3 Very Low-Risk Ways to Invest $1,000 Right Now

Investing money in the stock market is inherently risky. Investors are willing to risk losing money for the potential reward of making more if the investment pays off.

Some investments are less risky than others. Three safer stocks are Enterprise Products Partners (EPD 0.45%), Johnson & Johnson (JNJ -0.46%), and Camden Property Trust (CPT 1.44%). Here's what makes them great options for those seeking low-risk ways to invest $1,000 right now.

A low-risk energy stock

Enterprise Products Partners is one of the largest midstream companies in the country. The master limited partnership (MLP) serves as a bridge between oil and gas producers (upstream) and refining and petrochemical companies (downstream). While the energy sector's bookends battle commodity price volatility, the midstream industry generates steadier cash flow backed by long-term fixed-rate contracts.

Enterprise Products Partners produced about $7.8 billion of distributable cash flow in 2022. It gave slightly more than half of that money to investors via a payout that currently yields 7.4%. That high-yielding cash distribution provides investors with a nice base return. For example, a $1,000 investment would produce about $74 of annual income. 

The company's conservative payout ratio gives it lots of financial flexibility. It retains billions of dollars each year that it can use to invest in expanding its midstream operations and strengthening its balance sheet.

Enterprise Products Partners did both last year. It invested $1.6 billion in organic expansion projects and asset purchases and reduced the principal amount of its debt by $1.3 billion. The MLP also acquired Navitas Midstream for $3.2 billion.

Even with those growth-related investments, it ended the year with a very strong balance sheet. Leverage was down to 2.9 times debt-to-EBITDA, at the low end of its 2.75 to 3.25 target multiple. It also had an A-/Baa1 bond rating, the highest in the midstream sector. That fortresslike financial profile makes Enterprise Products Partners a very low-risk investment in the energy sector. 

A very healthy company

Johnson & Johnson is one of the world's largest healthcare companies. It makes lots of money each year selling much-needed medicines and medical technology.

In 2022, Johnson & Johnson generated $17 billion in free cash flow. That easily covered its 2.9%-yielding dividend (at $11.7 billion), providing investors with a solid-base cash return. Meanwhile, it used its excess cash to repurchase shares ($2.5 billion) and maintain a top-tier balance sheet.

Johnson & Johnson is one of only two companies with AAA-rated credit (higher than the U.S. government). The company ended the first quarter with $33 billion in cash and $53 billion in debt (giving it $20 billion of net debt).

That's a little higher than normal because the company recently closed its $16.6 billion all-cash acquisition of Abiomed to strengthen its medical technology portfolio. Given its strong and stable cash flows, the company can easily afford to carry that extra debt.

A low-risk landlord

Camden Property Trust is a real estate investment trust (REIT) focused on residential rental properties. The company owns over 170 apartment communities across 15 major markets in the fast-growing Sunbelt region.

It focuses on cities where population and jobs are growing fastest, which drives high occupancy levels and rent growth. That supplies the REIT with very stable and rising rental income.

Camden pays out less than 60% of its income to investors via dividends, a very conservative level for a REIT. It currently offers a very solid cash return, given its 3.8% dividend yield. 

It has one of the strongest balance sheets in the REIT sector and is one of only a handful of REITs with A-rated credit. It backs its fortresslike balance sheet with a low leverage ratio and lots of liquidity.

Camden's financial strength gives it the flexibility to invest in expanding its apartment portfolio. It's spending $761 million on six development communities (four multifamily and two single-family rentals). These investments should grow its rental income.

Built with financial safety in mind

Enterprise Products Partners, Johnson & Johnson, and Camden Property Trust have very low-risk business models. They complement that with very conservative financial profiles. These strong safety features make them very low-risk stocks.