The Smartest Dividend Stocks to Buy With $500 Right Now

A $500 investment sounds small at first. That is, until you remember what investing rewards. That’s time, repetition, and staying calm. Smart dividend stocks can turn a modest start into momentum as the cash payments give you something to reinvest even when prices wobble.

A Tax-Free Savings Account (TFSA) helps as dividends and gains can compound without tax drag. The goal is not to chase the biggest yield, but to buy businesses you understand, with dividends backed by cash flow, and then keep adding when you can. So let’s look at some of the smartest options on the TSX today.

T

TELUS (TSX:T) feels relevant right now as Canadians treat connectivity like a necessity. It keeps building fibre, upgrading wireless networks, and bundling services to reduce churn. The share price hasn’t always been thrilling lately, but that can suit a simple dividend plan. When the market panics, people still pay the phone bill. That steadiness can make it easier to start with $500.

Recent earnings have kept the TELUS story straightforward. It keeps adding customers, keeps investing heavily, and keeps focusing on cash flow to support the dividend, even after a recent unnecessary cut. That investment cycle also explains why valuation debates never go away. Telecoms carry meaningful debt, and higher rates can punish sentiment even when operations stay solid. The catalysts sit in fibre uptake, pricing discipline, and efficiency gains. The risks are in competition, regulation, and any squeeze on free cash flow.

RCI

Rogers Communications (TSX:RCI.B) looks like a smart option as the Shaw integration still drives the narrative. Investors watched the dividend stock swing between optimism about cost savings and worry about leverage. That makes it less set-and-forget than a utility, but the core business stays simple. It sells wireless and internet in a country where many households cut back elsewhere before cutting connectivity. That demand supports the dividend.

Recent results put the spotlight on wireless subscriber trends, service revenue, and how quickly Rogers turns synergy plans into cleaner cash flow. If it executes, it can pay the dividend and reduce debt over time, which can lift valuation. If it stumbles, the market will not be patient, and the multiple can stay compressed. Catalysts include steady integration progress and any easing in borrowing costs, while risks include a price war, tougher rules on pricing, or slower-than-expected synergies.

TD

Toronto-Dominion Bank (TSX:TD) earns a spot on a smart dividend shortlist as banks can compound quietly for decades. TD combines a powerful Canadian franchise with major U.S. exposure. That mix can drive growth, yet it also creates headlines when regulators or compliance costs rise. The dividend stock lags at times, which can frustrate traders. For a TFSA investor, that softness can create a more attractive entry point for a blue chip.

TD’s earnings story comes down to three levers: what it earns on loans and deposits, how many borrowers fall behind, and how well it controls expenses. In a softer economy, credit losses can rise, so the market watches provisions closely. Even so, TD has scale, a sticky deposit base, and a long dividend record. The valuation often looks more appealing when fear takes over, but investors should stay honest about risks that can include a deeper recession, higher loan losses, and any new compliance costs.

Bottom line

The point of investing $500 is not to buy a retirement plan in one click. It’s to build a habit that compounds. A share of TELUS can mean steady cash flow and a dividend mindset. A share of Rogers can mean an improving cash flow story with clear milestones. A share of TD can mean a core compounder you top up for years. And here’s what all three could earn from a $500 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL ANNUAL PAYOUTFREQUENCYTOTAL INVESTMENTT$17.6628$1.67$46.76Quarterly$494.48RCI.B$51.299$2.00$18.00Quarterly$461.61TD$129.633$4.32$12.96Quarterly$388.89

None of these dividend stocks are perfect, and dividend investing is not a cheat code. But if you stick to quality, keep adding, and reinvest in your TFSA, $500 can start real returns. Start small, stay consistent, and let time work.

The post The Smartest Dividend Stocks to Buy With $500 Right Now appeared first on The Motley Fool Canada.

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More reading

• The Least Sexy Stocks for 2026 (Don’t Even Think About Buying These Unless You Want to Make Money)
• This Dividend Stock Is Set to Beat the TSX Again and Again
• Sure, Telus Paused Its Payout: It’s My Newest Top Stock Pick
• This Dividend Stock is Set to Beat the TSX Again and Again
• 1 Dividend Stock I’ll Be Checking in On Closely in 2026

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications and TELUS. The Motley Fool has a disclosure policy.