1 forward split in mid-March. O’Reilly sought shareholder approval for its largest-ever stock split and was granted it, which paved the way for its split taking effect before the opening bell on June 10.

While shares of the company have jumped 36% on a year-to-date basis, they’re up closer to 67,000% since its initial public offering (IPO) in 1993.

O’Reilly Automotive has a few important tailwinds working in its favor. On a macro basis, S&P Global Mobility recently reported that the average age of vehicles on U.S. roadways jumped to 12.8 years in 2025. For context, this is up from an average of 11.1 years in 2012. With consumers hanging onto their cars and light trucks longer than ever before, they and their mechanics will be turning to auto parts retailers like O’Reilly to keep these vehicles in tip-top shape.

Additionally, O’Reilly has reworked its distribution system to ensure that drivers and mechanics have access to the parts they need. O’Reilly entered the year with 31 distribution centers and close to 400 hub stores. These hub stores feed from the distribution centers and ensure that outlying retail locations have access to more than 153,000 stock keeping units (SKUs) delivered same-day or on an overnight basis.

From an investment standpoint, O’Reilly’s greatest gift might just be its stellar capital-return program. Since initiating a share repurchase program in January 2011, O’Reilly has spent $26.6 billion to buy back almost 60% of its outstanding shares. For companies with steady or growing net income, buybacks can provide a big boost to earnings per share (EPS).

Image source: Getty Images.

Fastenal: up 32% YTD

A second stock-split stock that’s come close to tripling the year-to-date return of the broad-based S&P 500 is wholesale industrial and construction supplies company Fastenal (FAST -1.07%). Shares are up 32% YTD, but more than 150,000% since its August 1987 IPO.

Stock splits might as well be part of Fastenal’s corporate culture. The 2-for-1 split that was announced in April and effected prior to the start of trading on May 22 marked the ninth time in 37 years Fastenal had completed a split.

Fastenal is a company that benefits immensely from the disproportionate nature of economic cycles. This is to say that while economic downturns are normal, healthy, and inevitable, they tend to be short-lived. The average economic expansion since the end of World War II has stuck around five years, which is fantastic news for a company whose growth tends to ebb-and-flow with the health of the U.S. economy and cyclical industries.

Fastenal’s ongoing success is also reflective of its closeknit ties to its most-promising clients. During the second quarter, more than 73% of its net revenue traced back to contract sales, which are multisite, local, regional, and government customers that offer significant revenue potential. Being able to place its inventory solutions on-site helps integrate Fastenal’s products into the supply chains of its most important customers.

Lastly, innovation has been key to Fastenal’s six-digit percentage rally since its debut. The company’s managed inventory solutions, such as its internet-connected wireless vending machines and inventory tracking bins, help its clients save money and ensures that Fastenal has a good bead on the supply chain needs of its customers.

Interactive Brokers Group: up 44% YTD

However, the top-performer among stock-split stocks in 2025 is automated electronic brokerage firm Interactive Brokers Group (IBKR 0.45%), which has rallied 44% YTD and 438% over the trailing half-decade.

Unlike O’Reilly Automotive and Fastenal, Interactive Brokers made history when it completed a 4-for-1 forward split before the opening bell on June 18. This marked its first split since becoming a public company in May 2007.

One of the top tailwinds for Interactive Brokers Group is the stock market being in an uptrend. When the S&P 500 is hitting new highs, investors have a tendency to want in on the action. This typically means trading more, adding more money to the platform, and potentially using margin. Bull markets for the S&P 500 often create an excellent operating environment for Interactive Brokers.

Another factor fueling this outperformance is the company’s investments in technology and automation. Though these investments came at a cost, they’re allowing Interactive Brokers to offer higher interest rates to customers on cash kept in their accounts, as well as lower borrowing rates for margin. These are attractive perks that are clearly resonating with investors.

The final piece of the puzzle is that every meaningful key performance indicator for Interactive Brokers is pointing significantly higher. During the June-ended quarter, customer accounts and customer equity on the platform jumped 32% and 34%, respectively, with daily active revenue trades (a measure of trading activity on the platform) climbing 49%! It’s not hard to see why Interactive Brokers Group is leading the way in 2025.

One of the most common misconceptions about investing is that you need a significant sum of money to get started. Too often, would-be investors sit on the sidelines, waiting to accumulate what they perceive is “enough” capital before making their first move.

The reality is that even a modest investment can provide ownership in some of the world’s most influential businesses. With the right mindset and a commitment to long-term growth, a small stake today can become the foundation for meaningful wealth in the years ahead.

With that in mind, here are six artificial intelligence (AI) stocks you can begin building a position in with just $1,000.

Image source: Getty Images.

The hardware backbones

AI development is inseparable from infrastructure. As demand for compute and inference continues to accelerate, investors should focus on the companies supplying the hardware backbone that makes this growth possible.

At the top of this list is Nvidia (NVDA -1.55%), the undisputed leader in AI infrastructure. Its graphics processing units (GPUs) remain the gold standard for training AI workloads, while its CUDA software architecture helps form a deep competitive moat — making it both costly and complex for developers to switch providers.

