Anytime is a great time to invest in stocks. The catch is that you must choose the right stocks.
The current market dynamics, including high volatility and worries about tariffs leading to a trade war, make the stock selection process trickier than it's been over the last couple of years. However, the stocks of companies that pay strong dividends, have attractive valuations, and resilient business models should be great candidates even during such an environment.
Which stocks can you buy with minimal up-front cash that check off all of those boxes? Here are my picks for the three smartest dividend stocks to buy with $150 right now.
1. Dominion Energy
Anyone who lives in Virginia, North Carolina, or South Carolina is probably already familiar with Dominion Energy (D 0.10%). The company provides electric power in all three states. But this utility stock is worthy of consideration for income-seeking investors anywhere.
NYSE: D
Key Data Points
Dominion offers a forward dividend yield of 4.94%. The main knock against the company's dividend program is that you probably shouldn't expect any increases for a while. Dominion's management plans to keep the dividend at the current level until it reaches a target payout ratio of close to 60%. The good news, though, is that the dividend is already juicy and future cuts are unlikely.
This stock is valued attractively -- and I'm not talking about Dominion's relatively low share price of $54. The utility company's shares trade at below 16 times forward earnings. The average forward earnings multiple for S&P 500 utility stocks is 17.7.
Perhaps the best argument for buying Dominion Energy stock right now is that its business is rock-solid. Roughly 90% of its earnings come from state-regulated utility operations. Another 5% is "regulated-ish" with the company's Millstone nuclear power facility's power purchase agreements. The demand for power in Dominion's markets will likely increase in future years thanks to growing populations and data center expansions.
2. Enterprise Products Partners LP
You can buy one unit of Enterprise Products Partners LP (EPD 1.77%) for only $33 or so. Note that I said unit rather than share: Enterprise is a limited partnership (LP). The company also pays a distribution rather than a dividend. Putting the terminology differences aside, though, I think Enterprise Products Partners is a fantastic stock to buy right now.
NYSE: EPD
Key Data Points
Enterprise's forward distribution yield hovers around 6.5%. The LP has increased its distribution for an impressive 26 consecutive years. I fully expect that streak to continue well into the future.
The stock is up roughly 16% over the last 12 months. It's held up well so far this year while the major indexes have plunged. But Enterprise remains valued attractively with a forward earnings multiple of 11.1.
I like Enterprise's stable business model. The company operates over 50,000 miles of pipeline throughout the U.S. with over half of its gross operating margin coming from transporting natural gas liquids. Its toll-road-like business has consistently generated solid cash flow during good times and bad times.
3. Pfizer
Pfizer (PFE +1.25%) is probably the best-known stock on the list. It ranks as one of the world's largest pharmaceutical companies with multiple blockbuster drugs on the market. Pfizer has been in business since 1849. Although tariffs could impact the company's product pricing somewhat (it manufactures many products outside the U.S.), physicians will prescribe Pfizer's drugs and patients will take them regardless of macroeconomic factors.
NYSE: PFE
Key Data Points
This stock is the cheapest on our list in more ways than one. Pfizer's share price is below $26. Its forward earnings multiple is only 8.7, much lower than the S&P 500 healthcare sector's forward earnings multiple of 18.
Granted, Pfizer's cheap valuation is largely due to concerns about declining COVID-19 vaccine sales and the losses of patent exclusivity for several drugs over the next few years. However, the company has multiple new products and a promising pipeline that should enable it to deliver solid growth through the rest of the decade.
The biggest plus for Pfizer, in my view, is its dividend. The drugmaker's forward dividend yield tops 6.7%. Pfizer has increased its dividend for 16 consecutive years. Its management appears to be committed to maintaining and growing the dividend in the future.
