The Smartest Dividend Stocks to Buy With $3,000 Right Now

Investing in dividend stocks is a robust strategy for building sustainable wealth through a combination of steady income generation and the power of compounding. The key is to focus on quality companies with a history of increasing dividends, rather than simply chasing the highest yields.

A company that consistently pays and increases its dividends usually has a strong balance sheet, healthy cash flow, and a management team committed to shareholder returns, which are all indicators of a quality business. If you have $3,000 to invest in dividend stocks right now, here are two smart picks to consider.

Image source: Getty Images.

1. Lowe's

Lowe's (NYSE: LOW) has consistently increased its dividend for decades, and has paid a dividend every quarter going all the way back to the early 1960s. This places it in an elite group of companies known as Dividend Kings. The company maintains a healthy payout ratio of approximately 40% of its earnings and an even lower percentage of its free cash flow.

This indicates that the dividend is well-covered and provides a significant margin of safety for future payments, as well as to leave ample capital for reinvestment and share buybacks. Its current yield is about 2%. As one of the largest home improvement retailers in the country, Lowe's has a resilient business model that benefits from recurring home maintenance, repair, and remodeling needs.

Its strategic focus on expanding its professional contractor segment and enhancing its omnichannel capabilities has helped it maintain a competitive edge and stable revenue, even in the broadly uncertain economic environment of the last several years. Over the past five years, the company's earnings per share (EPS) have grown rapidly, around 350% over the last decade, and this has supported its dividend growth rate of approximately 330% over the same period.

Lowe's generates revenue through a few channels. Its leading segment is its DIY (Do-It-Yourself) business, which is fueled by individual homeowners performing their own repairs and renovations. Then there's the Pro segment that includes small-to-medium contractors and property managers.

As of 2024, the Pro business had reached approximately 30% of total revenue and Lowe's has pivoted to grow this business as consumers have been more constrained with spending on home improvements in the last few years. Lowe's also makes revenue from its installation solutions for complex projects like HVAC services or kitchen remodels.

Lowe's Q3 2025 earnings showed modest growth with 0.4% comparable sales and 3.2% increase in revenue. Net earnings were down slightly from one year ago due to acquisition costs, but still totaled about $1.6 billion for the three-month period. And online sales rose more than 11% year over year.

In 2025, Lowe's significantly expanded its footprint in the professional contractor space through two major acquisitions aimed at this $250 billion addressable market. Lowe's completed the acquisition of Artisan Design Group for approximately $1.33 billion in June 2025. ADG specialized in design and installation services for interior finishes like flooring and cabinets and served large-scale homebuilders.

Lowe's also completed the $8.8 billion acquisition of Foundation Building Materials in October 2025. This deal included over 370 locations across North America and a major distribution network for interior products like drywall, metal framing, and ceiling systems.

These two acquisitions will allow Lowe's to offer comprehensive supply solutions geared toward professional contractors, ranging from structural interior materials to finished surfaces and professional installation. These moves also intensify Lowe's competition with Home Depot, which made similar pro-focused acquisitions in late 2024 and 2025, and leave it well-positioned to benefit from an eventual recovery in the housing market.

2. Pfizer

Pfizer (NYSE: PFE) stock has been trading down the last few years, as investor sentiment about the business has turned negative. Pfizer is now trading not too far off from where shares were a decade ago. On the flip side, the current yield is around 6.8%, and its forward total dividend per share currently sits around $1.72 annually. The yield has been partly pushed up by the stock's lackluster performance.

It's worth noting that Pfizer has a long history of paying dividends for 348 consecutive quarters and has increased its dividend for 16 consecutive years. Due to a significant drop in its stock price from post-pandemic highs, Pfizer is currently trading at a low valuation relative to its historical averages and industry peers (a forward-looking price-to-earnings (P/E) ratio of around 8).

This makes Pfizer a potentially cheap stock to buy while collecting a solid dividend. It's generated about $14 billion in free cash flow and $10 billion profits over the training 12 months alone. So, it looks to have plenty of cash to cover its dividend obligation.

With demand for COVID-19 vaccines and treatments naturally waning, Pfizer has faced significant drops in revenue during certain financial periods the last few years. Several of Pfizer's top-selling drugs, such as the blood thinner Eliquis and the breast cancer drug Ibrance, are facing patent expirations. This is a normal part of the business cycle for pharmaceutical companies, and Pfizer has been planning for this timeline for years.

Acquisitions have remained Pfizer's primary strategy to add new, durable revenue streams and compensate for losses, and the billions of profits it raked in during the pandemic fueled many of these acquisitive moves the last few years. For example, the $43 billion acquisition of Seagen significantly bolstered Pfizer's oncology franchise, doubled its early stage pipeline, and added expertise in innovative antibody-drug conjugate (ADC) technology.

The company expects to have at least eight blockbuster cancer drugs by 2030 as a result. The acquisition of Metsera has positioned Pfizer to compete in the rapidly expanding obesity and cardiometabolic disease market, a segment projected to exceed $100 billion by 2030. This move was critical after an earlier internal obesity drug candidate was shelved.

Key non-COVID products like the Vyndaqel family (rare heart disease) and Prevnar (pneumococcal) are just a few franchises that continue to show strong performance and operational sales growth, and have durable runways before their patents expire. For investors willing to ride out some growth pains who want to invest in one of the world's oldest pharmaceutical businesses and gain a favorable dividend payout to boot, Pfizer looks like a smart buy to consider.

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot and Pfizer. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy.