The Smartest Dividend Stocks to Buy With $500 Right Now

I always recommend that investors look to the long term when considering their portfolios. Instead of chasing short-term wins and day trading, a surer path to success and wealth is to build a diversified investment portfolio full of quality companies and allow it to grow over time. And dividend stocks are some of the best stocks you can pick.

Consider for a moment the impact of dividends. Companies that provide a regular payout are giving you extra money on top of the regular return that your stock offers. You can reinvest those dividends into your holdings, allowing it to grow even faster.

For instance, the S&P 500 has grown 256% over the last decade -- solid performance that would have turned a $10,000 investment into $35,600. But when you calculate the dividend yield that was reinvested into the index, your total return is 322%, meaning your $10,000 investment swells to $42,250.

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That's the power of dividend reinvestment. Today, the S&P 500 yields 1.15%. For just $500, you can create a solid dividend portfolio with quality, reliable stocks that outperforms the index. Here's why you should use fractional shares to split your money in three equal piles to invest in Realty Income (NYSE: O), Enterprise Products Partners (NYSE: EPD), and American Express (NYSE: AXP).

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Realty Income provides monthly income

There are a lot of dividend stocks out there, but I know of none that are as consistent and frequent with their payouts as Realty Income. This real estate investment trust (REIT) has paid a monthly dividend faithfully for more than 50 years, recently marking the 668th consecutive monthly payout.

REITs are required to pay out 90% of their profits as dividends, making them preferred vehicles for many income investors. And the company's business model means that investors can be sure the profits will continue to roll in. Realty Income owns about 15,500 commercial properties under long-term net-lease agreements, meaning the tenant pays taxes, insurance, and maintenance.

Realty Income is also diversified, with more than 1,600 clients across 92 industries, including grocery stores, convenience stores, home improvement outlets, and dollar stores.

Shares of Realty Income are up nearly 18% so far this year, and the stock also pays a 4.8% dividend yield.

Enterprise Products Partners is a midstream workhorse

Oil and gas companies often offer dividends, but my favorite energy stock for a consistent payout is Enterprise Products Partners. This is a midstream energy company, which means its focus is on transporting oil and gas from where it is drilled to where it will be refined or sold. I like midstream companies because they don't have to worry about the high cost of exploring new oil and gas fields, nor are they as affected by oil and gas price swings. They rely on the volume of products that are moving through the pipelines and must provide the infrastructure to move them efficiently.

Enterprise Products Partners has more than 50,000 miles of pipeline to transport oil, natural gas, natural gas liquids, and refined products. The company is structured as a master limited partnership, or MLP, which means that it must pay out 90% of its income from its operations. MLPs also differ from other companies because they have units rather than shares and pay distributions rather than dividends.

The company's stock is up 13% so far this year and pays a generous 6% as a quarterly distribution.

American Express stands out among finance stocks

American Express doesn't have the market capitalization of competitors Mastercard and Visa -- its market cap is currently around $220 billion, while Mastercard sports a cap of $440 billion and Visa is even bigger, at $588 billion. But American Express has two qualities that Mastercard and Visa can't touch.

First, American Express caters to businesses and a more affluent customer base, which allows it to charge more in fees. It markets itself not only as a credit card company, but a premium lifestyle brand. American Express recently introduced updated consumer Platinum cards that have a whopping $895 annual fee -- but many customers are more than willing to pay to get American Express's benefits. American Express issued 12.6 million new cards in 2025, with 65% of new accounts representing millennial and Generation Z customers.

Second, American Express makes personal loans, which gives it another revenue stream that Mastercard and Visa can't touch. American Express reported $23.2 billion in revenue in 2025 from interest on customer loans, up 10% from a year ago.

American Express stock is down right now, off nearly 13% so far this year. But over the last five years, it's been a consistent winner, growing nearly 130%. Its dividend yield is currently 1%, but management already announced plans to increase the dividend by 16% early this year.

American Express is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard, Realty Income, and Visa. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.