I like dividend stocks. You probably should, too, even if you aren't interested in the income they provide. Dividends have driven a significant chunk of the S&P 500's (^GSPC 0.61%) total return over the long run.
It's easy to succumb to analysis paralysis when trying to decide which dividend stocks to buy, though. There are over 5,800 stocks that pay dividends trading on U.S. stock exchanges.
I think I might be able to help -- and you won't need a huge amount of cash to invest in these stocks. They're all trading under $200 per share as I write this. Here are my picks for the smartest dividend stocks to buy with $350 right now.
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1. AbbVie
AbbVie (ABBV 2.51%) offers pretty much everything you'd want in a dividend stock. The big drugmaker has a great dividend. Its business is rock-solid. AbbVie has good growth prospects, and the stock's valuation is also attractive.
Let's start with the dividend, since it's our main focus. AbbVie's forward dividend yield is 3.44% as I write this, a level that I suspect most income investors will find appealing. It's a member of the elite group known as Dividend Kings, with 53 consecutive years of dividend increases. AbbVie has grown its dividend by a whopping 310% since being spun off from Abbott Labs (ABT 0.15%) in 2013.
NYSE: ABBV
Key Data Points
How rock-solid is AbbVie's business? The company's autoimmune disease drug Humira ranked as the top-selling drug in the world for several years. Now, though, Humira's sales are sinking as it faces biosimilar competition. AbbVie barely skipped a beat. It has two newer autoimmune disease drugs on the market that are on track to soon generate combined sales that top Humira's peak sales. Because of these and other drugs, AbbVie expects to grow robustly at least through the end of the decade.
As for valuation, AbbVie's shares trade at 15.4 times forward earnings. That's well below the forward earnings multiples of the S&P 500 and the healthcare sector. But AbbVie's growth makes its stock look like even more of a bargain. The big pharma company's price-to-earnings-to-growth (PEG) ratio, which is based on five-year earnings growth projections from analysts surveyed by LSEG, is a super-low 0.4.
With its share price hovering around $190, buying AbbVie will cost you over half of an initial $350. But it should be money well spent, and you'll still have plenty to buy the other two great dividend stocks on the list.
2. Dominion Energy
Dominion Energy (D +0.57%) isn't a Dividend King like AbbVie, however, its forward dividend yield of 4.58% might make up for the lack of an impressive track record of dividend increases. You can scoop up a share of this top utility stock for less than $60.
One of the main reasons I like Dominion Energy is that its business is incredibly stable. The company provides electricity to 3.6 million residential and business customers in Virginia, North Carolina, and South Carolina. It provides natural gas to around half a million customers in South Carolina. In addition, Dominion is a major player in the renewable energy industry.
NYSE: D
Key Data Points
The company is a regulated monopoly in the markets it serves. Customers will need electricity and natural gas regardless of what happens with the stock market or the economy. With stock valuations at frothy levels and economic uncertainty flaring related to tariffs, I think Dominion Energy is an ideal dividend stock to own.
But it isn't just a defensive play. Dominion has solid growth prospects, too. The populations in the states where it operates continue to grow. Dominion's home state of Virginia hosts the world's largest data center market. This market should keep expanding with soaring demand for artificial intelligence (AI).
3. Realty Income
You should have around $100 or so remaining from your initial $350 after buying one share each of AbbVie and Dominion Energy. That's more than enough to pick up a share of Realty Income (O 0.95%), one of the best real estate investment trusts (REITs) around.
It's hard to overstate just how great Realty Income's dividend is. The REIT's forward dividend yield is a lofty 5.58% as I write this. Realty Income has increased its dividend for 30 consecutive years and 110 consecutive quarters. It even pays the dividend monthly.
NYSE: O
Key Data Points
Realty Income believes that it sits "at the intersection of two global megatrends." I agree. One of those megatrends is the need for aging investors with less time to ride out stock market downturns to find stable and growing passive income. The other is that companies in the U.S. and Europe are seeking funding solutions, and they have a combined $14 trillion of real estate on their balance sheets.
The REIT has a diversified portfolio of properties, many of which are leased to businesses such as convenience stores, groceries, dollar stores, and home improvement retailers. I like that roughly 91% of its total rent is resilient to economic downturns and/or insulated from e-commerce threats. And I love that Realty Income has delivered positive operational returns every year since going public in 1994. Buying this dividend stock would be a very smart move.
