Kings don't always receive royal treatment. Dividend Kings certainly don't. Target (NYSE: TGT) provides a great example.

Shares of the giant retailer have plunged close to 40% below the high set in October 2024. Some investors have run for the hills. However, there's a case to be made for not overthinking the difficulties that Target faces and just buying the beaten-down stock.

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An off-target Target

Target hasn't hit the bullseye very much lately. The company's first-quarter sales slipped nearly 3% year over. Its earnings were well below expectations. Executives said during the Q1 earnings call that they weren't satisfied with the performance four times. Even worse, Target slashed its full-year earnings guidance and expects sales to decline by a low single-digit percentage.

What's going on? Some of the problems are largely outside of Target's control. For example, inflation has put pressure on discretionary spending. Consumer confidence declined for five consecutive months this year.

President Trump's tariffs create more issues for the entire retail sector. Target is no exception. Many of the products the company sells are imported. While Target has significantly decreased its reliance on products made in China, the level is still around 30%.

Target is responsible for one major headache, though. Management announced earlier this year a rollback of several diversity, equity, and inclusion (DEI) initiatives and a new "Belonging at the Bullseye" strategy for "creating a sense of belonging for our team, guests and communities." This decision sparked a major backlash, including a consumer boycott. Target CEO Brian Cornell briefly acknowledged the pushback in the Q1 earnings call, saying that one of the headwinds the company faces was "the reaction to the updates we shared on belonging in January."

Better news for the beaten-down retailer

However, there is some better news for the beaten-down retailer. For one thing, management isn't trying to sweep the company's problems under the rug. Target established an "acceleration office" led by COO Michael Fiddelke. The purpose of this group will be to facilitate faster decision-making and execution of strategic initiatives to return to growth.

Much of what made Target one of the most successful retailers in the world for years remains in place. Many of the brands offered in its stores remain popular with customers. Target's partnership with Kate Spade was a big hit.

The company continues to make solid progress on reducing inventory shrinkage and improving productivity. These efforts should help offset some of the pressures on profits.

Target appears to have a good strategy for dealing with tariffs. It's negotiating with vendors, trying to source from different countries with lower tariff rates where possible, adjusting order pricing, and (as a last resort) increasing prices. Chief commercial officer Rick Gomez thinks that these efforts should "offset the vast majority of the incremental tariff exposure" the company will face.

Then there's the dividend. Target recently announced its 54th consecutive year of dividend increases. Its forward dividend yield stands at 4.67%. Despite the retailer's challenges, it remains in a strong position to continue its impressive streak of dividend hikes with a low payout ratio of 49%.

Don't overthink, just buy

It's easy to overthink Target's problems and overlook its strong points. After all, this is a company that's on track to generate revenue of close to $105 billion this year and deliver solid profits. Target is also, as we've seen, a highly reliable source of dividend income.

We shouldn't leave out the stock's valuation, either. Target's shares trade at only 12.8 times forward earnings.

I expect it will take a while for Target's turnaround to play out. However, I suspect that investors who buy now will enjoy attractive total returns over the long term.

Should you invest $1,000 in Target right now?

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Keith Speights has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

It didn't seem that far ago in the past that the idea of artificial intelligence (AI) seemed like the stuff of science fiction. Nowadays, however, it seems that everywhere we look, AI has a presence. From customer service chatbots to self-driving cars, AI in a wide variety of places that transcend the generative AI applications like ChatGPT that people are turning to daily -- and maybe even hourly.

Recognizing how rapidly AI is escalating, growth investors are looking for ways to prosper from the trend. Fortunately for them, they needn't fret about identifying individual AI companies -- the exchange-traded fund Invesco QQQ ETF (NASDAQ: QQQ) provides a convenient one-stop shopping exchange-traded fund opportunity for those looking to invest $1,000 and hold on for the long term.

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Don't let the name fool you -- AI exposure reigns supreme

Although you couldn't tell by the name of the fund, the Invesco QQQ ETF still offers considerable AI exposure, although it's not explicitly stated in the same way as other AI-focused ETFs like the Roundhill Generative AI and Technology ETF or the Global X Robotics and Artificial Intelligence ETF.

Providing exposure to the market's leading tech stocks, the Invesco QQQ ETF has the stated goal of tracking the Nasdaq-100, an index that tracks the performance of the top 100 nonfinancial stocks listed on the Nasdaq Stock Market.

In addition to all the "Magnificent Seven" stocks, the 10 largest positions in the Invesco QQQ ETF include semiconductor stalwart Broadcom, streaming leader Netflix, and leading wholesale retailer Costco Wholesale.

Company	Allocation (Percentage of the Invesco QQQ)
Microsoft	8.79%
Nvidia	8.62%
Apple	7.34%
Amazon	5.59%
Broadcom	4.80%
Meta Platforms	3.72%
Netflix	3.17%
Tesla	2.94%
Costco Wholesale	2.69%
Alphabet (class A shares)	2.54%

Data source: Invesco QQQ ETF Prospectus Data.

Despite the fact that there are 100 stocks held in the Invesco QQQ ETF, it's the top 10 positions that do the heavy lifting, representing 50% of the fund's weighting.

Besides companies providing innovative AI tools like Apple and Microsoft, investors have the opportunity to prosper from AI's use in autonomous vehicles with Tesla, as well as semiconductor stocks Nvidia and Broadcom that provide AI computing capabilities.

