The Smartest Dividend Stocks to Buy With $5,000 Right Now
Key Points
Buying dividend stocks offers cash flow now, but the real reward comes when you can compound dividend growth over decades.
American Express is a leading credit card issuer that can pay its annual dividend with its quarterly profit.
Realty Income delivers monthly dividend payouts based on a vast real estate portfolio of more than 15,500 properties.
- 10 stocks we like better than American Express ›
Investors load up on dividend stocks because they want passive income. Many dividend-paying corporations send shareholders cash distributions each quarter and hike their payouts each year.
While you can take cash right away, many investors opt to reinvest their dividends, guaranteeing higher payouts each time. Then, they have plenty of cash flow by the time they retire.
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If you have $5,000 floating around that you want to put into dividend stocks, here are two strong contenders. One of them qualifies with a low yield but a tremendous dividend growth rate. The other pick has a high yield right now and is one of the few dividend stocks that pays monthly cash distributions to its shareholders.
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American Express is a financial giant
American Express (NYSE: AXP) has been one of the top credit card issuers for decades. That history makes it easier for the company to gain market share and earn revenue from more transactions. This business model has also been enough to crush the S&P 500, with the stock up by about 160% during the past five years.
It only offers a 0.95% yield at current levels, so it isn't exactly a high-dividend stock. But management said it planned to raise the dividend by 16% this year, and those types of increases are quite common for the company. American Express also has a strong financial profile that supports such dividend hikes.
The company generated $2.5 billion in net income in the 2025 fourth quarter, a 13% increase from a year earlier. That's a little more than the $2.3 billion in dividends it paid to shareholders during all of 2025. Management also had enough financial flexibility to buy back $5.3 billion worth of shares that year.
Realty Income offers steady cash flow with its vast real estate portfolio
Realty Income (NYSE: O) is a diversified real estate investment trust (REIT) that owns about 15,500 properties across 92 separate industries. This portfolio covers all 50 states and several European countries. Because real estate relies on monthly cash flow, Realty Income has an easy time paying out monthly dividends to its investors.
The REIT normally doesn't beat the S&P 500, and its 10% gain during the past five years is a testament to that fact. However, the stock has started the year strong with a 15% year-to-date gain. Results for the third quarter of 2025 showed 10% year-over-year revenue growth and rising profit margins. A 98.7% occupancy rate for its properties tied everything together with a nice bow.
Even with the stock's strong start to the year, Realty Income still offers a dividend yield of 5%. Shareholders can reinvest their cash distributions each month to ensure higher dividend payouts in the future.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
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American Express is an advertising partner of Motley Fool Money. Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
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