The Smartest Dividend Stocks to Buy With $1,000 Right Now

Key Points

• Sirius XM and Camping World are yielding 4.6% and 2.8% respectively, but capital appreciation can be the real driver if their prospects start to improve.

• Berkshire Hathaway now owns 35% of Sirius XM, adding to its stake over the past year.

• Revenue growth has already turned positive for Camping World. Now it needs the stock and dividend to follow suit.

• 10 stocks we like better than Sirius XM ›

Dividends tend to take a back seat to capital appreciation when the markets are rallying -- as they are now -- but don't look gift distributions in the mouth. Payouts provide a typically reliable stream of income, also helping offset the slides when stocks are moving lower.

You don't need a lot of money to buy into some of the market's more compelling high-yield and low-priced stocks. Sirius XM Holdings (NASDAQ: SIRI) and Camping World (NYSE: CWH) are some of the smartest dividend stocks for investors to buy with as little as $1,000 right now. They offer dividend yields of at least 2.8%, are priced below $25 a share, and trade at a year-ahead earnings multiples below 14. If you're intrigued, let's take a closer look.

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1. Sirius XM

There's no denying that Sirius XM is in a lull. The lack of new listeners for the country's lone satellite radio service is chiseling away at its still massive subscriber base. This should be its third year of gradually declining revenue.

The stock chart reflects the negatives. Sirius XM is down more than 40% over the past year. Its business is holding up a lot better than that. Revenue has declined just 4% over the past year. Profitability is faring better -- on a per-share basis -- because of Sirius XM's insatiable appetite for buybacks. Its share count has been cut roughly in half over the past dozen years.

Image source: Getty Images.

It's not just Sirius that is eating its own cooking. Warren Buffett's Berkshire Hathaway now owns more than a third of the company after a few purchases over the past year.

Sirius XM checks off a lot of the Buffett boxes. It's a leader in its niche with a well-known brand. The media stock is also a money machine, consistently topping $1 billion in annual free cash flow over the past few years. Sirius XM recently told investors that it expects to generate $1.5 billion in free cash flow in 2027, something that it has done just once over the past nine years. There's also a healthy yield of 4.6%, and Sirius XM has boosted its payouts every year since 2017.

The stock is trading for just 8 times forward earnings. It's a low multiple in a high market. You won't have to wait long to find out how Sirius XM is faring these days. It will announce its second-quarter results on Thursday morning. Analysts are bracing for $2.3 billion in revenue, a modest 2% year-over-year decline. They also see a profit of $0.77 a share, a nearly 4% drop. Wall Street pros see a return to bottom-line growth next year on flat revenue growth next year. It could be a good time to tune in before the optimists start turning up the volume.

2. Camping World

There are a couple of trends working in favor of Camping World, the country's largest retailer of new and used recreational vehicles. The largest tailwind is the graying of America. In 2023, 17.7% of the country was 65 years or older. This is up from 16.4% in 2020 and 12.3% a decade earlier. As the retiree percentage grows, so should the demand of RVs to casually explore the country and potentially lower housing costs. An unfortunate trend that is also benefiting the RV market is the rise in trade and travel restrictions. If folks are going to spend more time on getaways closer to home, buying an RV becomes an easier decision to justify.

You're not seeing this scenario play out for Camping World right now. Like Sirius XM, Camping World's stock is trading lower over the past year (in this case, off by 11%). Revenue has also declined in the last two years, but after nine straight quarters of top-line dips, growth has turned positive in back-to-back quarters. Folks are concerned about big-ticket purchases given the economy's fuzzy outlook, and interest rates remain stubbornly high for the majority of buyers who will be financing their home on wheels.

Finally, you have a dividend that has been cut sharply twice over the past three years, plummeting 80% in the process. This is problematic, but did you miss the part about the return to positive revenue growth? Camping World has also posted better-than-expected earnings in the last three quarters. Analysts see the niche leader earning $0.72 a share this year, nearly doubling to $1.34 a share next year. If Camping World slashed its payouts when business was going the wrong way, what do you think will happen now that it's shifting out of reverse? The current 2.8% yield should be dramatically higher on a forward basis. In a fragmented market where even the top dog has just 12% of the market share, the upside potential stretches as long as the road.

Should you invest $1,000 in Sirius XM right now?

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Rick Munarriz has positions in Camping World and Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Camping World. The Motley Fool has a disclosure policy.