A little money can go a long way. That’s especially the case when you invest in stocks that pay you to own them.

I’m referring to dividend stocks, of course. There are plenty of great stocks that offer attractive dividends and don’t cost too much. Here are my picks for the smartest dividend stocks to buy with $100 right now.

You can scoop up a share of Ares Capital (NASDAQ: ARCC) for roughly $23 at its current price. I think doing so might be one of the best investments you can make, especially if you’re looking for income.

Ares Capital’s forward dividend yield stands at 8.4%. Why is the yield so high? Ares Capital is a business development company (BDC). To be exempt from federal income taxes, BDCs must return at least 90% of their earnings to shareholders as dividends. And this one generates a lot of earnings for its shareholders.

A key reason is the nature of the company’s business. The demand for direct lending offered by BDCs is rising due to several factors, including the speed of closing deals, and reliable access to capital during volatile periods. The total addressable market for direct lending is around $3 trillion for the traditional middle market of U.S. companies with annual revenue between $100 million and $1 billion. It jumps to $5.4 trillion if companies with annual revenue of over $1 billion are included.

Also, Ares Capital stands head and shoulders above its peers. It’s the largest publicly traded BDC, and has deep relationships in the market. It also has delivered greater dividend-per-share growth and total returns over the last 10 years than its top rivals.

Another $34 or so will buy you a share of Enterprise Products Partners (NYSE: EPD). Technically, you’ll get a unit of the midstream energy leader rather than a share, because it’s a limited partnership (LP). Investing in LPs comes with some tax hassles, but I think Enterprise Products Partners is worth the extra work.

Enterprise’s forward distribution yield was recently over 6.35%. Want even better news? The LP has increased its distribution for 26 consecutive years.

I like that Enterprise Products Partners’ business holds up well during recessions and turbulent times. Inflation doesn’t impact it very much because roughly 90% of its long-term contracts feature price escalation provisions. Enterprise’s cash flow doesn’t ebb and flow with oil and gas price fluctuations, either; it charges the same amount for using its pipelines regardless of commodity prices.

Story Continues

In recent months, investors have taken a renewed interest in quantum computing. Traditional computer bits can only hold zeros or ones. However, quantum bits, commonly called qubits, can represent any value between zero and one. This advancement enables exponentially faster computing speeds in comparison to traditional computers.

The problem lies with stability, as the more qubits a computer can process, the more error-prone it becomes. For this reason, most industry analysts believe quantum computing is years away from commercial viability.

Fortunately, Google parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has developed a quantum chip that is a possible game changer for the industry. With that development, Alphabet could be the most successful quantum computing stock in 2025. Here’s why.

Indeed, consumers and investors know Alphabet best for products like Google Search, YouTube, the Android operating system, and Google Cloud. Nonetheless, the company founded Google Quantum AI in 2012 and has researched the technology and built computers since that time.

Most of the focus on Alphabet in the quantum computing space revolves around Willow, its quantum chip. Willow stands out because it reduces errors as it adds qubits. This stands in contrast to past quantum chips, whose error rates increased as the number of qubits rose.

Additionally, Willow carried out a standard benchmark calculation in around five minutes. This is notable as it estimates that the fastest supercomputers in use today would take 10 septillion (10^25) years to perform the same calculation, a period longer than the entire history of the universe.

Admittedly, quantum computing is a technology in search of real-world applications. Still, the ability to address the error issues bodes well for Alphabet’s efforts to make quantum computing both beneficial and profitable.

Moreover, with commercial viability likely years away, the company’s other attributes may take a front seat in 2025 as quantum computing-related efforts remain focused on research and development.

Indeed, a massive and highly profitable digital ad business will probably help fund the company’s research. Also, a fast-growing Google Cloud enterprise contributes increasing shares of revenue and has made Alphabet increasingly critical in the IT world with its presence in the cloud and longtime innovation in artificial intelligence (AI).

