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

Key Points

• McDonald's and Realty Income both have powerhouse positions in their industries.

• Toyota is being hurt by global tariffs, but auto sales increased from a year ago.

• IBM is a rare tech stock that pays a generous dividend.

• These 10 stocks could mint the next wave of millionaires ›

I've always loved dividend stocks. I love receiving a notification every quarter or (in the cases of some stocks) every month that my dividend has been applied and reinvested into my account. I love getting news that a company I've invested in is increasing its yield. I love getting paid a little "thank you" to invest in a quality dividend stock.

Dividend stocks have two basic functions, depending on your investing style. Some investors want to reinvest their dividends, which allows them to increase their shares over time and become even wealthier. Other investors use dividend stocks for income, using the money to cover monthly expenses or fund long-term purchases.

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With an outlay of $10,000, you can create a diversified portfolio of dividend stocks that can help you reach both goals. For this exercise, we'll assume investments of $2,500 into four great dividend stocks: McDonald's (NYSE: MCD), Realty Income (NYSE: O), Toyota Motor (NYSE: TM), and International Business Machines (NYSE: IBM).

Image source: Getty Images.

McDonald's

One stock to diversify an income portfolio should be a restaurant stock, so I'm turning to McDonald's. The company is dominant in the space, with more than 38,000 restaurants around the world. McDonald's boasts a 20% global market share in the fast-food industry, which is expected to expand from a $322.72 billion market in 2025 to a $510.15 billion market by 2034.

Revenue in the second quarter was $6.48 billion, up 5% from a year ago, and net income was $2.25 billion, up 11%. McDonald's brought in $3.14 in earnings per share, up from $2.80 in the same period a year ago.

McDonald's stock is the most expensive per share on this list, priced just over $300, so a $2,500 investment can buy eight shares. The stock's 2.3% dividend yield means that investors get $7.08 per share annually in dividends, or $56.64.

Realty Income

I confess that Realty Income is my favorite dividend stock. It pays monthly instead of quarterly, which means that you get your money even faster and can put it to work for you, rather than letting it sit in the company's account.

Realty Income is a real estate investment trust (REIT) that owns 15,600 properties across the U.S. and Europe. Realty Income's properties run the gamut -- grocery stores, convenience stores, home improvement, dollar stores, restaurants, drug stores, and more. At the end of Q2, the company's portfolio had an occupancy rate of 98.6%. Revenue in Q2 was $1.41 billion, with income of $196.9 million and $0.22 per share.

Because it's a REIT, Realty Income is required by law to pay out at least 90% of its profits to shareholders. That's why it has an oversized dividend yield of 5.4%. And that dividend grows rapidly -- this month, Realty Income increased the monthly dividend for the 132nd time since the company began trading publicly in 1994.

Realty Income is trading at $60 per share, so with a $2,500 investment, you can buy 41 shares. Calculated at its new dividend of $3.228 per share annually, you'll get $134 per year in your account, on top of any gains the stock provides.

Toyota Motor

Toyota is one of the most popular and consistent automotive brands in the world. It's known for the Camry and Corolla sedans, Tacoma pickup trucks, and RAV4 and Highlander models of SUVs. Toyota also markets hybrid versions of the Corolla and Highlander, as well as its popular Toyota Prius coupe.

Tariffs are currently a major issue for Toyota, which saw an effect of 450 billion yen ($3 billion) in its operating income for the first quarter of fiscal 2026. Toyota issued guidance that the full-year effect from tariffs will be 1.4 trillion yen ($9.41 billion), up from its previous guidance of 1.2 trillion yen.

However, I see these as short-term headwinds. Toyota is tremendously popular, selling 2.41 million vehicles in the quarter, up 7% from a year ago.

Toyota stock trades for $198, so with $2,500 you can grab 12 shares. The stock has a forward dividend yield of 3.4% and pays out $6.91 per share, so your annual income from dividends would be $82.92.

International Business Machines

IBM is a rare tech stock that pays a substantial dividend. That's because while many other tech companies are still in their rapid growth stages and are pouring money into research and scale, IBM is already mature, tracing its roots back a century.

While IBM did amazing work with personal computers and was one of the first companies to make waves with artificial intelligence (do you remember when IBM's Deep Blue computer beat chess champion Garry Kasparov in 1997?), today the company is best known for working with cybersecurity, cloud computing, and consulting.

IBM's unique position in the growing world of AI and cybersecurity allows it to combine the dynamic performance of a growth stock with consistent dividend growth. IBM increased its dividend for 30 consecutive years, and currently offers a generous dividend yield of 2.5%.

IBM stock currently sells at $270, so a $2,500 investment will only buy nine shares. But as IBM pays $6.72 annually per share in dividends, you'll still walk away with $60.48, plus IBM's market-beating 22% rise so far this year.

Adding it up

By holding on to each of these dividend stocks for a year after your $10,000 investment, you can expect to get back $334 in payments, in addition to whatever gains the stocks give you during the course of the year. Whether you are putting those returns back into your portfolio or taking them out for another purpose, it's free money that's hard to turn down.

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Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines and Realty Income. The Motley Fool has a disclosure policy.