The Smartest Dividend Stocks to Buy With $10,000 Right Now

The market has been a real gift for many investors in 2024, with the S&P 500 hitting new all-time highs at the close of 57 different trading days (so far). Entering the gift-giving holiday season, it might be time to think about giving yourself a gift as well by investing for 2025. After all, investing in your future is one of the greatest gifts you can give. And if the gift is a reliable dividend stock, it can end up being a gift that keeps on giving.

Many people get a little extra cash near the holidays, whether from a year-end bonus, a seasonal second job, or a gift from a rich uncle for some lucky folks. Other people may have some bonds or CDs that mature and need to reinvest the cash. So, consider these two dividend stocks as long-term investments if you have $10,000 (or any amount really) available to invest.

1. Dell Technologies: Right place, right time

Big tech companies, like Elon Musk's xAI, Microsoft, Meta Platforms, and others, are building out massive data center complexes to tap into the exponentially rising interest in artificial intelligence (AI). These hyperscale data centers are a minimum of 100,000 square feet (some are much, much larger) and are filled with computer equipment working in tandem. xAI's Memphis data center currently has 100,000 GPUs powering servers that are training AI models and it plans to expand the center tenfold to help fulfill its growing needs. Dell is a major supplier of infrastructure for this xAI project. Microsoft's server center project in Wisconsin will occupy more than 2 square miles and also use Dell equipment.

Hyperscale data center growth accelerated in 2023, as shown below, and will far exceed 1,000 in 2024. Estimates are for 120 to 130 additional hyperscale centers coming online annually over the next few years.

These centers need infrastructure like servers, racks, and cabling, and Dell Technologies (NYSE: DELL) is the market's largest supplier. Last quarter, Dell's Infrastructure Solutions Group (ISG) grew revenue by 34% year over year to $11.4 billion. The most significant driver in this segment was servers and networking, which grew 58% to $7.4 billion -- a direct result of data center business. In total, sales hit $24.4 billion on 10% growth.

Dell's other segment, which serves the computer needs of businesses and individuals, isn't performing as well, with revenue dropping 1% year over year to $10.1 billion in the quarter. However, Dell believes a computer upgrade cycle driven by artificial intelligence (AI) is coming. Still, investors shouldn't expect this segment to power growth as much as ISG.

Dell plans to return 80% of adjusted free cash flow to shareholders through stock buybacks and dividends. The company intends to grow the dividend by at least 10% annually through at least fiscal 2028. The dividend increased by 20% when it was raised in this fiscal year. The forward yield is 1.26%. This yield is roughly in line with the S&P 500 average so it may not seem like a dividend stock worth pursuing. However, Dell is also expected to see solid share price gains. Of the 25 analysts who cover the stock, 21 rate it a buy or strong buy with an average price target of $151 per share That's 27% higher than the current price.

The massive need for data center infrastructure puts Dell in the right place at the right time. Those who buy in now stand to benefit long-term.

2. Vici Properties: A higher yield play

If you are looking strictly for a high-yield income stock, the real estate investment trust (REIT) Vici Properties (NYSE: VICI) might be more your speed. Vici owns some of the most recognizable properties on the planet and rents them out to these well-known experiential name brands.

Image source: Vici

These "trophy properties" are hard to replace, making barriers to entry for competition high. They are also occupied by large corporate tenants, like MGM Resorts International and Caesars Entertainment; deep-pocketed tenants make rent collection more consistent. In fact, Vici collected 100% of the rents during the COVID-19 pandemic despite many casinos and entertainment properties being temporarily closed.

Vici has raised the dividend annually since its inception, and growing funds from operations (from which the dividend is paid) make this likely to continue, as shown below.

VICI Dividend data by YCharts

The current forward yield is 5.5%, much higher than Dell's. However, Vici likely will not produce much share price appreciation; it is a stock for consistent, growing income.

Dell and Vici could not be more different companies, giving investors a choice of lower yield with potential share price appreciation or higher-yield income generation. One or both may be right for you.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $356,125!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,959!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $499,141!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 9, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Bradley Guichard has positions in Dell Technologies and Vici Properties. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool recommends Vici Properties and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.