Thanks to the success of those businesses, Alphabet held $93 billion in liquidity as of the end of the third quarter of 2024. Furthermore, it generated almost $62 billion in free cash flow in the first nine months of 2024 alone. Those assets put Alphabet in a strong position to fund quantum computing and any supporting technologies.

Story Continues

You can build incredible wealth in the stock market, and it’s not as difficult as you might think. The key is to patiently hold shares of a growing company that still has a large market to expand into. Here are two stocks that have monster return potential.

Dutch Bros (NYSE: BROS) is a fast-growing beverage chain that is building a unique brand. About half its menu items are coffee-based beverages, but it’s distinguishing itself from the likes of Starbucks with a range of other drinks on its menu, including lemonade, smoothies, and sparkling sodas.

The business was founded in 1992 by brothers Dane and Travis Boersma, and it went public in 2021. After underperforming over the last few years, the stock has settled into a more reasonable valuation range that sets up attractive return prospects as the company continues to expand across the U.S.

Revenue grew 28% year over year in the third quarter. It has reached 950 locations across 18 states, which leaves plenty of room for more growth. Same-shop sales, which measures growth of existing shops open at least 15 months, were up 2.7% year over year, consistent with the single-digit increases over the last few years.

Moreover, Dutch Bros is staying disciplined in opening new locations without being too aggressive. It is profitably expanding, with net income of $22 million in each of the last two quarters.

Investing in profitable and growing restaurants when they are still small is a great way to build wealth in the stock market, and Dutch Bros is clearly looking like a very promising opportunity. With 32 states that haven’t seen a Dutch Bros shop yet, there is plenty of growth that can fuel monster returns over the next 20 years.

Coupang (NYSE: CPNG) is South Korea’s leading e-commerce store. It’s often described as the Amazon of South Korea, but the company is building a unique advantage in serving densely populated areas that could give it an edge as it expands. The stock has soared 30% over the last year.

Coupang had 22.5 million active customers that placed at least one order during the last quarter. Active customers rose 11% year over year in the third quarter, which, along with increased spending from existing customers, is driving high double-digit growth in revenue.

A key advantage for Coupang is its fulfillment infrastructure, which management says can deliver 99% of orders within one day.

This is not easy: There are more than 15,000 people per square kilometer in Seoul, South Korea. But with Coupang’s Dawn delivery service, a customer living in a large apartment complex can place an order by midnight and have it delivered by 7 a.m. the next day. Being able to serve thousands of customers with fast delivery in a highly populated area can work to Coupang’s advantage as it expands into other geographies.

Story Continues

XtalPi Holdings, an artificial intelligence (AI) drug discovery firm based in the Greater Bay Area, is changing the biopharmaceutical industry by leveraging AI and robotics to transform traditional approaches to drug development.

The company’s self-developed large language model (LLM), the technology underpinning ChatGPT-like generative AI services, has helped increase the success rate of chemical experiments to 90 per cent from 20 to 30 per cent, according to Zhang Peiyu, the chief scientific officer at Shenzhen-based XtalPi.

“There are many good opportunities [for artificial general intelligence] in vertical fields,” Zhang told the Post at its China Conference: Greater Bay Area 2025 in Guangzhou. “For the pharmaceutical industry, we have seen great potential to use LLMs for specialised domains.”

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Zhang anticipates that the integration of robotics and AI will reduce drug discovery timelines to just one or two years from four.

Peggy Sito (left), business editor at the South China Morning Post moderates a panel with Fosun Health CEO Hu Hang, Professor Li Hongsheng, chief scientist of medical foundation models at SenseTime Healthcare, MingMed vice-president Tu Fuquan, and XtalPi chief scientific officer Zhang Peiyu on January 15 in Guangzhou. Photo: Nora Tam alt=Peggy Sito (left), business editor at the South China Morning Post moderates a panel with Fosun Health CEO Hu Hang, Professor Li Hongsheng, chief scientist of medical foundation models at SenseTime Healthcare, MingMed vice-president Tu Fuquan, and XtalPi chief scientific officer Zhang Peiyu on January 15 in Guangzhou. Photo: Nora Tam>

Founded in 2014 by three quantum physicists at the Massachusetts Institute of Technology, XtalPi a year later established its research and development base in Shenzhen. Located in the Hong Kong-Shenzhen Cooperation Zone on the border between the two cities, the company has capitalised on local industrial policies to emerge as a key AI player in drug development, serving nearly four out of every five big pharmaceutical companies globally.

