Dividend Stocks

Stimulus Stocks: A Guide to Investing Your Stimulus Check

The checks in the mail. Or more likely, it’s already in your bank account. If you’re lucky enough to be in a position to do so, investing in stimulus stocks is a great way to put that money to work… Instead of just leaving it in a bank doing virtually nothing.

The latest round of stimulus checks from the federal government can offer a great starting point for a new portfolio. Or they can also act as a useful contribution to a retirement account for active traders and passive income seekers.

The stimulus checks allow some to invest in stimulus stocks

But first, let’s be perfectly clear. Not everyone is in a position to take that check and invest it in stimulus stocks. For many, this round of stimulus is a lifeline. They will use it to pay down bills and buy food.

As we’ve seen from the Bureau of Labor Statistics, the country is still in recovery mode. Unemployment figures still have a long way to go before returning to pre-pandemic levels.

So, if you’re in a position to be able to invest it, count yourself amongst the lucky.

A recent report from Deutsche Bank found that 50% of 25- to 34-year-olds plan to invest half of their stimulus checks in the stock market. On the surface, this is good news. The problem is that not all investments are created equal.

Many young investors are looking for the next stock to go “to the moon.” The short squeeze pulled off on GameStop (NYSE: GME) captured the imagination of new investors. All the action surrounding that stock minted brand-new millionaires while turning the screws on a couple of hedge funds.

These Aren’t the Stocks You’re Looking For

There remains a push among online investing forums to create a sequel. Money is still pouring into so-called meme stocks. Struggling movie theater chain AMC Entertainment (NYSE: AMC), BlackBerry (NYSE: BB), Express (NYSE: EXPR) and GameStop remain the target of new investors. They’re looking to pull off the impossible again. But let’s be honest. Even the rookie investors know they remain extremely risky investments. That’s not to say it’s impossible – or even unlikely – that these stocks will rise further. But long-term, more people are going to wind up losing than winning on these bets.

The meme stock squeeze was pretty nuts – and awesome to watch. But that’s one of the reasons no less than five movies are being made about the events. It was just crazy enough to work. But getting lightning to strike twice seems a bit of a stretch.

And let’s be honest, anyone that received a $1,400 payment from the federal government knows that money is nothing to sneeze at. And throwing it at a questionable double-or-nothing bet is reckless. Especially when there are plenty of other opportunities with a lot more long-term upside.

Five Stimulus Stocks with Long-Term Potential

  • AbbVie (NYSE: ABBV)
  • Apple (Nasdaq: AAPL)
  • Kirkland Lake Gold Ltd. (NYSE: KL)
  • SPDR S&P 500 ETF Trust (NYSE: SPY)
  • Walmart (NYSE: WMT)

Let’s be perfectly clear. Investing $1,400 in any or all of these stocks isn’t going to make you the next “Roaring Kitty.” But it can put you on the path towards financial freedom. All five of these investments have excellent long-term potential to help you grow your wealth. For instance…

The S&P 500 has returned about 10% a year on average. That dates all the way back to 1928. The SPDR S&P 500 ETF Trust is set up to mimic those returns. It really is the ultimate set it and forget it opportunity. Investing in this is about as sure-fire way to grow a portfolio as there is. This makes this index fund, which is compiled of other excellent stimulus stocks, an excellent way to grow a portfolio.

The commodities sector isn’t all that sexy. But gold stocks remain an excellent way to balance a portfolio. There are a couple different ways to play this sector. Gold mining companies, brokers and streaming companies all offer exposure to this sector. A fairly straightforward play is Kirkland Lake Gold. This mining outfit has several profitable mines in Canada and Australia. And it’s showing strong signs of future growth. Institutional investors continue to pour money into Kirkland. And that vote of confidence makes it an excellent stimulus stock.

Passive Income Opportunities

A perennial favorite investment strategy around here is to hone in on stocks with healthy dividends. And the next three stocks are all excellent candidates. For starters, Walmart has raised its dividend for a whopping 48 years in a row. The company is operating in rarified air while delivering steady income to its investors. On top of this, Walmart could see a big boon to its bottom line thanks to the federal stimulus payments. During the last round of stimulus payments, more than half of recipients spent their money on food. And Walmart remains the largest grocer in the country… by far.

Next, is another household name Apple. The tech sector has been shaky of late. But don’t count Apple down for long. It’s still among the most profitable companies in the world. And analysts expect it to continue increasing its dividend over the coming years. It might not be a cheap stock. But by most measures it is trading at a discount.

Rounding out this list of stimulus stocks is AbbVie. There’s a lot to like about this biopharmaceutical behemoth. It’s the maker of the blockbuster drug Humira. That therapy alone has generated around $20 billion in global sales three years running for the company. It remains a top candidate to treat health issues like Crohn’s disease, rheumatoid arthritis and ulcerative colitis.

Meanwhile, AbbVie’s lymphoma and hepatitis C treatment sales are growing. It also has a pipeline of other therapies poised to hit the market in coming years. On top of all this, it also boasts an impressive 5.03% dividend yield. Promising future growth and a healthy dividend, makes AbbVie one of the best stimulus stocks investors can find.

The Bottom Line on Stimulus Stocks

More and more investors are beginning to dabble in the markets. The results can go several different ways though. Someone that loses their shirt shortly after entering the markets is going to be once bitten, twice shy. Losing money leaves a bad taste in folk’s mouth… one they don’t soon forget. And getting out and staying out of the markets for a while is only going to hurt long-term prospects for building wealth.

But investing in a diverse group of blue-chip stocks is a great way to gain exposure to the markets while growing your interest and portfolio in the process.

If you’re interested in staying up to date on dividend investment opportunities and time-tested investment strategies, we suggest signing up for our Wealthy Retirement e-letter. In it, income expert Marc Lichtenfeld helps guide readers towards steady, reliable investment opportunities for investors of all levels.


About

Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dog, Dorito.

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