In practice, rising capital expenditures (capex) from hyperscalers flow directly back to Nvidia. This creates a lucrative feedback loop: More investment in AI infrastructure drives ongoing demand for Nvidia’s chips, which in turn fuels the next wave of applications beyond today’s large language models (LLMs).

Nebius Group is emerging as a notable player in the evolving cloud infrastructure landscape. The company’s business model centers on renting GPUs through a specialized platform designed to help enterprises manage AI workloads with greater efficiency and flexibility.

Positioned as both cost-effective and technologically capable, Nebius is carving out a niche in infrastructure-as-a-service (IaaS) beyond incumbents like CoreWeave. Nebius benefits from strong ties to Nvidia and recently secured a $17.4 billion partnership with Microsoft.

The silent giant enabling the GPU ecosystem is Taiwan Semiconductor Manufacturing. While designers like Nvidia and Advanced Micro Devices capture outsize attention, it’s TSMC’s foundry that brings their chips to life — producing semiconductors at the most advanced nodes available.

As emerging AI applications in robotics and autonomous systems demand increasingly sophisticated fabrication processes, TSMC’s deep footprint in cutting-edge manufacturing is set to expand.

The software superstar

Once dismissed as a niche government contractor, Palantir Technologies (PLTR -0.58%) has transformed into one of the most formidable players in the software arena. Throughout the AI revolution, the company has gone toe to toe with enterprise incumbents like Salesforce and SAP, carving out market share across the private sector and proving its platform is indispensable.

What truly differentiates Palantir is the trust it commands at the highest level. While smaller rivals such as C3.ai and BigBear.ai are left chasing deals that are narrow in scope, Palantir is securing $10 billion contracts with the U.S. Army and forging strategic alliances with NATO.

Even more telling is how tech titans like Amazon, Microsoft, and Oracle have opted to partner with Palantir rather than compete head-on. This alignment opened new doors in healthcare, energy, and financial services — where Palantir is winning sticky, long-term contracts that provide durable revenue visibility and expanding unit economics.

In short, Palantir has evolved into a cornerstone of the AI software landscape — positioned to scale alongside the public and private sectors as AI investments continue to move downstream.

A magnificent duo

While infrastructure and software tend to dominate the headlines, two consumer-facing giants — Alphabet (GOOG -0.09%) (GOOGL -0.13%) and Meta Platforms (META 1.93%) — remain underappreciated relative to their “Magnificent Seven” peers.

Alphabet’s strength lies in the breadth and integration of its ecosystem. Advertising remains a cash cow fueled by dominance in search (Google) and engagement (YouTube). Yet beneath the surface, Alphabet has quietly built a vertically integrated AI empire: Custom Tensor Processing units (TPU) that rival with Nvidia’s GPUs, a rapidly expanding cloud computing platform, and DeepMind — Alphabet’s internal research lab driving breakthroughs that flow right into commercially available products.

Meanwhile, Meta commands arguably the most valuable social media network on the planet. With billions of users across Facebook, Instagram, and WhatsApp, the company is not only monetizing attention through advertising, but also unlocking new avenues of growth through AI-powered personalization. Few companies can deploy new features so broadly and effectively at scale — positioning Meta as a winner in the next phase of AI’s digital transformation.

Despite periods of turmoil in the stock market this year, most of the “Magnificent Seven” stocks have stayed hot. Those tech-focused megacaps have histories of generating strong earnings and free cash flows, and they’re all investing heavily in artificial intelligence (AI). Many investors expect them to be the primary beneficiaries of the AI revolution, which helps explain why their market caps have all now surpassed $1 trillion.

Despite their sheer size, some Wall Street analysts still foresee their shares making big moves upward. According to certain analysts, these two Magnificent Seven stocks could rise by 31% and 19%, respectively, over the next year.

Image source: Getty Images.

Microsoft: Reaping the rewards of AI investment

There was a time when investors had questions about Microsoft‘s (MSFT -0.44%) investments in artificial intelligence. But recent quarters have largely put those doubts to rest, and Microsoft’s stock has risen about 20% so far this year. In the company’s fiscal 2025 fourth quarter (which ended June 30), Microsoft’s Azure and other cloud services division, which houses a lot of its AI offerings, generated astounding revenue growth of 39% year over year.

“Cloud and AI is the driving force of business transformation across every industry and sector,” said CEO Satya Nadella in Microsoft’s latest earnings release.

Following the earnings release, Truist Securities analyst Joel P. Fishbein Jr. issued a research report, maintaining a buy rating on Microsoft and raising his price target on the stock to $675, forecasting a gain of about 31% over the next 12 months. Fishbein thinks the tech giant will continue to see strong growth from its cloud business, as well as tailwinds in the broader AI ecosystem. “Sustained strong cloud growth at scale & growing AI demand capture can lead to at least low teens double-digit rev, profit & CF (cash flow) growth over an extended period, while consistently returning cash via divs/repurchases,” he wrote.

