The best dividend stocks to buy with $100

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Have you ever heard the saying “you need money to make money”? By most standards, that’s true. The good news though is that you don’t need a lot of money to make money. You can start earning passive income immediately by investing just $100 in certain dividend-paying stocks.

While many dividend stocks trade above $100, there are dividend stocks that cost less and can provide reliable long-term growth. Here’s a closer look at two dividend-paying stocks in different industries to consider buying today.

Allied Financial

Allied Financial (ALLY -3.05%) is a digital bank that offers many of the same financial products and services as other major banking companies – certificates of deposit, checking and savings accounts, credit cards, retirement and brokerage accounts, as well as home and auto loans .

It just offers the products a little differently – online. The company has no physical branches, which allows it to save on overhead compared to other banks. It also takes its customer-focused approach to banking very seriously, offering products with no fees, no minimums and competitive rates.

Ally Financial has received a lot of attention in recent years, including a notable investment from Warren Buffett’s Berkshire Hathaway. The company recently more than tripled its position in Ally Financial, which speaks volumes about the company’s pricing and its long-term growth opportunities.

Ally’s stock price has fallen 48% from its 52-week high. This is largely due to a broader bear market, but it’s also in response to growing concerns about slowing loan growth and default risks, particularly for auto loans, its main source of income. However, Ally Financial’s advantageous pricing today is to the advantage of investors. The stock currently pays a dividend yield of over 4%, which means you could earn $1.20 in dividends per year on a stock that costs around $30.

Real estate income

Real estate income (O -3.49%) is a real estate investment trust (REIT) that owns a variety of assets such as retail properties, hotels and office properties, leasing them to tenants under long-term net leases. With nearly 11,500 properties in its portfolio, it is the largest net leasehold REIT in the world.

Although you may not recognize that you are at a Realty Income property, chances are that you have visited one of its properties, which could be rented to a reputable tenant like CVS Pharmacy,(CVS -0.89%)Home deposit, walmartand Starbucksas well as countless others.

The net rental business is an extremely reliable model because it uses rental contracts of 10 years or more with built-in rent increases. Since it is a net lease REIT, tenants are responsible for most of the costs of a property, including taxes and maintenance. The REIT has grown significantly in recent years, spending $11.9 billion on acquisitions from 2020 to 2022 year-to-date. These acquisitions helped boost its revenue to a record $2 billion in 2021.

The company just raised its dividend again, marking 28 years of consecutive increases and ensuring it retains its place on the list of dividend aristocrats – companies that have increased their dividends for at least 25 consecutive years. As if its track record wasn’t enough, the company also pays out monthly dividends. As of this writing, for a stock that costs around $56, you can earn just under $3 a year from just one stock, which is a return of just over 5%.

Starting with a $100 investment may not seem like much, but if held for the long term, you can benefit from regular dividends and future share price growth when the market recovers. Remember to keep increasing your positions and further diversifying your holdings, taking a long-term view on the stocks you buy.

Ally is an advertising partner of The Ascent, a Motley Fool Company. Liz Brumer Smith has no position in the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares), Home Depot, Starbucks and Walmart Inc. The Motley Fool recommends CVS Health and CVS Health Corporation and recommends the following options: Long January 2023 $200 calls on Berkshire Hathaway ( B shares), short $200 put options from January 2023 on Berkshire Hathaway (B shares), short $265 call options from January 2023 on Berkshire Hathaway (B shares) and short $85 call options from October 2022 on Starbucks. The Motley Fool has a disclosure policy.

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