A simple way to surf the waves of tech innovation

While the popularity of some technologies -- like 3D printing -- turn out to not provide investors with the lucrative returns that they had seemed to initially offer, the omnipresence of AI in so many facets of society suggest that it's here to stay and become even more deeply embedded in our daily lives in the coming years. While it does, the Invesco QQQ ETF will continue to provide investors with the opportunity to benefit.

Naturally, tech advancements will continue, and the Invesco QQQ ETF will continue to serve as an ideal way for investors to have exposure to the companies at the vanguard of innovation, since the ETF is rebalanced quarterly and reconstituted annually.

Many experts, for example, suspect that quantum computing will be the next tech revolution. If they're correct, companies that are quantum computing industry leaders and are already held in the Invesco QQQ ETF -- like Nvidia, Microsoft, and Alphabet -- will provide exposure for investors.

This ETF's success is clear as day

Since its inception in March 1999, the Invesco QQQ ETF delivered a convincingly strong performance, soaring at a clip that exceeds those of both the S&P 500 and Nasdaq Composite. From the early days of the internet through the development of the smartphone industry up to the boom in AI stocks, the Invesco QQQ ETF provided investors with a convenient way to prosper from the recent technological achievements.

QQQ data by YCharts.

As it has over the past 25 years, the ETF is bound to experience some bumps in the road, as it's subject to the whims of the market. But for investors who take the long view -- our favorite type of investors -- the volatility the ETF experiences shouldn't impede it from enjoying future success and contributing greatly to growing investors' personal wealth.

As if the allure of the fund isn't bright enough, those who fret that a high-quality ETF such as this comes with exorbitant management costs needn't worry. The Invesco QQQ ETF has a low total expense ratio of 0.2%, or $20 annually for each $10,000 invested.

Should you invest $1,000 in Invesco QQQ Trust right now?

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

One of the best things to happen to stock investing is the introduction of exchange-traded funds (ETFs). Instead of having to invest in many different stocks to achieve diversification, investors can invest in a single or a few ETFs and instantly be invested in hundreds or thousands of companies.

Leaning on ETFs doesn't have to mean sacrificing return potential, either. There are plenty of ETFs on the market that historically outperform many top companies. One of those is the Vanguard Information Technology ETF (NYSEMKT: VGT). This tech-focused ETF has the potential to turn monthly investments as low as $100 into $500,000 or more.

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This ETF checks off the tech boxes

If you're looking to add tech stocks to your portfolio, this ETF can be a great starting point. It contains over 300 stocks from various industries within the tech sector, including semiconductors (26.8% of the ETF), systems software (21%), technology hardware (18.8%), application software (15.9%), and IT consulting (3.8%).

The tech sector includes many different industries, so the ETF's diversity even within the tech sector gives you broader exposure to its full potential. You don't want to put all your focus on semiconductors and miss the growth of software, put all your focus on hardware and miss the growth of cloud computing, or put all your focus on IT services and miss the growth of cybersecurity.

How to build a $500,000 portfolio with this ETF

Since its January 2004 inception, this ETF has noticeably outperformed the market (based on S&P 500 returns), up 1,190% compared to 420%. That's an annual average of around 12% versus 8%.

When you look at just the past decade, the ETF's returns have been even more impressive, averaging 19% annual returns.

VGT data by YCharts

Averaging 19% and 12% over the long term is an ideal scenario, but it shouldn't be expected. The market historically averaged around 10% annual returns over the long haul, which is a safer expectation.

In either case, here's how much you could earn from this ETF by investing $500 monthly and averaging different returns:

Years Invested	10% Average Annual Returns	12% Average Annual Returns	19% Average Annual Returns
15	$189,200	$222,000	$394,500
20	$340,100	$427,800	$981,700
25	$582,100	$789,000	$2.37 million
30	$970,300	$1.42 million	$5.69 million

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Even if you don't have $500 available to invest monthly, you can still hit the $500,000 mark by only investing $100. What you don't have in money, you can make up with time and taking advantage of the power of compound earnings.

Years Invested	10% Average Annual Returns	12% Average Annual Returns	19% Average Annual Returns
15	$37,800	$44,400	$78,900
20	$68,000	$85,500	$196,300
25	$116,400	$157,800	$475,500
30	$194,000	$284,500	$1.13 million

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Past results don't guarantee future performance, so you never want to assume that this ETF (or any stock) will maintain these returns. However, it's positioned to return great long-term value.

This ETF should be a complementary piece to your portfolio

One downside to this ETF is its concentration in Apple, Microsoft, and Nvidia stocks. The three combine to make up over 45% of the ETF. That's a lot for any ETF, but especially one with over 300 companies.

Here are the ETF's top 10 holdings:

Company	Percentage of the ETF
Apple	17.15%
Microsoft	14.32%
Nvidia	14.20%
Broadcom	4.44%
Salesforce	1.75%
Palantir Technologies (Class A)	1.73%
Oracle	1.59%
Cisco Systems	1.59%
IBM	1.55%
ServiceNow	1.36%

Data source: Vanguard. Percentages as of April 30.

Granted, Apple, Microsoft, and Nvidia are some of the world's top companies, but that's still a lot riding on just them. Ideally, this ETF would be a complementary piece to your portfolio, rather than the bulk of it. This is especially true for people invested in the S&P 500, because these companies also make up a good portion of the index.

The tech sector as a whole can be volatile, so the same applies to this ETF. The best you can do is expect it, ignore it, stay consistent, and trust the long-term returns.

Should you invest $1,000 in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Cisco Systems, International Business Machines, Microsoft, Nvidia, Oracle, Palantir Technologies, Salesforce, and ServiceNow. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.