Microsoft has been able to monetize AI by integrating AI models from OpenAI and charging clients that use these templates. Additionally, Microsoft sells its Azure clients enterprise AI tools through Azure Foundry that allow them to build and implement AI chat, conversational AI, and AI agents, among other tools. Further growth is likely as AI begins to spread to more parts of the economy and different types of businesses across sectors.

Though it can be hard to gauge how much more room for growth a company with a more than $3 trillion market cap might have, I don’t have any issue recommending Microsoft to long-term investors. In addition to AI, the company has a tremendous slate of businesses, including its popular suite of office productivity software, its traditional cloud business, video games, and social media platforms. Plus, Microsoft is one of the only companies with a debt rating higher than the U.S. government.

Alphabet: Overcoming challenges all year

It’s been a tremendously volatile year for Alphabet (GOOG 0.14%) (GOOGL 0.03%). Toward the end of 2024, a federal judge sided with the Department of Justice in a lawsuit, agreeing that the Google parent had employed monopolistic practices to protect its domination of the search engine space, as well as in its digital advertising practices.

The Justice Department then asked U.S. District Judge Amit Mehta to make Alphabet divest itself of its Google Chrome unit, a key element of the company’s search business, which drives over half of Alphabet’s revenue. But recently, Judge Mehta ruled that the company would not have to do this.

Furthermore, Mehta said Alphabet can continue to pay distributors like Apple to make Google the default search engine on their web browsers. Alphabet reportedly paid Apple over $20 billion in 2022 to make it the default engine on the Safari browser, which is installed standard on all iPhones. However, Mehta said that exclusive contracts will not be allowed and that Google would have to share some of its search data with rivals. Overall, investors considered this a positive outcome for Alphabet.

Many were also concerned earlier this year that AI chatbots like OpenAI’s ChatGPT might significantly cut into Google’s search business. However, the AI Overviews results powered by Google Gemini that now top the responses to most Google search queries appear to be making progress and meeting the needs of consumers. Evercore ISI analyst Mark Mahaney said the judge’s ruling had removed a clear overhang on the stock, which will allow investors to focus on the company’s fundamentals.

“What we see is a Core Catalyst, with Google Search revenue growth likely to remain DD% [double digit] for the foreseeable future,” Mahaney wrote in a research note. While generative AI  will undoubtedly continue to provide competition, Mahaney believes Google’s ability to innovate will keep its search engine competitive and allow the company to continue to generate solid growth. His new 12-month price target on Alphabet stock is $300, implying about 19% upside from current levels.

I largely agree with Mahaney, although I think investors should monitor competition from the likes of ChatGPT. But Alphabet also has many other strong and growing businesses, among them its cloud business, YouTube, its Waymo self-driving vehicle unit, and even its own AI chip design business. Even after its big run-up, Alphabet still trades at about 24 times forward earnings. Given that the company’s relevance is unlikely to fade any time soon, at that level, it looks like a good long-term buy.

Quantum computing is a major emerging technology that could be commercially viable by 2030. With that timeframe not all that far away, investors are starting to take quantum computing stocks more seriously. Several stocks in this industry have the potential to make investors a fortune if they can grow from startups to dominant tech companies, but there’s no guarantee they can achieve that. Several established players are pursuing quantum computing. While these don’t have nearly the upside as their smaller counterparts, they are much safer bets.

I believe taking a balanced approach to the quantum computing arms race is a smart investment move, and these four stocks represent a great way to capitalize on this massive trend while also leveraging current market conditions.

Image source: Getty Images.

The startups: IonQ and D-Wave Quantum

Investing in quantum computing startups is an attractive option. Often, these companies are worth about $10 billion or less, but could grow to become far greater if their technology stack becomes the go-to option in the quantum computing realm, much like Nvidia‘s (NVDA 0.43%) GPUs have in the artificial intelligence (AI) realm. However, it’s possible that their technology doesn’t work out, and the stocks go to $0. This is likely to happen to many competitors in the quantum computing race, as several techniques are likely to yield unsatisfactory results compared to other technologies.

Two of my favorite pure-play quantum computing companies are IonQ (IONQ 18.36%) and D-Wave Quantum (QBTS 7.66%). Both companies are taking two separate approaches to quantum computing, which helps spread out risk.

IonQ employs a trapped-ion approach, which represents the most accurate quantum computing technology currently available and can also be implemented at room temperature, making it significantly more cost-effective. However, this comes at the cost of processing speed, which is slower compared to other options.

D-Wave Quantum utilizes quantum annealing, making it particularly well-suited for optimization problems, such as mapping logistics networks. Quantum annealing has a more limited use case than general-purpose quantum computers, such as those developed by IonQ. Still, it could be a viable technology that yields real results in areas that can benefit from quantum computing.

Success isn’t guaranteed with either of these investments, which is why balancing their risk with surefire bets is a smart idea.

