Investing in dividend stocks remains a strategic approach for individuals looking to build sustainable wealth through consistent income and the benefits of compounding. Focusing on companies with a proven track record of increasing dividends rather than simply pursuing high yields is critical to successful investment in this sector. Quality firms typically possess a solid balance sheet, robust cash flow, and management dedicated to returning value to shareholders.
For investors with $3,000 to allocate, two particularly appealing stocks stand out.
Lowe’s
Lowe’s has a long tradition of dividend payments, having consistently raised its dividends for decades and marking its presence as a Dividend King by offering quarterly dividends since the early 1960s. Currently, its payout ratio sits around 40%, reflecting that the dividend is not only well-supported but also leaves enough capital for reinvestments and share buybacks. With a yield of approximately 2%, Lowe’s positions itself strongly in the home improvement retail sector. The company thrives on the ongoing demand for home repairs, maintenance, and renovations, bolstered by a resilient business model.
Over the past few years, Lowe’s has strategically enhanced its professional contractor segment and improved its omnichannel capabilities. This approach has allowed Lowe’s to maintain stable revenues amid challenging economic conditions. Impressively, earnings per share have seen a surge of approximately 350% over the last decade, leading to a corresponding dividend growth rate of about 330%.
Notably, Lowe’s revenue is generated through its DIY segment, appealing to individual homeowners, as well as the Pro segment servicing small-to-medium contractors. By 2024, approximately 30% of its total revenue was from this Pro segment. Additionally, the company has recorded modest growth phases—recent earnings data from Q3 2025 showed a 3.2% increase in revenue, albeit with net earnings slightly affected by acquisition costs.
In a significant move to expand within the professional contractor space, Lowe’s made two pivotal acquisitions in 2025. The $1.33 billion purchase of Artisan Design Group focused on design and installation services for homebuilders, while the $8.8 billion acquisition of Foundation Building Materials expanded its footprint significantly across North America. These strategic acquisitions position Lowe’s competitively against rivals and equip it to harness future growth in the housing market.
Pfizer
In the pharmaceutical sector, Pfizer has also drawn attention as a stock with substantial potential. With a current yield around 6.8% and a history of uninterrupted dividend payments for 348 consecutive quarters, Pfizer has maintained a steady dividend increase for 16 straight years despite experiencing a downturn in stock performance over the past few years. The stock is trading at valuation levels near those from a decade ago, presenting a unique buying opportunity with a forward price-to-earnings ratio of about 8.
This pricing, combined with substantial free cash flow amounting to $14 billion over the last year, suggests Pfizer has sufficient funds to meet its dividend obligations. Nonetheless, the company’s revenue has had notable fluctuations, largely influenced by the declining demand for COVID-19 vaccinations and treatments. Additionally, looming patent expirations for popular drugs like Eliquis and Ibrance pose challenges typical to the pharmaceutical sector’s business cycle.
In pursuit of sustainable revenue streams, Pfizer has actively engaged in acquisitions, a strategy fueled by the profits gained during the pandemic. Significant transactions include the $43 billion acquisition of Seagen, which has enriched Pfizer’s oncology capabilities and expanded its early-stage pipeline. The acquisition of Metsera is aimed at enhancing its presence within the burgeoning obesity and cardiometabolic disease market, anticipating substantial growth in the upcoming years.
Amidst the transitional phase for its core products, Pfizer continues to witness positive performance in key non-COVID offerings like Vyndaqel and Prevnar, both showing robust operational growth and extended patent durations. For investors who are prepared to weather some initial challenges and are interested in a long-standing pharmaceutical entity, Pfizer represents an attractive buying option with a reliable dividend yield.
