Got $500? The Best Dividend Stocks to Buy Right Now

As the S&P 500 trades near its all-time highs, many investors might be reluctant to buy more stocks. That might be the prudent move, considering the S&P 500 looks historically expensive at 32 times earnings and is being propped up by a handful of high-flying AI stocks.

However, it might be smart to shop for undervalued dividend stocks that pay dividends higher than the 10-Year Treasury's yield of about 4.6%. These defensive dividend stocks will attract a lot more investors if the market finally pulls back. Let's take a look at two of those resilient blue chip stocks -- Altria (NYSE: MO) and Realty Income (NYSE: O) -- and see why they could be a great place to invest $500 (or more) to earn some steady passive income.

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Altria

Altria, the largest tobacco company in America, pays a forward yield of 5.8%. It's raised its dividend 60 times over the past 57 years. That makes it a Dividend King -- the elite title given to companies that raise their payouts annually for at least 50 consecutive years. Its trailing payout ratio of 88% also gives it plenty of room for future dividend hikes.

Altria might initially seem like a shaky investment, since adult smoking rates in the U.S. have sharply dropped to their all-time lows over the past six decades. That's bad news for Altria, which still generates most of its revenue from its Marlboro cigarettes.

However, Altria has offset that pressure by raising prices, cutting costs, and buying back more shares to boost EPS. It's also expanding its portfolio of smoke-free products -- including e-cigarettes, nicotine pouches, and snus -- to curb its dependence on cigarettes and cigars. It acquired the leading e-cigarette brand, NJOY, in 2023 to accelerate that strategy.

By 2028, Altria expects to generate at least $5 billion in smoke-free revenue, equivalent to more than a quarter of its projected sales. Assuming that the plan succeeds, analysts expect Altria's EPS to grow at a 13% CAGR from 2025 to 2028.

That's an impressive growth trajectory for a stock that trades at just 13 times this year's earnings. It's also fairly well-insulated from tariffs and geopolitical conflicts, since it generates nearly all of its revenue in the U.S. So if you're looking for a safe place to park your cash and earn more income than you'd get with a CD or T-bill, Altria checks all the right boxes.

Realty Income

Realty Income owns more than 15,500 commercial properties across the U.S., the U.K., and seven European countries. It primarily leases those properties to recession-resistant businesses such as convenience stores, drugstores, and discount retailers.

As a real estate investment trust (REIT), Realty Income must distribute at least 90% of its taxable earnings to its investors as dividends to maintain a lower tax rate. It's also one of the few REITs that pay monthly dividends rather than quarterly ones, and it's raised its payout 134 times since its 1994 IPO. It currently pays a forward dividend yield of 5.2%.

Some of Realty's tenants struggled with store closures over the past three decades, but its occupancy rate hasn't dipped below 96% since its IPO. Last year, its occupancy rate rose 20 basis points to 98.9%, as its stronger tenants opened new stores to offset its store closures. It also continued to expand its brick-and-mortar footprint, even as higher interest rates drove up the prices of new properties and created headwinds for its retail tenants.

Realty's adjusted funds from operations (AFFO) per share (which REITs use to gauge their profitability) rose 2% in 2025. It expects that figure to grow 3%-4% to $4.41-$4.44 per share in 2026, which will easily cover its forward dividend rate of $3.25 per share. Its stock trades at just 14 times that earnings estimate, making it a cheap dividend play for conservative investors.

Leo Sun has positions in Altria Group and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.