Big tech players: Alphabet and Nvidia

It would be a mistake for investors to move on too quickly from the AI investing trend. There are still truckloads of money being spent on AI computing capabilities, and that isn’t slated to slow down anytime soon. This benefits Nvidia more than any other company, but Nvidia is also getting involved in the quantum computing industry.

While Nvidia isn’t developing its own quantum processing unit, it is developing the technology that enables quantum computers to be integrated into traditional computing systems, such as those it manufactures. This hybrid computing approach is likely to become the primary use case of quantum computing. With Nvidia bridging the gap, it is poised to capitalize on this industry while also excelling in AI.

Another big player in the quantum computing space is Alphabet (GOOG 0.27%) (GOOGL 0.22%). Alphabet kicked off a major quantum computing investment rush in December 2024 when it announced that its Willow quantum computing chip completed a calculation that would have taken a traditional computer 10 septillion years (10 to the 25th power) to complete. This was a major breakthrough for Alphabet, but it’s still a long way away from developing a commercially viable quantum computing system.

However, if it can be the first cloud computing provider to offer a viable quantum computing system, it stands to make a ton of money from various quantum computing workloads that will appear over the next decade.

In the meantime, Alphabet has a dominant base business and is starting to emerge as the leading AI company. This combination will make Alphabet a fantastic investment over the next few years.

This combination of four quantum computing investments is a great way to capitalize on the trend. It allows investors to balance the risk of pure-play quantum computing investments that may not survive with established big tech players that are benefiting from current market trends and also have quantum computing investments.

Fear over President Donald Trump’s new tariffs has subsided, at least in the stock market. April lows have disappeared into a thriving bull market, and the S&P 500 is up more than 11% year to date.

Things could change next week when the Federal Reserve meets and considers an interest rate cut. If it does end up reducing interest rates, which it has indicated that it will, the market is likely to greet the news positively. If for some reason it doesn’t, or if it offers any kind of negative assessment of the economy, it could sink the markets again.

But that’s life in the markets. There are always going to be periods of uncertainty and volatility as well as dips, corrections, and crashes. But the overall arc has always been upward, and investing today is a vote of confidence in the future.

If you’re looking for excellent stocks that can withstand the oscillations of the market over time, I recommend MercadoLibre (MELI 0.10%), Dutch Bros (BROS -2.66%), and Apple (AAPL 1.82%).

Image source: Getty Images.

1. MercadoLibre: E-commerce and fintech

MercadoLibre is a no-brainer for investors looking for long-term growth. It continues to demonstrate incredible performance, but there’s so much further to go.

Although its main business is e-commerce, which is still a phenomenal growth driver, it has expanded to become a complete financial app. The dual focus gives it massive long-term opportunities.

Despite having been in business almost as long as Amazon, it still reports high growth in e-commerce. Its region is underpenetrated, and it’s generating a shift from offline retail to online retail.

Total revenue increased 53% year over year (currency neutral) in the second quarter, and gross merchandise volume of goods sold through its e-commerce marketplace increased 37%. New active customers, the foundation of the consumer shift to e-commerce, increased 35% over last year. Management is upgrading the value proposition to make it worthwhile for new shoppers to try MercadoLibre, and the service recently lowered its threshold for free shipping in Brazil from 79 Brazilian reals to 19. It’s also incorporating more artificial intelligence, and that’s leading to higher engagement, as is infinite scroll, which displays more information on a screen.

MercadoLibre’s fintech platform has even greater potential in underbanked communities. It offers a large assortment of financial services through its digital wallet, MercadoPago, and growth in monthly active users has been at 30% or higher for the past seven quarters.

Another feature I like a lot about this company is its varied markets. It operates in 18 Latin American markets, and they’re not all the same. Last year, it was experiencing pressure in Argentina, historically its largest market, but that was offset by success in Brazil and Mexico, its other two largest markets. That kind of hedge gives MercadoLibre stability even as some of its markets look risky.

2. Dutch Bros: Growing its brand in coffee

Dutch Bros is almost as old as Starbucks, but it’s been a small chain concentrated in Oregon. Although it’s been expanding slowly for years, it made a clever move when the pandemic shifted coffee shop consumption behaviors to ride the tide and take its drive-thru coffee concept national.

The original pilot, bringing the chain south through California, was extremely successful. The company took it up a notch with some very smart decisions to bring in new management and try new store formats as it keeps moving east, and it’s been a roaring success.

When you hear coffee, you might be envisioning steaming hot cups. But Dutch Bros’ core beverages are cold drinks and energy drinks. It offers customized beverages featuring all kinds of flavors and shots, and it has carved out a significant and growing niche in this space. Customers love it, and the future looks wide open.

The results speak for themselves. Revenue increased 28% year over year in the second quarter, driven by a 6.1% increase in same-store sales. Contribution margin, which measures store profitability, improved from 30.8% to 31.1%, and adjusted net income rose from $31.2 million to $45.5 million.

The investing thesis is made even more compelling by the expansion opportunities. Management recently raised its long-term goal from 4,000 stores to 7,000, a sevenfold increase from today’s store count.

