Ever heard the saying "you need money to make money"? By most standards, it's true. The good news though, is you don't need a lot of money to make money. You can start earning passive income immediately with just $100 by investing in certain dividend stocks.
While many dividend stocks trade above $100, there are dividend-paying stocks that cost less and can offer long-term growth opportunities and reliability. Here's a closer look at two dividend stocks in different industries to consider buying today.
Ally Financial
Ally Financial (ALLY -0.47%) is a digital bank that offers many of the same financial products and services as other big banking companies -- certificates of deposits, checking and savings accounts, credit cards, retirement and brokerage accounts, along with home and car loans.
It just offers the products a bit differently -- online. The company has no physical branches, which helps it save a lot of money on overhead compared to other banks. It also takes its customer-first approach to banking very seriously, offering products with zero fees, no minimums, and competitive rates for its products.
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 for the company's pricing and long-term growth opportunities.
Share prices for Ally have fallen 48% their 52-week high. This is largely due to general bear market volatility, but it's also in response to growing concern over slowing loan growth and default risks, particularly for car loans, its biggest revenue driver. However, Ally Financial's favorable pricing today is to investors' advantage. The stock currently pays a dividend yield of more than 4%,meaning you could earn $1.20 in dividends per year on a stock that costs about $30.
Realty Income
Realty Income (O) is a net lease real estate investment trust (REIT) that owns a variety of assets like retail properties, hotels, and office space, leasing them to tenants on long-term net leases. With nearly 11,500 properties in its portfolio, it's the largest net lease REIT in the world.
While you may not recognize you are in a Realty Income property, there's a good chance you've visited one of its properties, which could be leased to a slew of big-name tenants like CVS Pharmacy,(CVS 0.50%)Home Depot, Walmart, and Starbucks, along with countless others.
The net lease business is an extremely reliable model because it uses lease contracts of 10 years or more with built-in rent increases. Because it is a net lease REIT, tenants are responsible for most of the costs, including taxes and maintenance. The REIT has grown tremendously over the past few 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 that it maintains its place on the list of Dividend Aristocrats. As if its track record wasn't enough, the company also pays dividends monthly. At the time of this writing, for a stock that costs about $56, you can earn just under $3 per year from a single share, which is a yield of just over 5%.
Starting out with a $100 investment may not seem much, but if held for the long term, you can benefit from dividend and share price growth when the market recovers. Just remember to continue to add to your positions and further diversify your holdings, taking a long-term outlook on the stocks you are buying.
