The Smartest Dividend Stock to Buy With $5,000 Right Now

Amid conflict in the Middle East, investors face deep uncertainty. Such conditions could negatively affect many of the artificial intelligence (AI) stocks that drove the latest bull market.

Knowing that, investors may want to turn to dividend-paying consumer stocks. While such stocks tend not to have as high a potential for massive returns, their steady, growing dividends often mean they have less propensity to experience massive drops.

Additionally, improved business conditions could turn the following consumer staples stock into one of the smartest places to invest $5,000 right now. Here's how.

The smart dividend stock investors should buy

Under current conditions, investors might want to consider Clorox (NYSE: CLX). At today's price, $5,000 should buy approximately 48 shares.

Moreover, Clorox offers a dividend that has risen annually for decades. It pays shareholders $4.96 per share annually, amounting to a dividend yield of about 4.7%. That returns investors more than the 10-year Treasury yield of around 4.4%, paying them well to wait on potential stock price growth.

Additionally, investors have an opportunity in a stock that most investors probably overlook. The company not only owns its flagship bleach product but also brands such as charcoal maker Kingsford, health products company Burt's Bees, and water filtration enterprise Brita.

Demand for Clorox's products surged during the pandemic, but the stock has suffered since that time. Furthermore, a cyberattack in 2023 and the process of implementing a new CRM system weighed on the company's performance, taking the stock down by more than 55% from its peak.

Indeed, the fact that its $3.1 billion in sales in the first six months of fiscal 2026 (ended Dec. 31) fell 10% may not reassure investors. Fortunately, analysts believe that the decline rate will fall to 8% for fiscal 2026 before rebounding 5% in fiscal 2027.

Also, its $778 million in free cash flow covered the $602 million in dividend costs. This makes the company likely to maintain the annual streak of payout hikes. With the stock trading at just 17 times earnings, investors may be more inclined to capitalize on that income stream as business conditions improve.

Invest in Clorox stock

Under current conditions, Clorox looks increasingly like an excellent company in which to invest $5,000.

Aside from the low valuation and depressed stock price, it will pay investors a cash return comparable to many fixed-income investments.

Moreover, returns may not be limited to the dividend. With Clorox addressing issues with its CRM system, sales growth is on track to make a comeback. Hence, as growth resumes, it could spawn a virtuous cycle of higher dividends and a growing stock price, and such growth should protect you in today's economy.

Will Healy has positions in Clorox. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.