3. Apple: Don’t give up on it

Finally, Apple might seem like a contrarian call today, but its recently stagnating price means that there’s time to buy before it starts to soar again.

The naysayers might point to slowing growth and too much dependence on the iPhone. But Apple doesn’t need a lot of products to generate engagement and high sales. It has developed an incomparable ecosystem of products that work together, plus loyal fans who love its quality and stay in that ecosystem, buying new upgrades and complementary products.

One recent concern has been that it’s not staying competitive in artificial intelligence (AI). It has released a slew of Apple Intelligence services, but it doesn’t seem to have found a breakout AI model like many of its most direct competitors. But I think it’s highly likely that it will come through.

Apple strives to be different, and better, and its AI will reflect that. One recent development just launched for its AirPods Pro earbuds is the ability to translate conversations on the spot. This is the kind of innovation that will make Apple Intelligence stand out.

Apple stock is down 6% this year, trailing the market, and now is a great time for the forward-thinking investor to take a position.

There are 10 companies with a market cap over $1 trillion right now, and all of these except one are involved in artificial intelligence (AI). This technology will drive a substantial amount of economic growth in the 21st century, providing investors the chance to earn substantial gains from the right stocks.

Some companies that are well positioned to play a key role in shaping the economy with AI are still valued at less than $1 trillion. Although their share prices could be volatile in the near term, the following two companies could be worth a lot more down the road they are today.

Image source: Getty Images.

1. Palantir Technologies

More than 800 companies have chosen Palantir Technologies (PLTR 4.14%) to transform their business operations with AI. Businesses can upload data on Palantir’s platforms, and it basically shows them how to be more efficient, grow their revenue, and become more profitable. It is working magic for businesses and the U.S. military, which trusts Palantir to keep top-secret information secure about the U.S. and its allies. Despite its already high market cap of $400 billion, Palantir’s unique value proposition and stellar profitability has all the makings of a $1 trillion business.

Palantir is not just slapping a large language model on a company’s data to make it easy to search information. It pulls together data from different sources within a company, which creates a framework for understanding how the company operates. Palantir is essentially building a digital copy of a company’s operations that can detect problems and solve those problems instantly.

Palantir’s financials suggest there is no replacement for the value it provides. It reported accelerating revenue growth over the last year. In the second quarter, revenue grew 48% year over year, compared to 27% in the year-ago quarter.

Moreover, its net income margin was stellar at 33% in Q2, with an adjusted free cash flow margin of 57%. It’s not common for a small software company in the early stages of growth to be reporting margins like Microsoft.

These margins are being driven by high prices that Palantir charges customers. For example, it recently secured a $10 billion contract with the U.S. Army for the next decade. Organizations are willing to pay up for Palantir’s software because the savings realized are that big. Palantir is saving enterprises millions, even hundreds of millions in costs in some cases, providing an attractive return on investment that is driving the company’s growth.

Palantir stock is expensive, trading at high multiples of sales and earnings. But this is a unique software company with a huge opportunity ahead. CEO Alex Karp is aiming to grow revenue by 10x over time, which would bring annual revenue to more than $40 billion from this year’s analyst estimate of $4.1 billion. Based on its current margins, that could equate to $20 billion in annual free cash flow over the long term. Applying a high-growth multiple of 50 to that would put the stock’s market cap at $1 trillion.

2. Advanced Micro Devices

For AI to keep advancing and transform how people work and communicate, it needs more powerful chips. Nvidia has been the biggest winner so far, but investors shouldn’t overlook Advanced Micro Devices (AMD 1.91%). It is the second-leading supplier of graphics processing units (GPUs), and it could be well positioned to meet growing demand in edge computing and AI inferencing that could send the stock from its current $250 billion market cap to $1 trillion.

As AI proliferates across the economy, people will be able to use powerful AI applications and processing on their devices, which makes edge computing a large opportunity for AMD. The company offers a range of high-performance and energy-efficient chips that are aimed at running AI devices and PCs, positioning it to benefit from a booming market estimated to be worth $327 billion by 2033, according to Grand View Research.

Investors were disappointed by the company’s Q2 data center growth of 14% year over year, but management expects stronger demand once it launches its Instinct MI350 series of GPUs. As it continues to bring new solutions to the data center market, AMD’s data center business should accelerate.

AMD’s chips are clearly addressing needs in the AI market. It announced a partnership with Saudi Arabia’s Humain to build AI infrastructure using AMD’s GPUs and software. Meanwhile, Oracle is building a massive AI compute cluster using multiple AMD chips. AMD says it is also working with governments globally to build sovereign AI infrastructure.

Analysts expect AMD‘s earnings to grow at an annualized rate of 30% over the next several years. Against those prospects, the stock trades at a reasonable forward price-to-earnings multiple of 40. There is enough earnings growth here to potentially triple the stock in five years, putting it easily within striking distance of reaching $1 trillion within the next decade.

The stock market trended higher in August. The popular S&P 500 (^GSPC -0.05%) index gained 1.9% last month. As of September 10, it has seen a total return of 20.6% in 52 weeks.

