The best way I've found is to:
1.) Take an awl and push it through the paper pattern where each stud placement is marked. Make a hole just large enough to put the tip of a Sharpie through.
2.) Tape your pattern in place. Take a Sharpie or marker of contrasting color to the stone and mark every hole directly on the stone.
3.) Leave the top edge of the pattern taped in place. Remove all other tape. Fold the pattern up and out of the way and tape it in place.
4.) Bring a roll of 1" wide Gorilla tape. Rip off 1½" long (±) pieces. Place a piece by each mark you made on the wall. Aim a corner of the tape so it points where the center of the hole is to be drilled.
5.) Use either a hammer drill or a small SDS rotary hammer (ie: the Milwaukee 12v is great for this) and drill your holes.
6.) If the bit wanders or the stone flakes/breaks off, the tape will still be in place pointing to where the hole should be.
7.) Ensuring the letters are flush to each other and plumb is simply a matter of patience.