The Smartest High-Yielding Dividend Stocks in the S&P 500 Index to Buy With $3,000 Right Now

The stock market has been incredibly volatile this year, registering a nearly 20% fall from February highs before bouncing back with a roughly 20% gain since President Donald Trump's sweeping tariff announcement in April. Two of the three major indexes entered bear market territory at one point.

Not everyone has the stomach for this kind of volatility as it can be incredibly stressful to see so much movement in such a short time period. Many investors prefer to focus on passive income by purchasing stocks with healthy, growing dividends. For those intrigued by this approach, here are the smartest dividend stocks in the broader benchmark S&P 500 index to buy with $3,000 right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Philip Morris International: A proven dividend payer with growing earnings

Tobacco company Philip Morris International (NYSE: PM) was spun off from its parent company, Altria Group (formerly Philip Morris Companies Inc.), and taken public in 2008. It was also around this time that the company made the decision to shift its focus from cigarettes to smoke-free products such as ZYN and iQOS.

The move away from cigarettes has only been gaining steam for the company recently with the stock up 149% over the last five years. It's even one of the top-performing names in the S&P 500 in 2025 with a 35% year-to-date gain (as of May 15), which is even more impressive considering how tough market conditions have been.

In the first quarter of the year, Philip Morris grew its earnings per share by 25%, while net revenue was up 6%. Management expects full-year adjusted EPS to surge over 50% on organic net revenue growth of 6% to 8%.

That's an encouraging outlook for income-focused investors. Philip Morris has been a strong dividend payer since going public in 2008, and it has increased its annual dividend every year at a roughly 7% compound annual rate. Dividends paid in the first quarter amounted to about 78% of earnings, and the company's free cash flow yield of 5.7% is comfortably above its 3.3% dividend yield.

Image source: Getty Images.

Realty Income: The Monthly Dividend Company

Given that its slogan is "The Monthly Dividend Company," Realty Income (NYSE: O) is a stock that lives and dies by this monthly payout. As a real estate investment trust (REIT), the company must pay at least 90% of its taxable income in dividends to shareholders, which explains its superb 5.9% dividend yield as of this writing. Realty Income's core business is as a triple net lease operator, meaning it rents out properties to businesses, which are on the hook for other expenses like property tax, insurance, and maintenance.

It's clearly a favorable setup for a landlord that has less work to do but still collects rent. Tenants benefit because they have more flexibility over the spaces they rent, and they may be able to leverage the added responsibility to get more favorable rent or lock into longer leases. Realty Income operates over 15,600 properties in all 50 U.S. states, the United Kingdom, and six other countries in Europe. The company focuses on non-discretionary, inexpensive, and service-oriented businesses like convenience and grocery stores, dollar stores, and home improvement, among others. It's also wading into new and growing sectors like data centers and gaming.

Realty Income also has a strong history of excellent dividend performance. The company has paid 658 consecutive monthly dividends, increased its dividend for 110 consecutive quarters, and seen a 4.3% compound annual growth rate for its dividend since 1994.

The dividend also looks quite sustainable. Because of the unique corporate structure that REITs operate under, a good way to measure the sustainability of the dividend is to look at adjusted funds from operations (AFFO), which is essentially a measure of free cash flow for a REIT. In the first quarter, Realty Income paid $0.796 per share in dividends, while generating $1.06 in AFFO per share, meaning quarterly dividends currently equate to about 75% of AFFO. The stock has not been a strong performer recently, only up about 14% in the past five years, but it's a reliable way to generate passive income.

Should you invest $1,000 in Realty Income right now?

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.