The top three performers among the 503 S&P 500 components took very different routes to the top. Let’s take a quick look.

1. UnitedHealth, up 24.2%

Health insurance giant UnitedHealth Group (UNH -0.31%) had three things working in its favor last month:

1. The stock dropped after reporting weak Q2 results near the end of July. It’s mathematically easier to post big gains after a dip like that.
2. The long-suffering acquisition of home healthcare specialist Amedisys finally closed. The $3.3 billion deal was proposed in the summer of 2023, following a process that included lawsuits and substantial concessions to secure the final approval.
3. Above all else, Warren Buffett’s Berkshire Hathaway (BRK.A -0.55%) (BRK.B -0.59%) disclosed owning 5 million UnitedHealth shares. It’s an entirely new position and investors celebrated Berkshire’s cash-powered seal of approval.

2. Intel, up 23%

Intel (INTC -2.09%) followed a similar stock-chart trajectory but for strange reasons. The Trump administration will buy $8.9 billion of Intel stock.

The U.S. government will hold a 9.9% ownership interest in Intel, with a warrants-based option to purchase another 5% of the stock under certain circumstances.

3. Newmont, up 19.8%

Gold miner Newmont (NEM -0.50%) rounds out this trio. Gold prices have been rising all year long, currently soaring near all-time highs. The average gold price rose 4.8% in August.

Newmont wasn’t alone in this surge. Fellow gold miners Coeur Mining (CDE 1.04%), Gold Fields (GFI -0.06%), and Iamgold (IAG 1.27%) outperformed Newmont in August, gaining 37.4% (Gold Fields) to 51.3% (Coeur).

Image source: Getty Images.

Shaky macroeconomics often result in rising gold prices, as investors flock to safer asset classes. That’s what’s going on in 2025, too.

However, Newmont is the only gold stock in the S&P 500, so its rivals don’t qualify for this particular list. Otherwise, all the names mentioned above would have ranked lower — including Newmont.

Global spending on information technology is expected to reach nearly $5.4 billion in 2025, driven primarily by the growing adoption of artificial intelligence (AI). This massive wave of investment is creating long-term opportunities for businesses that can scale with these digital shifts. Companies with robust competitive advantages and proven business models are positioned to benefit most from this trend.

Image source: Getty Images

As this trend accelerates, here’s why these two growth stocks can prove to be exceptional buy-and-hold picks for the next decade.

Meta Platforms

Meta Platforms (META 0.70%) remains a leading player in the social media and digital advertising landscape, and it’s now accelerating its investment in AI infrastructure to drive the next phase of growth.

Meta’s core business is a cash-generating machine that can fund future growth opportunities. In the second quarter of 2025 (ending June 30), revenues rose 22% year over year to $47.5 billion, with an operating margin of 43% and free cash flow of $8.5 billion.

It is indisputable that digital advertising remains the primary driver of growth. Meta is leveraging advanced AI technologies to enhance ad targeting and recommendations as well as user engagement across Facebook, Instagram, WhatsApp, and Threads, strengthening its digital advertising business.

The company serves over 3.4 billion daily active users and uses AI models, including Andromeda, GEM, and Lattice, to enhance ad conversions and pricing across its applications, resulting in stronger monetization.

Its push beyond its core apps into newer platforms may also begin to generate fresh advertising growth. Threads has already surpassed 350 million users, and ads are starting to appear across its feed. Advertisements are also being introduced in the status and channels features of WhatsApp. Business messaging is scaling, with U.S. click-to-message revenue up more than 40% year over year in the second quarter.

Meta is also rolling out subscriptions for WhatsApp channels — a feature that can help businesses connect with over 1.5 billion daily active users who visit the channels. Meta AI, a consumer-facing AI-powered assistant integrated into its app ecosystem, has already built a user base of over 1 billion monthly active users. Besides improving user engagement through personalized recommendations and enhanced content discovery, it can also become a new monetization avenue in the coming quarters.

The tech giant is aggressively investing to expand its AI infrastructure. Meta expects capital expenditures of $66 billion to $72 billion in 2025, with even higher figures in 2026 as it builds AI data centers to support advanced AI models. While this may affect margins and cash flows in the near term, the long-term payoff of leveraging in-house AI capabilities to strengthen the core business may be exceptionally impressive.

Meta’s shares trade at a rich valuation of nearly 28.5 times forward earnings. While the company’s growth to date has been awe-inspiring, this may be just the beginning of an AI-powered multiyear growth story. Hence, considering Meta’s scale, cash generation potential, and AI investments, the stock remains an attractive choice for the next decade.

Amazon

E-commerce and cloud computing giant Amazon (AMZN -0.74%) is also doubling down on cloud computing, advertising, and AI to fuel its next chapter of growth.

The company’s core business is strong, and it clearly has enough financial flexibility to fund future growth opportunities: Amazon’s revenue increased 13.3% year over year to $167.7 billion while operating income soared 31% year over year to $19.2 billion in the second quarter of fiscal 2025 (ending June 30). The company also reported trailing-12-month free cash flow of $18.2 billion at the end of the second quarter.

