The Smartest Dividend Stocks to Buy With $150 Right Now

Smart investors know not to chase the hottest investment trend of the current moment. Whether it's artificial intelligence (AI) today or any other investment fad from the last few decades, this is where investors can lose their shirts if they are not careful. Just because a sector is popular to invest in does not mean it will be profitable for you to buy these stocks.

Earnings, not popularity, will determine shareholder returns over the long run. Steady dividend payers are an indicator of highly profitable businesses that can deliver great returns. Here are three smart dividend stocks investors can buy for $150 right now.

A bet on higher oil prices

Aside from recent weeks amid the ongoing conflict in the Middle East, energy stocks have been out of favor for the last few years, driving down the share prices of companies like Occidental Petroleum (NYSE: OXY). This Berkshire Hathaway favorite is still below its 2022 highs and now yields 1.7%.

While not a huge dividend payer today, Occidental Petroleum has a preferred position as an oil and natural gas producer focused on the secure United States market. With oil prices soaring, the company should be able to generate outsize profits and serve as a ballast for any portfolio in times of high inflation.

The last time oil was above $100, Occidental Petroleum earned around $10 billion in net income compared to its current market cap of $57 billion, and that was in a period when its production was lower than it is today. If oil prices remain elevated, Occidental's balance sheet will begin to overflow with cash to fund dividend payments.

Image source: Getty Images.

Consumer banking in the digital age

Another dividend stock investors should look at closely is Ally Financial (NYSE: ALLY). The online bank currently pays a dividend yielding 3.3% and could be a good dividend growth stock in the years ahead.

Ally has not grown its dividend in the last few years due to rising interest rates affecting its banking operations and difficult conditions for its automotive lending business. However, today, net income has begun to recover and is close to reaching $1 billion again. That looks cheap compared to its current market cap of $11 billion.

The first move Ally's management will make is to resume repurchasing outstanding shares, which it paused during this tough period. Once it repurchases stock, it will reduce its shares outstanding and allow management to resume steadily increasing its dividend per share.

At an already juicy dividend of 3.3%, Ally's stock looks like a coiled dividend growth spring that investors can buy today and ride to new heights over the long haul.

OXY Dividend Yield data by YCharts

The new age of nicotine

The highest dividend yield on this list belongs to British American Tobacco (NYSE: BTI), which currently yields 5.4%. It is a tobacco and nicotine giant that is adeptly transitioning its business away from just traditional cigarettes.

Overall revenue grew 2% in constant currency last year, with 7% growth from new product categories such as electronic vaping and nicotine pouches. In 2026, management is guiding for 3% to 5% revenue growth due to an acceleration in demand for its new nicotine categories.

Even though growth is not explosive, British American Tobacco is setting itself up to be a strong cash generator in the years ahead, and believes it can generate 50 billion British pounds in cumulative free cash flow from 2024 to 2030.

This will help the company repurchase stock and grow its dividend payout, providing steady gains for shareholders.

Occidental Petroleum, Ally Financial, and British American Tobacco may not fly off the page like the hottest AI stocks right now. However, with steady earnings power, these businesses should be great dividend stocks for your portfolio over the long term.

Ally is an advertising partner of Motley Fool Money. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends British American Tobacco P.l.c. and Occidental Petroleum. The Motley Fool has a disclosure policy.