I would suggest to go for option1, using a hyphen
And if the keywords are of same vertical then club them\
Hope that helps :)
Think from user's perspective
Which domain is easier to remember and recall?
This will give your more advantage of visitor base rather then taking any very remote benefit of segregated keywords in domain.
It has been discussed in the Yahoo forum that Y does not like hyphens in a URL.
Y! doesn't like more than a certain number of hyphens in a URL, but there can always be variations on a theme. Top results there turn up a LOT of hyphen-less pages, and at this stage of the development of search, Google can more than likely figure out what words are in URLs with or without hyphens.
The main advantage I know of with hyphenated domains is when there's a direct URL link using the domain name they're separated but that doesn't happen a majority of the time. I try to keep hyphens to a minimum possible and frankly think domain names look much better without hyphens.
>> I try to keep hyphens to a minimum possible and frankly think domain names look much better without hyphens.
Buy both domains to keep typo-squatters out, and then 301 redirect one of them to the canonical domain.
Hmmm... thanks very much everyone. Much appreciated.
Assuming it is only one hyphen, go for that solution, but do buy the non hyphenated domain as well.
More hyphens may cause problems. Recently I submitted one of my 5-word domains which has 4 hyphens between the words, and several (secondary) directories rejected it outright. My actual domain and website has nothing spammy about it, but there have been so many spammy domains abusing the hyphens, that I see where these directories are coming from.
I never use hyphens. They're not intuitive to the user. If someone hears your domain name and types it in, they may or may not remember or know there's a hyphen in it. Odds are they'll type in without first - and if someone else has the domain without the hyphen, it's just sending them your traffic.
The question is whether they are still available? Especially a "twoword" domain.