Amazon Web Services (AWS), the company’s cloud computing business, accounted for 30% of the global cloud infrastructure services market in the second quarter of 2025, up from 29% in the prior quarter. With 85% to 90% of global IT spend focused on the on-premises environment and enterprises increasingly shifting workloads to the cloud, there is huge scope for AWS to grow in the coming years.

AWS revenue grew 17.5% year over year to $30.9 billion in the second quarter. The business has now reached an annualized run rate of $123 billion.

AWS had a backlog worth $195 billion at the end of the second quarter, reflecting strong demand for Amazon’s infrastructure and AI services. AWS is giving customers the use of Nvidia‘s cutting-edge graphics processing units as well as its own custom chip, Trainium2, to ensure better performance and lower costs to clients running AI workloads.

Additionally, Amazon Bedrock (a fully managed service enabling clients to build and scale generative AI applications on AWS) is adding several leading large language models like Anthropic’s Claude and the company’s own model, Nova. 

Amazon’s e-commerce business is also speeding up, especially as the company leverages automation and robotics to improve cost efficiencies, which could boost margins. Faster delivery is becoming a significant competitive advantage in the e-commerce market. In the second quarter, the company delivered 30% more items on the same day or the next day in the U.S. than it had in the same period last year. The company is planning to expand this same-day and next-day delivery to over 4,000 smaller U.S. towns by the end of 2025.

Finally, advertising is fast becoming a major growth catalyst. Amazon’s advertising revenues grew 22% in the second quarter of 2025 to $15.7 billion. With proprietary shopping, browsing, and streaming data secured from its platforms, advertisers can optimize their efforts, leading to improved outcomes. Advertising is proving ever more effective on platforms such as its retail marketplace, Prime Video, Fire TV, Twitch, and live sports.

Despite the many tailwinds, Amazon’s shares trade at 34.6 times forward earnings, which is not cheap. But considering AWS’s growth, fueled by rising AI adoption and improving e-commerce and advertising businesses, the stock may be attractive to investors seeking long-term growth opportunities.

Some decisions are tough to make. Others are so easy that they don’t require much thought and are practically no-brainers.

Three Motley Fool contributors believe they’ve identified dividend stocks to buy in September that fall into the latter category. Here’s why they picked Abbott Laboratories (ABT 0.81%), AbbVie (ABBV -0.85%), and Eli Lilly (LLY -0.20%).

Image source: Getty Images.

A tremendous track record of stability and dividend growth

David Jagielski (Abbott Laboratories): A top blue chip dividend stock to hold for the long term is that of Abbott Laboratories. It may not be the flashiest stock or have the highest dividend yield, but the long-term stability and consistency it offers investors makes it a no-brainer option for not only years but potentially decades.

Currently, the stock pays 1.8%, which is a bit higher than the S&P 500 average of 1.2%. It’s not a huge yield by any means, but the big payoff for investors is from simply hanging on to the stock. That’s because Abbott Laboratories is a Dividend King — it has been raising its dividend for decades. Last December, it announced a 7.3% increase to its payout, and with the significant bump up, Abbott extended its streak to 53 consecutive years of increases. And the healthcare company has been generous with its increases; the stock’s dividend has risen by over 60% since 2020.

The company’s fundamentals also look solid, which is key when selecting a quality dividend stock. This year, excluding COVID-19 testing sales, its revenue will grow at an organic rate between 7.5% and 8%. Its broad business encompasses pharmaceuticals, nutrition, diagnostics, and medical devices. As a leading company in the healthcare industry with many ways to grow in the long run, Abbott makes for a great income-generating investment to buy and hold.

Checking all the boxes — income, growth, and value

Keith Speights (AbbVie): AbbVie was spun off from Abbott Laboratories in 2013, and inherited its impressive track record of dividend increases. Its current forward dividend yield of roughly 3% is well above its parent company’s, though, making AbbVie a great choice for income investors.

Growth investors have something to like about this stock, too. AbbVie quickly shook off any effects from the patent cliff it faced in 2023 with its former top-selling drug, Humira. Its shares have outperformed the S&P 500 so far in 2025, and over the last five years.

Even better, AbbVie expects to deliver solid earnings growth through the rest of the decade. Soaring sales for Skyrizi and Rinvoq, its two successors to Humira, should help the company meet its goals. The company also has other big winners, including cancer drug Elahere and migraine therapies Qulipta and Ubrelvy. Vyalev, which was approved by the U.S. Food and Drug Administration in October 2024 for treating Parkinson’s disease, has built strong sales momentum as well in its first year on the market.

Is AbbVie an attractive stock for value investors, too? Yep. The big drugmaker’s shares trade at only 15 times forward earnings. Its price-to-earnings-to-growth (PEG) ratio, which reflects analysts’ five-year projections for earnings growth, is a super-low 0.4.

Few stocks offer something for income, growth, and value investors. But AbbVie checks all the boxes.