Zhang said the company’s development has been boosted by regional synergies in the bay area scheme, particularly in talent acquisition, supply chain partnerships and fundraising across cities.

The cooperation zone has attracted diverse industry players, including biotech and pharmaceutical start-ups, service providers and regulatory agencies, Zhang said.

Story Continues

If you are looking to create a lifetime’s worth of income by buying dividend stocks, you might overlook NextEra Energy (NYSE: NEE) because its yield is “only” 3%. That’s about average for a utility, and there are plenty of higher-yielding choices out there for you to consider, both inside and outside the utility sector. But there’s one important factor to consider here that might change your mind. NextEra’s dividend has grown, and looks like it will continue to grow, at an exceptionally rapid pace. Here’s why this dividend stock could set you up for a lifetime of income.

NextEra is really two companies in one. The core of the business is its regulated utility operation. This is, basically, a slow and steady foundation. Like all regulated utilities, NextEra’s Florida-based utility operations have been granted a monopoly in the markets it serves. It then has to get capital investment plans and rate increases approved by the government. In most cases, this is not an approach that leads to rapid growth.

That said, the state of Florida has benefited from in-migration for decades, so the population has been growing rapidly. More customers mean more income, and also mean that a higher level of investment is needed to keep up with demand. So even though the regulated side of NextEra Energy’s business is the slower-growing side, it is still advantaged relative to other utilities.

NextEra Energy’s other important business is its clean energy operation. This business is built on long-term contracts, so it is a highly reliable cash generator. Demand for clean energy is high, and the company is able to expand this business rapidly. For example, management expects to install as much as 46.5 gigawatts of renewable energy by 2027, up from 36 gigawatts today. In other words, this business is likely to double in size in just a few years.

If you buy NextEra Energy right now, you’ll collect a 3% dividend yield, which, as noted, is about average in the utility sector. But NextEra Energy stands out from the average utility in one very important way — dividend growth. Over the past decade, the dividend has grown at roughly 10% a year on an annualized basis. That’s huge in the utility sector, where 5% growth is considered very good.

NextEra Energy expects the dividend to grow by 10% a year through at least 2026. Unless it runs into some sort of major headwind, history suggests that the dividend can keep growing at that rate beyond 2026. Given all the dividend increases, over time the yield on purchase price with NextEra Energy becomes an important metric to consider.

Story Continues

Some math will help here. If you bought NextEra Energy at its highest price point in 2013, a share of the stock would have cost $22.45 (that figure, and the others noted here, has been adjusted for a 4:1 stock split in 2020). The quarterly dividend at that point was $0.165 per share, leading to a yield of around 2.9%, about where the yield is today. However, after years of rapid dividend growth, the dividend today is $0.515 per share, which leads to a yield on purchase price of over 9%! Oh, and the stock price today is around $69, so you benefited from notable capital appreciation along the way.

High-yield stocks often have slow dividend growth rates. So while maximizing income today may feel good, you will probably end up with only modest growth in your income stream over time — often something close to the rate of inflation growth (basically low single digits). That’s not a bad outcome, but if you are willing to step down in yield just a little bit and buy a dividend growth stock like NextEra Energy, you can supercharge your income portfolio.

Sure, NextEra Energy doesn’t look like a high-yield stock right now, but continued dividend growth could quickly turn it into one of your highest yield on purchase price investments. That can help set you up for a lifetime of income that not only keeps up with inflation, but outpaces it over the long term.

Before you buy stock in NextEra Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NextEra Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $843,960!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of January 13, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.

Could Buying NextEra Energy Stock Today Set You Up for Life? was originally published by The Motley Fool