7 Dividend Stocks to Buy With $2,500 and Hold Forever

Key Points

• Investing in dividend-paying stocks can provide passive income along with stock price appreciation.

• Historically, dividend-paying companies have outperformed non-dividend stocks with lower overall volatility.

• Dividend companies typically have stable businesses, sound capital management, and a commitment to rewarding shareholders.

• 10 stocks we like better than Realty Income ›

If you're searching for passive income from your investments, dividend stocks can help deliver the goods. Dividend-paying companies share a portion of their profits with shareholders, typically quarterly, although some pay out monthly dividends.

Beyond steady payments, dividend-paying stocks offer investors another benefit: stronger performance with less volatility. According to research from Hartford Funds and Ned Davis Research, companies that pay dividends have outperformed those that don't over a 50-year period, with average annualized returns of 9.2% versus 4.3%.

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Ultimately, it boils down to this: Dividend-paying companies typically have effective business models, prudent capital management, and a strong commitment to rewarding their investors over the long term. If you're in search of income from your portfolio, here are seven quality dividend stocks to consider today.

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Realty Income

Realty Income (NYSE: O) is a real estate investment trust (REIT) that appeals to income investors thanks to its reliable monthly dividend payments, which yield about 5.7%. With more than 661 consecutive monthly dividends and more than 111 quarterly dividend increases since 1994, Realty Income offers stability through diversified triple-net lease properties across retail, industrial, and service sectors. (Triple net leases require tenants to pay most of a property's operating expenses.)

Its long-term leases with built-in rent escalators provide inflation protection and consistent cash flow. Its rock-solid balance sheet, recession-resilient tenants, and exposure to important infrastructure make it ideal for conservative dividend portfolios seeking reliable monthly income.

Stag Industrial

Stag Industrial (NYSE: STAG), another REIT, offers dividend investors exposure to U.S. industrial real estate, with a portfolio focused primarily on single-tenant warehouses vital to e-commerce and logistics. Another stock offering a monthly dividend, and an attractive yield of 4.3%, STAG delivers consistent income backed by long-term leases and high occupancy. The company maintains a conservative balance sheet and prudent capital allocation, with room for dividend growth.

Digital Realty

Digital Realty (NYSE: DLR) owns and operates 310 data centers around the world, serving hyperscalers, enterprises, and interconnection customers. As artificial intelligence (AI), cloud computing, and data consumption surge globally, Digital Realty benefits from long-term, high-credit tenants and built-in rent escalations.

It's structured as a REIT and offers a consistently growing dividend yielding 2.9%, supported by recurring cash flows and global expansion. Given Digital Realty's strategic importance in digital infrastructure, it is a compelling long-term play for dividend growth investors seeking tech exposure with a real estate twist.

Ares Capital

Ares Capital (NASDAQ: ARCC) is one of the largest business development companies (BDCs) in the U.S and offers an ultra-high dividend yield of 8.6%. The company's bread and butter is investing in middle-market companies through senior secured loans and mezzanine debt, generating steady interest income.

Its underwriting strength and disciplined risk management have been on display for more than two decades, and it has maintained a stable dividend, reflecting consistent outperformance.

With a conservative leveraged profile, broad sector diversification, and historically stellar underwriting, Ares Capital is a solid stock for income-focused investors seeking high yields.

Chubb

Chubb (NYSE: CB) is a global insurance leader known for its underwriting discipline, robust capital reserves, and consistent dividend growth. It boasts 32 consecutive years of dividend increases, a conservative payout ratio, and significant free-cash-flow generation.

Chubb operates across commercial, personal, and specialty lines, giving it geographic and business-line diversification. Thanks to its pricing power, the company's premiums have risen amid inflationary pressures in the economy in recent years. Meanwhile, investment income on its investment portfolio has expanded amid the higher interest rate environment.

For dividend investors, Chubb and its 1.4% yield offer defensive sector exposure with inflation-resistant pricing power and a growing stream of reliable income backed by sound underwriting.

S&P Global

S&P Global (NYSE: SPGI) is a dividend-growth powerhouse that plays a key role across financial markets. It owns the iconic S&P credit-rating business, where it has a 50% share of the U.S. credit ratings market. It also owns global benchmarks like the S&P 500 index and valuable data and analytics platforms powering trillions in investment decisions.

With high-margin recurring revenue streams and pricing power, S&P Global consistently generates strong free cash flow and has increased its dividend for more than 52 years. Its asset-light business model also provides it with solid margins.

Its yield, at 07.%, isn't the highest. But for dividend investors seeking long-term compounding, S&P Global offers an ideal mix of growth, quality, and capital returns, riding secular trends in passive investing, regulatory complexity, and global financial infrastructure.

Cincinnati Financial

Cincinnati Financial (NASDAQ: CINF) is a lesser-known but reliable Dividend King, having raised its dividend for more than 65 consecutive years. It offers property and casualty insurance through a network of independent agents, with a focus on underwriting profitability and conservative reserving. Its equity portfolio, which includes blue chip stocks, generates added cash flow through investment income and capital gains.

Cincinnati Financial's long-term, shareholder-aligned culture and prudent capital deployment have enabled slow but steady growth through recessions and rate cycles. For dividend investors attracted to the 2.3% yield, it offers income dependability with a strong balance sheet.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Digital Realty Trust, Realty Income, and S&P Global. The Motley Fool recommends Stag Industrial. The Motley Fool has a disclosure policy.