Much more than just a weight loss stock

Prosper Junior Bakiny (Eli Lilly): Over the past few years, Eli Lilly has dominated the headlines in the pharmaceutical industry, and with good reason: The drugmaker has established itself as the leader in the rapidly expanding weight loss market. Both Lilly’s lineup, with brands like Mounjaro and Zepbound, and its pipeline in this field look incredibly exciting.

The company has generated strong revenue and earnings growth in recent quarters, and is likely to continue doing so. However, it would be a mistake to think that Eli Lilly is just a weight loss stock. The company has a lot more to offer. Its lineup features blockbusters outside of its area of expertise, including cancer treatment Verzenio. Recent approvals, such as Ebglyss for eczema, could also achieve over $1 billion in annual sales at their peak.

Then there’s the pipeline, which boasts promising programs beyond diabetes and obesity. Lilly’s investigational drug lepodisiran completed phase 2 studies in reducing lipoprotein(a), a substance in the body that, in high concentrations, is strongly linked to various cardiovascular problems. So along with excellent financial results, investors can expect robust clinical and regulatory progress in the foreseeable future.

Lastly, the stock is an excellent pick for income seekers. It’s true that Lilly’s forward yield is a modest 0.8% — but the company has increased its dividend by an impressive 200% in the past decade. Eli Lilly’s excellent business and remarkable dividend track record make it a no-brainer stock to buy.

You could do a lot of things with $2,000. Spend it. Bury it in jars in your yard. Buy lottery tickets. However, I think a smarter approach is to use the money to buy stocks that pay attractive dividends.

The obvious question that arises is: Which dividend stocks should you buy? There are thousands of alternatives, some of them good and some not so good. Here are my picks for the smartest dividend stocks to buy with $2,000 right now.

Image source: Getty Images.

1. Enbridge

Enbridge (ENB 0.60%) is a Dividend Champion with 30 consecutive years of dividend increases. Its forward dividend yield currently stands at 5.63%. The company should be able to continue increasing its dividend, with expected distributable cash flow (DCF) of around 3% through next year, which should jump to 5% after 2026.

A strong underlying business supports those dividend payouts. Roughly 30% of the crude oil produced in North America and 20% of natural gas consumed in the U.S. flow through Enbridge’s pipelines. The company ranks as the largest natural gas utility in North America based on volume. And it has expanded beyond fossil fuels, with over $8 billion committed to renewable energy projects that are either currently in operation or under construction.

The stability of Enbridge’s relatively low-risk business model should be especially appealing now, considering the uncertainty surrounding a potential U.S. government shutdown, tariffs, and weak jobs reports. I like that the company has been able to consistently deliver solid earnings per share and DCF per share during turbulent times, including the financial crisis of 2007 through 2009 and the COVID-19 pandemic.

But Enbridge isn’t just a dividend stock to buy as a defensive move. The energy infrastructure leader has around $50 billion of growth opportunities through 2030, with nearly half of the total related to expanding its gas transmission business.

2. Realty Income

Realty Income‘s (O 0.50%) track record of 30 consecutive years of dividend increases matches Enbridge’s. Its forward dividend yield of 5.43% is nearly as high as Enbridge’s. Realty Income offers one nice advantage compared to the energy company, though: It pays a monthly rather than quarterly dividend.

This real estate investment trust (REIT) owns over 15,600 properties. Its tenant base represents 91 industries, including convenience, grocery, and home improvement stores, as well as restaurants. None of Realty Income’s tenants generate more than 3.5% of its total annualized contractual rent.

Realty Income shares another similarity with Enbridge: remarkably stable cash flows. The REIT has generated positive cash flow in every year since 2004 except for 2020, when the COVID-19 pandemic disrupted the global economy. Even then, though, its total operational return remained positive.

What about growth? Realty Income checks off that box, too. It’s targeting a total addressable market of roughly $14 trillion. Around 60% of that market is in Europe, where the REIT faces only one major rival.

3. Verizon Communications

Verizon Communications (VZ -0.35%) has increased its dividend for 19 consecutive years. While that isn’t as impressive as Enbridge’s and Realty Income’s streaks of dividend hikes, Verizon beats them in another way, with its ultra-high dividend yield of 6.35%.

I think Verizon’s dividend program is on solid footing. The telecommunications giant recently increased its free cash flow guidance for 2025 to a range of $19.5 billion to $20.5 billion, up from its previous forecast of $17.5 billion to $18.5 billion. Over the last 12 months, Verizon has paid out dividends of $11.4 billion. This reflects plenty of free cash flow cushion to continue growing the dividend.

Although the telecom market is highly competitive, Verizon more than holds its own. The company generated the highest wireless services revenue in the industry in the second quarter of 2025. Its broadband market share continued to grow. Verizon was also recently recognized by J.D. Power as having the best wireless network quality for the 35th time.

The company’s pending acquisition of Frontier Communications should boost growth over the near term, with the transaction expected to close in early 2026. Verizon could have strong long-term growth prospects as well as a 6G wireless networks launch in a few years.