There are many different strategies that investors can deploy. Some invest in high-growth tech stocks, hoping to reap consistently strong gains that beat the market, while others look for beaten-down value stocks that can turn things around and eventually get back into the good graces of the market.
Dividend investors are unique in that they focus less on a stock's appreciation potential and more on its ability to consistently pay and raise dividends every year, providing reliable passive income.
Dividend stocks that pay out money each year can be powerful compounders of wealth. The key is looking for dividend stocks with a strong track record and that generate enough earnings and free cash flow to regularly pay their dividends and increase them every year.
Here are the best dividend stocks to buy with $1,000 right now.
1. Coca-Cola: One of Buffett's favorites
If you're looking for a good endorsement, Warren Buffett and his company Berkshire Hathaway is arguably as good as it gets. Buffett has owned few stocks longer than the iconic beverage company Coca-Cola (KO 0.29%), which Berkshire first purchased in 1988. Coca-Cola has been good to Berkshire and Buffett, protecting the brand and consistently growing earnings and the dividend.
Coca-Cola is considered one of the strongest consumer staples stocks in the market because consumers will continue to purchase its products through the economic cycle. The company has also innovated and now owns a large portfolio of products including water brands, coffee and tea, juices, and even alcohol.
Management has been able to navigate the difficult business environment with President Donald Trump's constantly changing tariffs, previously saying that it has the flexibility to lean into plastic packaging if aluminum gets more expensive. The company continues to report solid earnings results, and management recently reiterated its guide for 5% to 6% organic growth in sales in 2025, despite demand still being somewhat weak among the consumer.
NYSE: KO
Key Data Points
Coca-Cola's dividend is one of the most solid in the market. The company is a Dividend King, meaning it has paid and raised its annual dividend for at least 50 straight years. In fact, this year marked Coca-Cola's 63rd straight increase and the company now has a trailing-12-month yield of close to 3%.
On an adjusted basis excluding cash spent on a recent acquisition, management expects the company to generate $9.5 billion of free cash flow, while annual dividends are projected to come in around $4.5 billion. This creates a solid buffer for the dividend and should allow Coca-Cola to safely pay and raise its dividend for the foreseeable future.
2. Realty Income: The monthly dividend company
With its official slogan being "The Monthly Dividend Company," you can bet that Realty Income's (O 0.38%) management team feels pretty good about its ability to continue to pay and raise its dividend.
Realty Income is a real estate investment trust (REIT). This is a special corporate structure in which REITs can avoid paying corporate taxes by meeting certain conditions. These include paying out 90% of taxable income in dividends to shareholders, investing at least 75% of the company's assets in real estate, cash, or Treasury bills, and obtaining at least 75% of total income from real estate-associated activities.
Realty Income is a triple-net lease operator, meaning it leases out its properties to tenants that are required to pay property taxes, handle property maintenance, and pay insurance costs. The advantage for tenants is they have more flexibility with the space, and may be able to negotiate more favorable terms for taking on additional responsibilities.
NYSE: O
Key Data Points
Realty Income focuses on non-discretionary, low-price service-oriented businesses like convenience and grocery stores, home improvement, and quick-service restaurants. Some of the company's larger tenants include 7-Eleven, Dollar General, and FedEx. It is also expanding in new geographies like Europe and new growth sectors like data centers and gaming.
Realty Income pays its dividend monthly and has made consecutive monthly dividend payments for more than three decades. It has grown the dividend at a 4.2% compound annual rate during this time and now has a trailing-12-month dividend yield of 5.35%. When looking at Realty's ability to keep paying the dividend, the company generated adjusted funds from operations, which is essentially a measure of free cash flow for REITs, of $2.11 through the first half of 2025. During the same time, the company paid just over $1.60 per share in dividends, showing that it's in a strong position to keep paying and raising the dividend going forward.
