The 2 Smartest Dividend Stocks to Buy Right Now

Dividend stocks are a blessing to investors because they provide income and don't rely on stock price appreciation to reward shareholders. You can't go wrong with dividend payouts at any time, but they're especially helpful when there's a lot of uncertainty in the stock market. Or, more uncertainty than usual, at least.

That's been the story with the stock market so far in 2025 for U.S. stocks. Both the S&P 500 and Nasdaq Composite are down year to date (YTD), spending time in correction territory and the Dow Jones Industrial Average is barely in the green, up less than 1% as of March 25.

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If you want investment income without worrying too much about stock price movements, the following two dividend stocks are worth adding to your stock portfolio.

1. AT&T

After struggling for the better part of five years, AT&T's (NYSE: T) stock has rallied over the past 12 months, up over 60%. I figured a turnaround for AT&T's stock wasn't far-fetched, but even I must admit that the past year surprised me a bit.

In early 2022, AT&T slashed its dividend by almost half, going from $0.52 quarterly to $0.2775. This move was made so it could have extra cash to pay down its debt and make needed investments as it shifted its focus back to its core telecom business.

During the period after the dividend slash, there were concerns that AT&T would do away with the dividend, but that no longer seems like a realistic (or smart) move.

AT&T's free cash flow has reached a level ($17.6 billion in 2024) where it supports its dividend and debt obligations, with enough left over for the investments needed in its broadband and fiber businesses.

AT&T's current dividend yield isn't as attractive at its 8% average over the past five years, but the 4% yield is still around three times the S&P 500 average.

T Dividend Yield data by YCharts

AT&T's growth will depend a lot on expanding its fiber business. Luckily, that's been a positive area for AT&T. In the fourth quarter, fiber revenue grew 18% year over year, and in 2024, it added 1 million customers, marking the seventh consecutive year it has added at least 1 million.

Telecom is an industry that's not going anywhere, and AT&T will be one of its top players for the foreseeable future. It's a good buy-and-hold dividend stock for those not expecting its recent stock price growth to be the norm.

2. Coca-Cola

Coca-Cola's (NYSE: KO) products and brands are known and loved worldwide, distributed in over 200 countries and with Coca-Cola soda ranking as an iconic product.

Coca-Cola has products that people buy regardless of economic conditions. That doesn't make the company recession-proof, but it sure makes it more recession-resistant than most companies. That's how it has managed to become a blue chip dividend stock.

Coca-Cola's quarterly dividend is $0.51, with an average yield of around 2.9% over the past year. However, the more impressive part is that the company is a Dividend King, having increased its dividend for 63 consecutive years. In just the past 10 years, its dividend has increased by 55%.

KO Dividend data by YCharts

At its size, Coca-Cola isn't a company that will have double-digit revenue growth year in and year out, but the appeal is its reliability and the fact that investors will likely never have to doubt its dividend (short of a drastic and unforeseen event happening).

Part of Coca-Cola's reliability rests on the fact that it hasn't gotten comfortable with the success of some of its flagship products like Coca-Cola Classic, Diet Coke, and Sprite. It has expanded into water, coffee, tea, juices, plant-based drinks, and even alcohol.

It's a smart buy for investors who want reliability, consistency, and a stock that prioritizes rewarding its shareholders.

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 $284,402!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,312!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $503,617!*

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

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*Stock Advisor returns as of March 24, 2025

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.