The 3 Smartest Dividend Stocks to Buy With $500 Right Now (2024)

Dividend stocks to buy present a simple path to passive income. You don’t have to manage a real estate property, deal with tenants, or travel very far to stay on top of your dividend portfolio. Most dividend-paying firms give out quarterly distributions and raise their dividends each year. If you reinvest the dividend, you’re going to receive a higher payout each time.

Investors can choose from many dividend stocks. While it’s good to have many choices, it can also feel overwhelming. Some dividend stocks continue to thrivewhileothers stay flat for years. You shouldn’t only focus on the dividend yield. Capital gains also impact your total return, so it’s good to find stocks that have a history of going up. Strong financials increase the likelihood that a stock will outperform.

The dividend stocks on this list each have rising revenue and profit margins. They also have dividend yields above 1% and impressive growth rates. Discover three compelling dividend stocks to buy.

American Express (AXP)

American Express(NYSE:AXP) offers a margin of safety with its 19 P/E ratio. That’s a lower valuation than other credit and debit card stocks. The fintech firm also has solid financials, including 11% year-over-year revenue growth inQ1 2024. Net income grew at a faster pace — 34% year-over-year — to support a 16.9% net profit margin.

Dividend investors will like that American Express has a 1.22% yield. The company regularly maintains a double-digit dividend growth rate and continued that trend with a17% dividend hikeearlier this year. American Express has also delivered meaningful capital gains for long-term investors. Shares are up by 22% year-to-date and have gained 85% over the past five years.

The firm’s recentacquisition of restaurant booking platform Tockfor $400 million demonstrates leadership’s commitment to growth. American Express has been acquiring companies in the dining and event space over the past five years to give cardholders more choices.

Walmart (WMT)

People always need to buy food, and they’ll look for the lowest prices when it comes to various products.Walmart(NYSE:WMT) has been at the intersection of those trends for decades. The company emphasizes affordability and is a leading grocer. Shares are up by 28% year-to-date and have gained 83% over the past five years.

Walmart offers a 1.22% yieldwhichrecently received a9% boost. It’s the highest dividend hike in more than a decade and marks Walmart’s 51st consecutive year of dividend increases. The company’s solid financials and recent initiatives can lead to a high dividend growth rate for several years. Revenue increased by 6.0% year-over-year inQ1 FY25whileadjusted PES was up by 22.4% year-over-year.

In a positive development, e-commerce sales were up by 21% year-over-year. The company’s advertising division grew by 24% year-over-year. Ads should increase overall profits, and a recent change in stores should also spark higher profitability. Walmart isswapping its physical price labels with digital screens. This move will save the company money since it no longer has to replace labels. This change might lead to higher advertising revenue, as Walmart can theoretically display digital advertisem*nts on some of its in-store screens.

Texas Roadhouse (TXRH)

Texas Roadhouse(NASDAQ:TXRH) is expanding its fast food restaurant chain while delivering solid results with its steakhouses. The company has been delivering solid financial growth similar to other fast food restaurants that have much higher valuations. The company reported 12.5% year-over-year revenue growth and 31.4% year-over-year net income growth in thefirst quarter. Texas Roadhouse had an 8.6% net profit margin to wrap up the quarter.

Comparable restaurant sales were up by 8.4% at company restaurant and was up by 7.7% at domestic franchise restaurants. High comparable restaurant sales suggest that expansion isn’t the only factor contributing to high revenue growth.

The company trades at a 34.5 P/E ratio and offers a 1.43% yield. Texas Roadhouse has maintained a double-digit dividend growth rate for several years, including an11% dividend hikeearlier this year. Shares are up by 43% year-to-date and have more than tripled over the past five years. Texas Roadhouse is currently rated as aModerate Buyfrom 22 analysts. If you are looking for dividend stocks to buy, start here.

On this date of publication, Marc Guberti held a long position in TXRH. The opinions expressed in this article are those of the writer, subject to theInvestorPlace.comPublishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.