A common misconception about investing is that it takes a lot of money to get anything out of it. That couldn't be further from the truth. Yes, large sums can accelerate the wealth-building process. However, consistently investing relatively small amounts can also create a nice nest egg.
With $1,000 available to invest right now, I would focus half on a high-dividend stock and the other half on a high-growth company with good long-term potential . The following two companies check both of those boxes and can be long-term pieces of your portfolio -- the best of both worlds, if you will.
1. AT&T
AT&T 's (NYSE: T) stock is having one of its best years in quite some time. Through Sept. 9, it has increased more than 21% this year, outperforming all three major indexes (the S&P 500 , Nasdaq Composite , and Dow Jones ). It has been a while since observers have been able to say that.
Even with its good run this year, AT&T has still shed around a quarter of its value in the past five years. It's admittedly been a rough stretch, but things are looking up for the telecom giant.
The biggest (and only, some would argue) appeal of investing in AT&T is its dividend, so let's get right to it. AT&T is routinely one of the highest-yielding dividend stocks in the S&P 500. Its forward dividend yield is around 5.2%, more than four times the S&P 500 average. A $500 investment could pay you $26 annually at that yield.
AT&T's dividend yield is much smaller than in previous years, but that's a blessing, considering that the cause is a surge in its stock price. I'm sure investors don't mind the trade-off.
Much of AT&T's recent success comes a couple of years after it restructured to refocus on its core telecom businesses. AT&T's attempt at entering the media and entertainment business proved misguided, increasing its debt and setting it back a few years.
Since the restructuring, AT&T's financials have made a healthy turn. It probably won't deliver eye-popping revenue growth at its size, but its free cash flow growth has been impressive after a challenging 2022.
T Free Cash Flow data by YCharts.
Having healthy free cash flow is important for AT&T because it uses that money to cover its attractive dividend, pay down its nine-figure debt, and invest in new technologies like 5G and fiber. As the top player in an industry that's indispensable in today's world, AT&T should be a great long-term hold.
2. CrowdStrike
With everything positive about AT&T this year, CrowdStrike (NASDAQ: CRWD) has experienced the opposite since July 19, when the company caused the largest IT outage in history. Since that incident, its stock price is down more than 30%.
Before the IT outage, CrowdStrike was one of the stock market's hottest growth stocks. The incident was unfortunate and has put a dent in CrowdStrike's reputation, but the silver lining is that it wasn't caused by a cyberattack or a deficiency in CrowdStrike's security -- it resulted from a faulty software update.
CrowdStrike's core cybersecurity tools (called "modules") remain unaffected and continue to be some of the industry's best. That's why it's hard to see many of its customers jumping ship because of a non-security-related problem. CrowdStrike should continue to grow impressively despite these short-term woes.
In its latest quarter (ended July 31), CrowdStrike added $218 million in net new annual recurring revenue (ARR), bringing its total to $3.86 billion. That's 32% year-over-year growth it accomplished while increasing its operating margins by two percentage points to 24%.
The $272 million in free cash flow it generated last quarter was up 44% year-over-year, giving CrowdStrike some financial flexibility as it navigates the near term. It finished the quarter with more than $4 billion in cash and cash equivalents.
CRWD Free Cash Flow (Quarterly) data by YCharts.
Cybersecurity is an industry that's here to stay and growing rapidly. CrowdStrike estimates the total addressable market (TAM) for artificial intelligence (AI)-native cybersecurity solutions is currently around $100 million. By 2028, it estimates the TAM could be around $225 billion.
Of course, CrowdStrike won't capture the full market by itself, but as one of the top (and pioneering) AI-native cybersecurity companies, it stands to gain a lot from the market growth.
There will undoubtedly be volatility along the way, but investors with time on their side likely won't regret a $500 investment in the stock after its recent plunge.
Should you invest $1,000 in AT&T right now?
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Stefon Walters has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy .
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